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Copenhagen Business School October 11, 2010

A Strategic Analysis of FIH Erhvervsbank

Name: Pernille Orthmann

Program: Cand.Merc(fsm) Counselor: Carsten Kyhnauv 178.649 STUs corresponding to 79 pages

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Executive Summary

The purpose of this Master’s Thesis is to evaluate the challenges that FIH Erhvervsbank is facing and to find out how FIH’s business model can be improved by dealing with these issues.

The challenges are identified to be internal problems, a ownership issue and a general business model setup which does not take the environmental influences into account.

The project examines the subject by incurring an extensive evaluation of the links between the business model and the stated strategic challenges by approaching it from an internal, an external and a systemic point of view.

The main findings in the internal analysis are that FIH is losing its profit foundation because it is failing in managing the business elements that makes it special.

From the external point of view, FIH’s problems are related to the competitive changes which have evolved during the past years and have been accelerated due to the Financial Crisis.

The conclusion is that FIH’s niche position in the market is diminishing – it is no longer a unique market player and is therefore, in the range of being weakened by further losses of market shares.

Also, the impacts from the surrounding systemic environment – that being both in economical, political and technological terms – are significant because they are determining for how FIH can exist in the market.

The solution which is being proposed is that FIH should redefine its business strategy.

Basically, it should develop its brand, expand its position in terms of products and markets and last, but not least, it should develop a sustainable funding model based on an expansion of its current e-bank platform.

In conclusion, what FIH needs to do is to initiate a new offensive strategy which gives potential for cost advantages and increases its earnings.

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Table of Contents

1 Introduction ... 5

1.1 Problem Diagnosis ... 5

1.2 Problem Statement ... 6

1.3 Choice of Model and Method ... 12

1.4 Delimitations ... 18

1.5 Structure ... 19

2 Presentation of FIH Erhvervsbank A/S ... 20

2.1 The History of FIH ... 20

2.2 Ownership Structure ... 25

2.3 The Management ... 28

2.4 The Organization ... 29

2.5 Markets ... 30

2.6 Products ... 31

2.7 Financials ... 34

3 Strategic Analysis ... 37

3.1 Internal Analysis ... 38

3.2 External analysis ... 52

3.3 Sub-conclusion ... 66

4 Empiricism for Micro- and Macro-Economic Relations ... 67

4.1 The PEST framework ... 68

4.2 Political and Legal Factors ... 68

4.3 Economic Factors ... 69

4.4 Social Factors ... 71

4.5 Technological Factors ... 71

4.6 Sub-conclusion ... 72

5 Empiricism to forward-pointing Short and Long Term ... 73

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5.1 Strategy Choices ... 73

5.2 FIH’s Strategic Options in the Short- and Long-Run ... 77

5.3 The New Strategy ... 78

5.4 A Reflection on the Analysis and on the Results ... 81

5.5 Sub-conclusion ... 82

6 Source Criticism ... 83

7 Main Conclusion ... 84

8 Outlook ... 86

9 Bibliography ... 87

9.1 Books ... 87

9.2 Scientific Journals ... 88

9.3 Articles ... 88

9.4 Reports and Publications ... 90

9.5 Web Sites (www) ... 91

9.6 Other Sources ... 91

10 Appendix ... 92

10.1 Organization Structure ... 92

10.2 Geographical Markets ... 93

10.3 Financial Information for the FIH and SEB Group’s Business Segments ... 94

10.4 ROE after tax and income/cost ratios ... 96

10.5 FIH’s ROE after tax for the years 2000-2009 ... 96

10.6 Debt ... 97

10.7 The Financial Industry in Numbers ... 98

10.8 Overview of Utilized Materials’ Authors ... 104

10.9 The Sale of FIH ... 105

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1 Introduction

1.1 Problem Diagnosis

The Danish FIH Erhvervsbank A/S (FIH) is currently floating in a grey area. Its focus on lending activities and other services for Danish companies has throughout the years manifested FIH’s position in the market as “a well-driven and healthy bank with a solid and diversified loan portfolio”1 (Nielsen, 2008, p. 29).

As of the year 2009, FIH was the 6th largest bank in Denmark (Sørensen, 2009a) and is as such one of the big players in the financial industry. However, the past two years have made FIH fragile – not only because of the Financial Crisis, but also due to other upcoming issues.

