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Landsbanki Powerpoint 1

  1. 2. Halldór J. Kristjánsson CEO Landsbanki Overview Presentation Winnipeg – April 2007
  2. 3. Iceland - A Growing Nation with Strong Fundamentals Reykjavík <ul><li>Iceland is the 4 th most competitive nation in the world, according to the 2006 IMD World Competitiveness Yearbook </li></ul><ul><li>Iceland’s GDP per capita is among the highest in the world - GDP has grown by 50% in real terms in the last 10 years, </li></ul><ul><li>GDP growth in 2007 is estimated at 2,5% and will be close to long term potential of around 3% as the economy gathers pace and FDI projects materialize. </li></ul><ul><li>Government credit ratings are high/Aaa </li></ul><ul><li>Strong capital formation and international diversification in recent years and a well functioning pension system - Fully funded with assets amounting to 116% of GDP and tax efficient supplementary pensions growing fast since 2002 </li></ul>The nation is young and life expectancy, labour market participation, employment and educational levels are well above the OECD average Iceland is rich in natural resources, including in particular its bountiful fishing banks and energy sources Source: Ministry of Finance, Statistics Iceland & OECD Iceland is 103,000 square kilometers Total inhabitants 300,000, population growth ~ 1% As a member of the European Economic Area (EEA) since 1994, Iceland is part of the European Single Market for financial services Iceland has implemented all the EC directives on banking, insurance and securities trading Iceland GDP Growth 2000-2007
  3. 4. Continued International Diversification of the Icelandic Economy <ul><li>Continued growth underpinned by strong inward and outward FDI flows </li></ul><ul><li>Strong growth of FDI and Portfolio capital abroad – 215% of GDP in 2006 </li></ul><ul><li>Landsbanki – well hedged against cyclical economic developments </li></ul><ul><li>About 75% of cash flow of ICEX listed companies is denominated in foreign currencies, 80-90% excluding the banks </li></ul>Source: Iceland CB Estimated foreign earnings 2007 as a ratio of total income of largest ICEX-15 corporates Source: Landsbanki Research FDI as % of GDP
  4. 5. Landsbanki - A Growing International Bank Positions by location <ul><li>120 years of operations since establishment in 1886 and headquartered in Iceland </li></ul><ul><li>Provides, corporate banking, investment banking, asset management, private banking and retail banking services </li></ul><ul><li>Leader in all core banking areas in domestic market with over 30% market share and the most extensive branch network </li></ul><ul><li>Operations in major financial centers of Europe, thereof UK operations most extensive </li></ul><ul><li>European platform focused on small and medium sized corporates </li></ul>2,117 November 2005 February 2007 Ratings upgraded March 2006 February 2007 Confirmed B/C C Bank financial strength Stable Stable Outlook F1 P-1 Short-term A Aa3 Long-term Fitch Moody’s Rating
  5. 6. A Growing International Bank Income by location (total: ISK 89 bn) Lending by location (total: ISK 1,438 bn) Employees by location (total: 2,117) Income by currency Nordic and others 25% Others 17% Nordic and others 15 % Nordic and others 5 %
  6. 7. The Leading Financial Institution in Iceland <ul><li>Leading bank with 30% market share in domestic retail market </li></ul><ul><li>Domestic branch network’s lending and deposits increased by 80% and 19% respectively in 2005 </li></ul><ul><li>Leading corporate lender in Iceland with a 37% market share </li></ul><ul><li>Leading provider of M&A, foreign exchange, derivatives, equity and fixed income services with more than 40% market share in FX </li></ul><ul><li>Assets under management EUR 4.6 bn and 34% leading share in domestic funds </li></ul>Market share in domestic market Branch network in domestic market
