Fokus Bank - Den Danske Bank in · PDF fileRelationship banking through combining...
Transcript of Fokus Bank - Den Danske Bank in · PDF fileRelationship banking through combining...
Capital Market Day, Copenhagen, 29 June 2000
Fokus Bank -Den Danske Bank in Norway
Svein SivertsenManaging Director of Fokus Bank
Fokus Bank
Agenda
� Introducing Fokus Bank
� The Norwegian banking industry
� Fokus Bank as part of Den Danske Bank
Fokus Bank
Introducing Fokus Bank:
Facts and history
u A regionally based commercial bank
u Total assets of NOK 45.7 billionu Fully privatised in 1995 - acquired by Den Danske Bank in 1999
u Ten Region Banks and 66 branchesu Established in 1987 as the result of a merger between seven regional
commercial banks
u Operates in markets where the bank has long traditions and a strongmarket position
u Emphasises long-term customer relationshipsu Aims to offer a broad range of financial services and solutions
Fokus Bank
Introducing Fokus Bank:
Strategic elements
• Being or having the possibility to become the leading commercial bank in each target region• Professional and regionally based banking are to give growth and strengthened market positions
• Combining a decentralised organisation and local decision making powers with a broad and international product range• Sales-oriented organisation in order to retain and develop the customer base and attract new customers
• Customer contact in the region banks• Adapted and available competence locally and regionally• Access to international solutions and competence• Financial strength and stability - Nordic group
• Clearly defined roles - market operation, back-office and production, management, control and development• In the forefront in using IT in order to gain advantages in terms of quality and cost-efficiency
Regional banking
Relationship banking throughcombining decentralised customer
contact and a broad product range
Professional and internationalthrough adapted and available
competence
Low costs through clearly definedroles and being in the forefront in
the use of IT
Fokus Bank
Introducing Fokus Bank:
Strong regional market positions
Share of Share of Region Bank corporates individuals
Tromsbanken 20.3 10.8
Nord-Trøndelagsbanken 36.0 21.2
Forretningsbanken 33.1 17.7
NordVestbanken 13.0 10.4
Vestlandsbanken 17.2 17.2
Vestlandsbanken Bergen n.a. n.a.
Sunnhordlandsbanken 19.2 12.4
Rogalandsbanken 15.4 8.2
Telemarksbanken 25.2 13.4
Bøndernes Bank 1.6 3.6
Share of Share of Region Bank corporates individuals
Tromsbanken 20.3 10.8
Nord-Trøndelagsbanken 36.0 21.2
Forretningsbanken 33.1 17.7
NordVestbanken 13.0 10.4
Vestlandsbanken 17.2 17.2
Vestlandsbanken Bergen n.a. n.a.
Sunnhordlandsbanken 19.2 12.4
Rogalandsbanken 15.4 8.2
Telemarksbanken 25.2 13.4
Bøndernes Bank 1.6 3.6
Fokus Bank
Introducing Fokus Bank:
The restructuring of Fokus Banku New strategy in 1991
u Cost reductionsu Concentrating the operation to regions where the bank had a
leading market position
u Cultivate the Region Banks as units for sales and marketing -centralisation of back-office and production
u Expanding the product range - capital markets, assetmanagement and insurance
u Management and controlu New credit organisation and credit policy
u Improve risk management and Management InformationSystems
Fokus Bank
Introducing Fokus Bank:
Development of main Balance Sheet items
1991 1992 1993 1994 1995 1996 1997 1998 1999
Customer depositsNet lending
Total assets0
5000
10000
15000
20000
25000
30000
35000
40000
45000
Fokus Bank
Introducing Fokus Bank:
Operating principles
u All customer contact in the Region Banks
u All back-office functions and production to beperformed centrally
u Centralised corporate development as well asmanagement and control
u The subsidiaries’ main task is to support the RegionBanks’ operations with products, services and expertise
u Offer a broad range of financial solutions to corporatesand individuals in the targets regions
Fokus Bank
Introducing Fokus Bank:
Organisation - roles and tasks
Sales and customer contact
Production andback-officefunctions
Management, control and
development
Region Banks
Fokus Service Centre
Top Management/Group Staff
Market focusthroughdecentralisation
Low coststhroughcentralisation
Strong managementand control
Fokus Bank
Introducing Fokus Bank:
The Norwegian operation
The Norwegian Market
Den Danske Bank
Region Banks
Investment Banking
FokusAsset
Management
FokusCapitalMarkets
Nordenfjeldskeforsikring
Fokus Finans AS Danske
Securities
Wholesale Banking
FokusKreditt AS
Den DanskeBank Oslo
Fokus Bank
Introducing Fokus Bank:
Current position
u Customersu 20,000 corporate customersu 200,000 private customers
u Productsu Broad product range
u Distributionu Emphasis on development of web-based banking services for
individuals and corporates
u Competenceu Invested in building formal competence
ð A good foundation to build on
Fokus Bank
The Norwegian Banking industry:
The Norwegian banking market
0
5
10
15
20
25
30Dn
B/Po
stban
ken CBK
UBN
*
Spare
bank
1/Vå
r
Foku
s Ban
k
* Including co-operating banks
u DnB/Postbanken, Christianiaog Union Bank of Norway arethe three dominating bankinggroups in Norway with almost65 per cent of the market(measured as share of totalassets)
u Norway is predominantly aretail banking market
Fokus Bank
The Norwegian Banking industry:
Macroeconomic development
u Marked upturn in Norwegianeconomyu Higher net export - oilu Higher market growth
abroad gives higher exportu Mainland demand is
growing
u Low level of investments in2000u 2000 will be the bottom
yearu Investments will grow in
2001 - both in the oilsector and in the mainlandeconomy
0100999897969594939291908988878685
6
4
2
0
-2
6
4
2
0
-2UKEFOKUS.KNR0011nok$
Marked upturn in aggregated demand... % y/y
GDP
Private consumption
010099989796959493
30
20
10
0
-10
-20
30
20
10
0
-10
-20UKEFOKUS.KNR0012nok$
..and investment bottoms out this year% y/y
Total investment
Investment in mainland industry
Fokus Bank
The Norwegian Banking industry:
Macroeconomic development
u Higher general pressure in theNorwegian economyu Tight labour marketu High credit growthu Weak kroneð Inflationary pressure
u Increased interest ratesu More aggressive
monetary policyu Too expansive
budgetary policy willlead to further tightenedmonetary policy
009998
9.00
8.80
8.60
8.40
8.20
8.00
112
110
108
106
104
102
NOK/EUR Index
NW.KALLE.VALUTA.KURS$
Weaker krone adds to inflationary pressure..