I find that FIH is fascinating - not only because of its size, but also because it is facing many interesting challenges.

Over the past decade, the bank has gone through some rapid internal modifications as well as external impacts in its field of operations. In relation to this, the strategic perspectives have also changed, and today, several matters are of great concern regarding FIH’s ongoing activities.

The issues are not something to easily pass by because they relate to several hugely important problems regarding FIH’s business model and strategic decisions. These are crucial to cope with in order for FIH to protect its competitiveness.

The origin of the concerns stems from FIH’s relations to its owner, the Icelandic Kaupthing Bank, which has brought an unclear picture upon the future control of FIH.

Moreover, it has put pressure on the stability of FIH’s business model together with a questionable independency towards environmental factors.

In addition, the impacts of the Financial Crisis and the problems in the banking industry have further stressed the business as outside interests are hugely influencing the bank’s position in the Danish market.

Consequently, the future of the banking sector is currently being discussed and, over time, this can constitute structural changes directly influencing the market players.

1 Own translation of ”en veldrevet og sund bank med en solid og diversificeret udlånsportefølje”

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FIH is, like so many others, exposed to the current Economic downturn, but the basic concern is the fact that FIH is experiencing problems related to its current business model and strategic decisions; downgrading by rating agencies, closure of newly opened activities incurring big losses, problems with obtaining access to capital, exposure to the property market and a net profit below those of the past decade’s.

Alongside the mentioned difficulties comes the uncertainty about the future business platforms and how to secure the market position.

The question is if FIH’s financial downturn is only stemming from the past and current financial turmoil in the global and national economy, or if it is in fact a sign of a failing business model?

What one may ask is what the future of FIH really is? – Yet another decade being a successful market player or a struggle for survival?

1.2 Problem Statement

In this thesis, FIH Erhvervsbank A/S is the pivot and the related issues will be evaluated throughout an extensive analysis and discussion.

It is the aim to obtain an understanding of the business model and the influencing factors in order to be able to perceive the bank in a greater perspective with the future strategic decision-making in mind.

As already explained, FIH is under a considerable pressure – not only from the outside world, but also from the inside of the bank itself, and the problems that can be observed are likely to only be the top of the iceberg.

1.2.1 FIH’s Internal Problems

The affairs of FIH are targeted at a pool of different interests; the bank is involved in several areas - some of which are market of lending, advisory services, and banking. (FIH.dk)

The business concept is fixed on “solid banking combined with a strong customer focus”, (FIH.com) but, this concept does not seem to be the whole truth; the last two annual reports and recent events indicate that the bank might not be as solid as aspired to be.

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Figure 1: The FIH Group’s Net Profit after Tax for 2000-2009

Source: Own creation based on figures from (FIH AR 2010)

The FIH Group’s net profits after tax for the years 2000 to 2007 can be seen on figure 1 which clearly illustrates that these were all at a fairly high level with a seemingly upward trend whilst the past two years have dramatically went down to DKK 184 million in 2008 and only 12 DKK million in 2009.

The first quarterly report of 2010 shows that the FIH Group has earned DKK 200.5 million in the first quarter and expects the 2010-result to be DKK 400 million (FIH Q1, 2010) which is a step up compared to 2008 and 2009, but still not at the level of that of the previous years’.

Despite the improvement, it seems reasonable to ask if FIH is loosing its footing.

The bank itself has a strong base – it is as earlier mentioned, the 6th largest in Denmark, and has for many years provided a net interest and fee income of around a billion DKK. (FIH AR, 2009)

The business segments spans over a fairly broad palette of services that has also been modified during the years. Unfortunately, costs have gone up (FIH AR, 2009) and, needless to say, they must be kept in check in order to secure the future profitability.

In general, it is by Brealy, Myers & Allen stated, that the goal of a company is “maximization of shareholder value” (2008, p. 30) and figure 1 supports that the FIH group has created value for the owners for quite a long time by generating positive earnings, but it has come to slip back without making the same levels of profit.