  7. 8. Stillholt Leifsstöð Fáskrúðsfjörður Neskaupstaður Hornafjörður Selfoss Reykholt Hvolsvöllur Eskifjörður Egilsstaðir Vopnafjörður Reyðarfjörður Borgarfjörður eystri Seyðisfjörður Þorlákshöfn Grindavík Keflavík Akranes Ólafsvík Húsavík Akureyri Sauðárkrókur Skagaströnd Grundarfjörður Ísafjörður Hellissandur Kjarnaútibú Minni útibú Branch network in Iceland Hafnarfjörður Smáralind Hamraborg Árbær Höfðabakki Breiðholt Grafarholt Bæjarútibú Háaleiti Langholt Vesturbær Austurbær Aðalbanki
  8. 9. 2006 Main Results <ul><li>Strong results </li></ul><ul><li>Profit before taxes ISK 44.7 bn (CAD 800m) </li></ul><ul><li>Profit after taxes ISK 40.2 bn (CAD 717m) </li></ul><ul><li>ROE before taxes 40% </li></ul><ul><li>ROE after taxes 36% </li></ul><ul><li>Cost-Income Ratio 43% </li></ul><ul><li>Strong balance sheet </li></ul><ul><li>Total assets ISK 2,173 bn (CAD 38.8bn) </li></ul><ul><li>Shareholders equity ISK 144 bn (CAD 2.6bn) </li></ul><ul><li>Tier 1 Capital Ratio 13.0% </li></ul><ul><li>CAD Ratio 14.8% </li></ul>
  9. 10. Implementing the Strategy <ul><li>Corporate Banking </li></ul><ul><ul><li>Structured Finance </li></ul></ul><ul><ul><li>Asset Backed Lending </li></ul></ul><ul><ul><li>Trade Finance </li></ul></ul><ul><ul><li>Property Finance & Specialised SME Financing </li></ul></ul><ul><li>Corporate Finance </li></ul><ul><ul><li>Corporate Advisory </li></ul></ul><ul><ul><li>Equity Capital Markets </li></ul></ul><ul><li>Specialised Retail Banking </li></ul><ul><ul><li>Specialised Mortgages </li></ul></ul>Strengthening a profitable corporate and investment bank, focused on mid-cap corporates in Europe through organic growth and bolt-on acquisitions, and acquisition of sound banking assets... Specialty finance banking & retail deposits ... funded by capital markets together with wholesale deposits raised in Europe and retail deposits raised via Internet in selected markets <ul><li>Equity Research & Institutional Brokerage </li></ul><ul><ul><li>Corporate Brokerage </li></ul></ul><ul><ul><li>Securities Finance and Derivatives </li></ul></ul><ul><li>Funding </li></ul><ul><ul><li>Capital Markets </li></ul></ul><ul><ul><li>Retail Deposits - Icesave </li></ul></ul><ul><ul><li>Wholesale Deposits </li></ul></ul><ul><li>Private Banking & Asset Management </li></ul><ul><ul><li>Comprehensive personalized private banking </li></ul></ul><ul><ul><li>Wide range of international and domestic asset management products </li></ul></ul>Corporate & investment banking
  10. 11. Execution of strategy <ul><li>Buy small platforms that support strong organic growth </li></ul><ul><ul><li>By adding new services and teams </li></ul></ul><ul><ul><li>Establish branches and representative offices </li></ul></ul><ul><li>By strengthening existing services </li></ul><ul><li>Buy quality assets not assets that need to be fixed </li></ul>Investments (€350m) Heritable Bank Luxembourg Teather & Greenwood Kepler Equities Merrion Capital Lex Life Cheshire Guernsey Limited Organic Growth London Branch Amsterdam Branch Canada Branch Norway Branch Faroe Islands Rep Office Icesave – Deposits Cork Office In The Pipeline USA Rep Office Hong Kong Rep Office Singapore Rep Office Genf Private Banking Scandinavia Growth
  11. 12. Transformation of Landsbanki Since 2002 ISK billion + 8x + 7x + 8x + 6x + 8x + 7x + 2x + 18x + 14x
  12. 13. Operation in 15 countries
  13. 14. Basic Structure – Business Lines and Regions Fully Operational Start-up Phase (JK)                 US             Canada                 Guernsey                 France               Spain                 Italy             Switzerland                 Netherlands                 Germany               Norway / Faroe Islands             Luxembourg                 Ireland               UK                 Iceland Deposits Retail Banking & Speciality Finance Intl. Treasury FX & Derivatives AM & PB (BÞB) Corporate Finance Corporate Banking Brokerage & Research