Trade-weightedexchange rate>>
<< NOK/EUR
20001999
7.5
7.0
6.5
6.0
5.5
5.0
7.5
7.0
6.5
6.0
5.5
5.0
% %
NW.KALLE.VALUTA.FOLIO$
..and central bank tightens up
Deposit rate
New forecast
Previous forecast
Fokus Bank
The Norwegian Banking Industry:
International developmentsu Increased internationalisation and globalisation - international
flow of goods and capitalu EMU amplifies the development - Norway will have to adjustu Cross-border competition - the demand for high yield on
investments is high and rising - reflected in the equity and bondsmarkets
u Norwegian banks experience increased competition from foreignplayers - the competitive climate has changed - reduced interestmargins
u Increased economies of scale and new IT enable mass productionof financial services and lower-cost distribution
u Mergers between financial institutions give larger entitiesinternationally
u Market domination is becoming increasingly more important
Fokus Bank
The Norwegian Banking Industry:
The Banks’ role
u The banking industry is an important part of the corporateinfrastructure
u An internationalisation of the corporates demands aninternationalisation of the Norwegian banking industry
u A global economy demands banks that are characterised by:u Professionalismu Competence regarding the Norwegian market combined with
international solutions, competence and networku Information technology expertise
Fokus Bank
The Norwegian banking industry:
Consolidation necessary
u The largest Norwegian banks are becomingincreasingly smaller compared to their Nordic andEuropean counterparts
u Difficult to compete in markets where size mattersu Wholesale bankingu Investment bankingu Asset managementu International cash management
u Retail banking is still highly profitable - requires strongmarket positionsu Regional consolidationu Norway is overbanked
Fokus Bank
Fokus Bank as a part of Den Danske Bank:
A new phase for Fokus Banku Fokus Bank is at the beginning of a new phase
ð 1987-1991: Strategic aim to become nation-wide,Norwegian economy in difficulties, banking industrycrisis
ð 1992-1995: Survival strategy, trimming andcultivation of the operation
ð 1995-1999: Privatisation, strong regional bankingfocus, structural activities in order to solve futurechallenges
ð New phase: Fokus Bank is to strengthen its position in theNorwegian market
Fokus Bank
Fokus Bank as a part of Den Danske Bank:
The work so far
u Fokus Bank has been a part of Den DanskeBank Group for thirteen months
u The integration has so far focused onu Routinesu Reportingu Risk Managementu Introducing group values and cultureu Joint designu IT-integration - joint platform from October 2001
Fokus Bank
Fokus Bank as a part of Den Danske Bank:
Increased income and efficiency
u Preparing for a new growth phaseu Product range
u Asset managementu Corporate and retail real estateu Internet banking - corporate and retail
u Geographical expansionu Areas with high population density and high level of
economic activity
ð In the short term - increased costsð In the long term - increased income and efficiency
Fokus Bank
Fokus Bank as a part of Den Danske Bank:
International solutions combined withregional market focus
Den Danske Bank hasü International networkü Broad range of products and
solutions for corporatesü International cash management
solutionsü Strength within the capital markets
and asset managementü Modern and customer-oriented IT-
solutions
Internationally competitive product range combined with regional and local distribution and market focus equals
a strong banking partner
Fokus Bank hasü Long traditions as banking
partner for the regionalcorporates
ü Local competence and decision-making
ü Local and regional market focusü Focused marketing strategy
emphasising the strong relationsbetween customer and bank
Fokus Bank
Fokus Bank as a part of Den Danske Bank:
Cost of distributionThe development of new distribution channels must be financed through reduced cost of traditional channels.
Express banking
Other face-to-face
Telephone
ATM/PC based
Branch
Challenge
Total distribution cost
Cost
1995 2005
(Source: Coopers & Lybrand, illustrative)
Fokus Bank
Fokus Bank as a part of Den Danske Bank:
Future challenges and growth areasu Strengthen regional market positions
u Gain market shares within traditional bankingu Develop the Region Banksu Emphasis on the large markets in Greater Oslo, Bergen and Stavanger
u Enter new marketsu New geographical areas
u Strengthen our position within asset managementu The main growth area in the Norwegian marketu Combine international and Nordic products with domestic distribution
u Develop and market competitive WEB solutionsu Use Den Danske Bank Group solutions where applicable
u Establish core values as an integral part of the organisational identityand culture, develop a communication platform and increase themarketing effort