0 200 400 600 800 1,000 1,200

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

DKK Millions

Year

FIH Group

Net Profit for 2000 - 2009

Profit after tax

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According to Barney, a competitive advantage exists “when it [the firm] is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors”. (1991, p. 102) The maximization of shareholder value is in this way related to the sustainability of competitive advantages.

In relation to FIH, these statements make it interesting to investigate if the bottom line results are really a sign of weakening competitive advantages. Conversely, it could also, in fact, be something else that is influencing FIH’s performance.

Consequently, it must be wondered if the poor results are really a sign of failing strategic decisions or if it is stemming from outside factors which do not lead towards sustainability of competitive advantages and thus, increased value to its owners.

1.2.2 The Problematic Ownership Structure

A big issue to FIH was and still is its relations to Kaupthing Bank, which were one of the main players in the Icelandic Crisis. (Theil, 2010) Ever since Kaupthing Bank was set under the supervision of the Icelandic Government back in 2008, the relationship to FIH has stayed unresolved – FIH is due to its status as a Danish bank separated from Kaupthing’s situation, but is also trapped in its current ownership structure. (FIH Q1, 2010)

As long as the ownership stays unresolved FIH will not be able to get a new owner, but this is the contrary to the interests of FIH; recently it was emphasized by CEO, Henrik Sjøgren, who stated that he believes it is very attractive for the FIH to get another owner. (Theil, 2010) Accordingly, the contradiction is clearly pointing out an issue of importance, because even though, FIH should be sold, is it then enough with a new owner or will the current pressure on the business still exist?

What is known, however, is that the ownership has made it very difficult for FIH to obtain funding on the international lending markets, because everything related to the Icelandic crisis have been black listed. (Theil, 2010)

As stated above, it is crucial to maintain competitive advantages in order to create value.

Thus, FIH needs to make sure that competitive advantages can be sustained or that new ones are created in order to secure the future of its business activities. However, what must also be emphasized is that it is questionable if FIH can solve all of its problems from the inside – the reason being that the implications of the environment are closely connected to the competitive

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position in the market. Therefore, FIH cannot only rely on competitive advantages – it must also take the externalities into account in its strategic decisions.

1.2.3 Market Implications

As earlier stated, it is unknown whether FIH’s financial downturn is actually based on internal or external concerns. As FIH states in its annual report, the bank is suffering from the financial crisis which has affected the business portfolio in several different ways. (FIH AR, 2009)

However, the rest of the economic environment has also been affected and as such the concern points to if FIH due to its market position and business structure is more sensitive toward the macro-economic changes that have occurred. Said in another way, it is of interest to discuss how the competition within the banking industry is influenced and what the future prospects are.

Moreover, structural changes have flooded the financial industry from the regulating authorities – both as control mechanisms as well as attempts to influence the economic climate.

The Danish Government has initiated two guarantee schemes in order to “secure access to liquidity and maintaining an adequate solvency ratio” (FIH.com, 2010).

Bank package I meant that the banks’ debt is covered by the Government and most of the Danish banks entered the agreement. (Danmarks Nationalbank, 2009, p. 13)

In 2009, Bank Package II was initiated which made it possible for credit institutions to receive capital from the Danish Government if certain requirements are fulfilled. (Danmarks Nationalbank, 2009)

The two initiatives were originally intended to make sure that the financial stability in the Economy weren’t destroyed and that the institutions would not end up having credit problems (Danmarks Nationalbank, 2009), but it also proved to be a profitable solution to the Government whilst being expensive for the banks to participate within.

As such, it is by the Danish Ministry of Economic and Business Affairs estimated that the State earns almost DKK 14 billion on Bank Package 1 and 2. Moreover, Bank Package 2 involves an average interest rate of 10.5 % on loans to the banks. (Aagaard, Iversen, &

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Skovgaard, 2010) The government support is therefore quite expensive for the banks that have chosen to redeem the guarantees.

FIH states that it has realized costs of DKK 131.4 million due to Bank Package I. (FIH Q1, 2010) In addition, FIH has also utilized the second one and according to Moody’s, FIH got DKK 1.9 billion in capital from Bank Package II. (Moody's Global, 2009, p. 1) Both of these facts clearly question the sustainability of FIH’s business model.

1.2.4 Funding Issues

Yet another factor which is also threatening is the fact that the rating agencies have placed FIH’s debt to be a possible downgrade from its already not too good category placement.

