Iceland review - 2006, Qupperneq 100

98 BUSINESS SUPPLEMENT
CEO Hreidar Már Sigurdsson discusses
the bank’s operations and a little about
what characterizes Kaupthing Bank’s
current services. Hreidar began his career
with Kaupthing Bank in 1994 in the Asset
Management Department, setting up
equity funds and pension funds, and finally
becoming the department’s director. From
there he became a vice president and went
to New York to set up the bank’s operations
in the US. Finally he began his term as
CEO of Kaupthing Bank in 2003. Under
his leadership the bank has seen notable
expansion, growing into the northern
European corporate and investment bank
that stands today.
You’ve seen the bank through quite a phase
of expansion. What do Kaupthing Bank’s
operations look like today?
Kaupthing now operates in ten countries. We
have banking licenses in Iceland, Denmark,
the United Kingdom, Luxembourg, Finland and
Sweden, and we have investment services
in Switzerland, the Faroe Islands, Norway
and the United States. Our history of prudent
growth is founded in organic growth coupled
with a number of strategic acquisitions in the
Nordic countries and the UK in recent years.
The first step towards expansion was in 2001
when Kaupthing purchased Sofi, the Finnish
brokerage firm. JP Nordiska Bank in Sweden
was taken over the following year and in spring
2003 Kaupthing merged with Búnadarbanki
Íslands, which was a solid development for
the company. Most importantly last year
Kaupthing Bank took over the management
of the corporate bank FIH in Denmark, with
an acquisition funded by an increase in share
capital. The bank used its own net earnings
to purchase Singer & Friedlander in the UK in
autumn 2005.
How do you feel the bank’s success has
been received?
Our success has been well received by most
as we have generated quite a lot of value for
our shareholders. But as it seems to go, those
who succeed are sometimes met with harsh
criticism, and we’ve been no exception. But
regardless, the bank has never been as strong
as it is today.
So what’s the business model that has
made all this possible for the bank?
We are developing a bank that offers integrated
financial services for mid-sized companies and
affluent private clients in northern Europe. As
a provider to companies in expansion, we have
been able to grow with our clients and bring
our business relationships to new heights.
At the same time, we have established the
kind of personal trust and closeness with our
private banking clients necessary to form the
basis of successful asset management and
private banking services. We believe we are
innovators in our field.
What would you say distinguishes
Kaupthing Bank?
In short, when I’m asked to characterize the
bank I say we’re a sturdy and progressive bank
on the rise. We have a solid client base and
maintain strong diversification in our lending
portfolio, with regard to both country and
industry as well as other influential factors.
This is demonstrated in our credit ratings
from international rating agencies, which give
us good ratings. Another one of the main
characteristics of recent developments has
been the constant improvement of asset quality
and the steadily declining trend of impairment.
What’s more is our focused emphasis on
rigorous risk control, and how well it has paid
off. We closely monitor all risk factors, using
projections and stress tests to measure what
effect variables like movements in foreign
exchange rates, interest rates or share prices
would have on the bank’s business. What the
stress tests tell us is good; they show us that
the bank’s position has probably never been as
solid as it is right now.
Do you think Kaupthing Bank can maintain
this level of prosperity?
There’s no question in my mind. Looking ahead
our prospects are good. Our recent acquisition
of Singer & Friedlander will accommodate the
bank’s increased activity in the UK market and
our prudent growth strategy will continue, but
never at the expense of profitability. Because
Kaupthing Bank is rooted in sound financial
fundamentals, we have every possibility to
continue reaching our profitability target of
15% return on equity for years to come.
SEEING IT THROUGH
BUSINESS SUPPLEMENT
“Because Kaupthing
Bank is rooted in
sound financial
fundamentals, we
have every possibility
to continue reaching
our profitability
targets for years to
come.”