  14. 15. Number of full-time equivalent positions by country at year end 2006 95 214 29 UK Netherlands 45 Germany 63 Switzerland 29 Italy 32 Spain 111 France 18 USA and Canada 450 Iceland Ireland Luxemborg 93 811 92 Norway 3 Faroe Islands 1
  15. 16. Continuous Integration and Consolidation of Operational Platforms <ul><li>Strong track record of profitably integrating new subsidiaries both domestically and internationally since first overseas acquisition in 2000 </li></ul><ul><li>Implementation of growth strategy </li></ul><ul><ul><li>Buy small platforms, efficiently run quality assets, that support strong organic growth </li></ul></ul><ul><ul><li>Retain existing management and add key employees with relevant experience </li></ul></ul><ul><ul><li>Add new services and strengthen existing product line </li></ul></ul><ul><li>Product and service synergies with Landsbanki </li></ul><ul><ul><li>Corporate finance with direct link with Landsbanki </li></ul></ul><ul><ul><li>Risk control, compliance, audit & accounting </li></ul></ul><ul><ul><li>Joint IT and marketing support </li></ul></ul>Growth Investments (EUR 350 m)* Heritable Bank Landsbanki Luxembourg Teather & Greenwood Kepler Equities Merrion Capital Lex Life Cheshire Guernsey Limited Organic Start-ups London Branch Amsterdam Branch Canada Rep. Office Faroe Islands Rep. Office Norway Rep. Office ICESAVE - Deposits Overall brand harmonization and product development proceeding well * including estimation of earn-out arrangements for Merrion and Kepler
  16. 17. International Banking Platform - Overview <ul><li>Staff of 94 </li></ul><ul><li>Deposits: ISK 89.5bn (EUR 955m) </li></ul><ul><li>Loans: ISK 222.2bn (EUR 2.4bn) </li></ul><ul><li>Operating Revenues: ISK 5.5bn (EUR 63m) </li></ul><ul><li>Private Banking services: Wealth Management; Tax Advise; Brokerage Services; Lending and Deposits; Pension and Life Insurance </li></ul><ul><li>Credit activities for high net worth individuals and small/medium-sized financial institutions in Nordic region </li></ul><ul><li>Staff of 92 </li></ul><ul><li>Deposits of ISK 99bn from over 10,000 customers </li></ul><ul><li>Loan portfolio ISK 104bn to 9,000 customers </li></ul><ul><li>Operating Revenues: ISK 2.6bn (GBP20.6m) </li></ul><ul><li>Best buy table led outsourced retail savings </li></ul><ul><li>A Fitch rating A/F1 and fully funded through deposits (plus capital) </li></ul><ul><li>5 Business lines across residential mortgages; structured property finance; asset finance and deposits </li></ul><ul><li>Staff of 73 </li></ul><ul><li>Deposits of ISK 247 bn (GBP 1.8 bn) </li></ul><ul><li>Loan portfolio ISK 166 bn (GBP 1.2 bn) </li></ul><ul><li>Operating Revenues: ISK 5.9bn (GBP 46m) </li></ul><ul><li>Two thirds of projects have international (non-Icelandic) sponsors </li></ul><ul><li>Employees from major Investment and retail banks (JP Morgan, Barclays Capital, RBS, Deutsche etc) with international experience </li></ul>Continue organic growth and acquire banking assets that support stable recurring revenue streams London branch