Moreover, since FIH, in contradiction to other market players, has more loans than deposits, it is crucial for it to have access to the needed funding in the lending markets. (Theil, 2010) As already mentioned, the business model of FIH presupposes lending in the market as a debtor, but when that capital source is not attainable what are the possibilities then? Changes in the business model or strategy easily come into mind, but how can that be enough?

FIH does have initiated an overall funding strategy with the goal of ensuring funding diversification, extend credit facilities and to “focus on investor relations and other external stakeholders, including rating agencies”. (FIH AR, 2009, p. 34)

What FIH seems to have acknowledged is, that it must take in a broader approach onto its strategic considerations.

More interestingly, though, is it to ask what exactly it is that will make FIH successful in the future, because surely, the mentioned strategic objectives are the problems of today, but are they also the solution of tomorrow?

Furthermore, Moody’s has expressed fear regarding FIH’s future when the support from the Danish Government is to fade away. (Moody's Investors Service, 2010) The strategic decisions will thus be vital because FIH has to protect itself when the government interventions come to an end.

To FIH, who has utilized the schemes to support its business, the question is, if it will be strong enough to maintain its competitiveness on the Danish market. The going-concern and potential of the future is unknown, but it can be worth a lot to the strategic decision-making to

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consider what is thought to become key factors for obtaining and sustaining a good market positioning in the future.

1.2.5 Narrowing Down the Problem Area The purpose of this master’s thesis is to:

evaluate FIH’s strategic options on the basis of a theoretical and an empirical framework and thus, creating knowledge

which is to be founded on a visible awareness of the selection and rejection of the different components in the project.

The issues discussed above will be carefully evaluated in order to reach an understanding of FIH as a business.

A reflection upon FIH’s strategic direction should, therefore, as FIH has learned the hard way, not be taken lightly – it is critical to include influencing macro- and micro-economical factors when taking decisions due to the possible effects on the business prospects.

Subsequently, what is central to consider is how FIH controls its business and thus, how it can successfully manage to handle its interests and resources in the ever-changing world of today.

All in all, this leads down to the following sub questions:

 How can FIH’s business model be described and what are the key elements?

 What are the strategic implications of FIH’s business model from an internal as well as an external perspective?

 How do the micro and macro economical development influence FIH’s activities and future business options?

Next, the problem areas discussed above are pinned down to the following problem statement:

What are the strategic implications of the business challenges FIH is currently facing and how can FIH deal with them in order to

strengthen its business model?

The problem statement will be the turning point of this thesis, and the main chapters will build upon an analysis and discussion of the three sub questions which in the end will lead to a discussion and evaluation of ex post and ex ante strategic considerations.

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Afterwards, a strategic recommendation will be set on the basis of the past analysis components.

1.3 Choice of Model and Method

Science consists of two elements; empiricism and theory (Collin & Køppe, 1995) and thus, it is of great purpose to consider and discuss what the foundation of this project is built upon so that a coherent and logical analysis can be set up under the awareness of the conditions under which results are derived.

Consequently, dealing with the theoretical applications of the method and model makes it a logical step to also consider the limitations stemming from the scientific choices on the scope and quality of the project.

It is my aim to provide a thoroughly and clear scientific analysis so that the subject is covered in the best possible way.

1.3.1 Research Design

Research design can be defined as “the way we explore the phenomena which is the subject of the investigation” 2 and the choice of design is highly relevant, because it makes it possible to ensure that the defined problem areas can be handled with the appropriate documentation.

(Andersen I. , 2005, p. 103)

The method approach can be divided into four research types3: the descriptive, the explaining, the critical-diagnosing and the change-related type. (Andersen (red.), et al., 1994, pp. 36-41)

The relevant one here is the critical-diagnosing research type. The reason is that, the project will embrace both a description and an explanation of the subject. Thereby not said, that the explaining research type is not suitable to ensure that solutions or alternatives are set up at some point, because it is strongly emphasized that the word “explain” can also mean “to predict” and thus, it does take a much broader approach than the descriptive one. (Andersen (red.), et al., 1994, p. 37)

However, since the focus in this thesis is also appointed on taking a more specific look at the problem area and thus, to “unveil the reasons, and also the possibilities for changing and

2 My translation of: ”.. den måde, hvorpå vi udforsker det fænomen, der er genstand for undersøgelsen”

3 My translation of: 1) Beskrivende undersøgelser 2) Forklarende undersøgelser 3)Kritisk-diagnosticerende undersøgelser 4) Ændringsorienterede undersøgelser

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improving the circumstances”4 (Andersen (red.), et al., 1994, p. 39), the third research type is the one that is identified to be utilized.

The change-related type, on the other hand, involves the researcher’s own physical participation in influencing and implementing changes in the company and it is as such beyond the scope of this project because I do not have the access to do just that. (Andersen (red.), et al., 1994)

Consequently, the link between the analysis and the resulting recommendation is well founded under the conditions of the critical-diagnosing research type.

1.3.2 Choice of Method Perspective

The methodological outset is essential to consider since it contains the view from which the project will be seen. The starting premise for the philosophical point of view in this thesis is critical hermeneutics.

In general, Hermeneutics is as a philosophical direction aimed at comprehension and interpretation. (Collin & Køppe, 1995, p. 110)

Originally, the term was first applied in the 1600th Century, but, according to Collin & Køppe, Hermeneutics was first really considered being a philosophical direction after Friedrich Schleirmacher lay the foundation by stating it should be applied to:

“not only texts, but also their originators and their opinion, volition and feeling”.

Wilhelm Dilthey further expanded this view so that it came to “embrace all forms of human activity and the products of it” 5 and he also applied the hermeneutic concept of interpretation.

(1995, p. 112)

Overall, Hermeneutics has evolved during the centuries and it exists in several variations. The following three hermeneutic movements are considered to be the major directions (Collin &

Køppe, 1995):

1. Historical Hermeneutics 2. Existential Hermeneutics 3. Critical Hermeneutics

4 My translation of ”… at afdække hvad årsagerne er, samt mulighederne for at ændre og forbedre forholdene”

5 My translation of “… at omfatte ikke blot tekster og deres ophavsmænd og disses menen, villen og følen” and ”… at omfatte alle former for menneskelig aktivitet og produkterne af denne”

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The focus on comprehension and interpretation is by hermeneutics, in general, aimed at a certain apprehension of the relation between subjectivity and objectivity. The way to reach objectivity is described by the hermeneutic circle which is a central element in all variations of hermeneutics. (Jacobsen, Schack, Wahlgren, & Madsen, 2006, p. 167)

The Hermeneutic Circle is based on existing knowledge. The circle itself is never ending – when something is interpreted and comprehended, it happens based on the pre-understanding, and the analysis is carried out through a dialogue. When the resulting interpretation is reached, a new understanding is obtained which means that it is possible to go further into depth and thus, to go through the circle again due to the modification of the pre- understanding. (Andersen I. , 2005)

Thereby, the Hermeneutic Circle states that the shifts between dealing with the parts and the totality is a way to seek truth – and in the end to approximate objectivity.

Figure 2: The Hermeneutic Circle

Source: Own creation, based on (Andersen I. , 2005) , (Collin & Køppe, 1995) and (Andersen (red.), et al., 1994)

The Modern Criticism, with Habermas as one of its most central proponents, goes a step further. An essential point which is conveyed is that Hermeneutics should take the societal aspects into account and as such, provide the apprehension that the world view can be split into two; a system and a life world. (Andersen (red.), et al., 1994)

(Pre) understanding

Understanding of the Parts Understanding

of the Totality

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Andersen explains that the relation between the two ensures that empirical- and hermeneutical aspects are combined – the empirical being the fact that the system is something that is objective where different mechanisms will be in focus whilst the life world is something the individual perceives by itself and therefore subjective. (1994)

Andersen proclaims that the critical perspective underpins the importance of being critical towards the society, but also towards the subjectivity contained by Hermeneutics. (1994) The reason why I find the above method useful is because it allows for relating the economic mechanisms to that of the perceived, interpreted and comprehended view on FIH.

What is assumed, though, is that I, as the researcher, have a certain pre-understanding.

Therefore, my angle of approach is based upon what I have experienced and understood. This pre-understanding will be challenged by the analysis – both from a systemic and a fraction- oriented point of view.