  17. 18. Corporate Investment Banking Platform - Overview <ul><li>Market share of 8-10% in local corporate finance market 2004 </li></ul><ul><li>Corporate advisor to majority of Ireland’s largest transactions </li></ul><ul><li>Wealth management - market share of <5% of Irish high net worth client base </li></ul><ul><li>Institutional Equities – market share of 7-9% in Irish secondary equity trading </li></ul><ul><li>Winner of MoneyMate and Investor Magazine Awards </li></ul><ul><li>Staff of 96 </li></ul><ul><li>Staff of 350 </li></ul><ul><li>1,500 institutional clients </li></ul><ul><li>Market share of 2-4% in secondary equity trading </li></ul><ul><li>260 corporate roadshows and 150 client field trips organized in 2006 </li></ul><ul><li>Top 10 ranking for Country Analysis in 5 countries (Extel) </li></ul><ul><li>Pan-European Small Cap rankings: sales (7th) and research (8th) (Extel) </li></ul><ul><li>Named best stock picker in Europe by Bloomberg </li></ul><ul><li>Staff of 155 </li></ul><ul><li>230 commission paying UK institutional clients </li></ul><ul><li>Mid cap / small cap market share of 3.5%, in the top 10 </li></ul><ul><li>120 plus retained corporate finance clients </li></ul><ul><li>300 investment funds clients –UK and worldwide </li></ul><ul><li>UK secondary market share of almost 5% </li></ul><ul><li>Ranked as top 5 UK player </li></ul>Significant Opportunities in Fragmented Competitive Landscape - Combined Research of +800 Stocks
  18. 19. Significant Opportunities in Fragmented Competitive Landscape Local Brokers Global Broker Dealers
  19. 20. Landsbanki – Combined Research Product of +800 Stocks Iceland Paris London Reykjavik Dublin <ul><li>Common Research Product </li></ul><ul><li>Common Database </li></ul><ul><li>80+ Analysts </li></ul><ul><li>800 Companies </li></ul>Launched May, 2006
  20. 21. The Equity Story – Good Share Liquidity <ul><li>Landsbanki one of the most actively traded stocks on ICEX </li></ul>Samson Eignarhaldsf. 41.4% Next 30 largest shareholders 39.9% Approx. 29,000 shareholders 18.7% Volume YTD 2007: CAD 2.5 billion (5,678 transactions) 20.04.07 - Share Price 34.5 Market Cap CAD 7bn Share Price Volume ISK million 13,783
  21. 22. Further involvement in Energy Projects <ul><li>Recently Landsbanki formed the company HydroKraft Invest hf. in equal partnership with Landsvirkjun. </li></ul><ul><li>In HydroKraft Invest hf. Landsvirkjun’s experience and know-how in building and operating large and medium sized hydro power plants is combined with Landsbanki’s financial expertise and network of energy analysts to form a strategic alliance. </li></ul><ul><li>HydroKraft Invest will participate in power projects outside of Iceland, mainly in Europe. </li></ul><ul><li>The initial focus is on rehabilitation of existing hydropower plants. </li></ul>
  22. 23. Basic Facts about Utilization of Energy in Iceland
  23. 24. Landsbanki activities in Canada <ul><li>Borrowing </li></ul><ul><ul><li>CAD 300 millions five year bond issue (dec 2006) </li></ul></ul><ul><ul><li>New bond issues and private placement planned in 2007 </li></ul></ul><ul><li>Lending to Canadian companies and Icelandic companies for projects in Canada </li></ul><ul><ul><li>10 clients </li></ul></ul><ul><ul><li>Ammount commited and in the pipelines CAD 250 millions </li></ul></ul><ul><li>Private banking and asset management </li></ul><ul><ul><li>Establishing presence in Winnipeg </li></ul></ul>
  24. 25. Representative office in Canada <ul><li>Representatives office located in: </li></ul><ul><ul><li>Halifax, Nova Scotia with 3 employees </li></ul></ul><ul><ul><li>Winnipeg with 2 employees </li></ul></ul><ul><li>Role of representative offices </li></ul><ul><ul><li>To promote Landsbanki services </li></ul></ul><ul><ul><li>To liaise between Landsbanki in Iceland and overseas clients </li></ul></ul><ul><ul><li>To bring Landsbanki’s specific know-how of the fisheries industry from Iceland overseas fisheries companies </li></ul></ul><ul><li>Products to be promoted </li></ul><ul><ul><li>Trade finance & revolving credit </li></ul></ul><ul><ul><li>Syndications with other banks or financial institutions </li></ul></ul><ul><ul><li>Private banking and asset management </li></ul></ul>