Another implication is that the analysis will be unique due to the fact that results are deduced based on my pre-understanding.

All in all, the method choice is the one that sets the basis for the scientific procedures that will be carried out in this project.

1.3.3 Theoretical Perspectives and Models

A theory is, by Collin & Køppe, defined as “an overall, abstract conceptual framework, which serves as a way to organize and systematize the concrete data”6 (1995, p. 29) whilst Andersen states that “a model is a system of terminologies where the relations between individual concepts are clearly stated”7 (2005, p. 82).

Theoretical perspectives and models are the tools of an analysis – they provide an approach to perceive the point of interest from different angles.The perspectives do not necessarily provide differences in the result but can also be appointed and utilized with similarities in mind. (2005, pp. 73-75)

6 My translation of “…hermed blot menes en overordnet, abstrakt begrebsramme, som tjener til at organisere og systematisere de konkrete data”

7 My translation of ”En model er et begrebsapparat, hvor relationerne imellem de enkelte begreber er klart angivet”

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In this project, the theories of the Resourced-Based Perspective (RBV) and Industrial Economics together with aspects from general economic theory will be utilized along with related models.

The following figure lists the choices and puts up a few key words on each perspective.

Figure 3: Table of the Choice of Theoretical Perspectives and Models

Perspectives Resourced-Based Industrial Economics General Economics

View Internal External Systemic

Key words Resource

Core Competence Key Success Factors Competitive Advantage

Competition Entry/Exit barrier Over normal profit Competitive Advantage

Maximization of Shareholder Value

Macro- and microeconomic factors

Models Barney’s model of Sustained Competitive Advantages

Porter’s Five Forces SWOT

PEST

Ansoffs Model

Some of the main proponents and sources

Barney

Prahalad & Hamel Wernerfelt

Porter D’Aveni

The Danish Bankers Association The Danish FSA

The Danish Central Bank Ansoff

Source: Own creation

The choices will be briefly touched upon in the following, whilst a more in-depth description and discussion will be encircled during the analysis:

RBV and Industrial Economics will both be utilized in chapter 3 in order to make it possible to approach FIH’s firm- and competitive specific issues from different angles.

RBV is chosen because it provides a strong focus on taking a deeper look into FIH’s internal affairs and how the company is dependent on resources from the environment.

Industrial Economics is mainly represented by Michael Porter who put up a framework based on a research of competitive aspects. Today, the framework is widely utilized and the choice of this framework gives an external angle upon FIH.

The focus is based on industrial elements and competitive forces. The models that will be utilized are Porter’s Five Forces which provide an approach to consider the market conditions.

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Moreover, the SWOT-analysis will be utilized as a tool for summing up the vital points derived during the strategic analysis.

General Economic theory will be utilized in the micro- and macro-economic parts of the analysis. The components in this view will be taken mainly from the Danish Central Bank.

In Chapter 4, the general economic theory angle is approached by utilization of the PEST framework in order to obtain a broader perspective on the societal influences from a systemic point of view.

When finally setting up the strategic recommendation in chapter 5, Ansoff’s model will be utilized.

All in all, the theoretical perspectives are chosen in order to obtain an analysis of the subject that is touched upon from different angles with the desire of achieving a broad range of insights and conclusions on the topics – supplementing as well as contradicting ones.

1.3.4 Data Collection

The empirical framework consists of different types of data which have been collected with the aim of obtaining a broad span of opinions, facts, statements and approaches regarding the subject.

In general, data can be described as either quantitative or qualitative. The two types contain very different perspectives on how to approach and accept the data.

The qualitative method is based upon the elements that are not measurable whilst quantitative method takes outset in the opposite because it is believed that only these are objective enough to reach a certain truth. (Andersen (red.), et al., 1994)

In this project, both data types have been collected. Approaching the subject from different empirical angles makes it possible to set up a discussion of whether or not the collected data types support each other or not.

Moreover, the usability of both quantitative and qualitative data is substantiated by the former method choice.

In general, the main empirical basis is FIH. My collection of data is based on external information, because it has not been possible to get access to and gather information from the inside of FIH.

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All information is therefore based on materials that FIH has chosen to release to the public – e.g. annual reports, website information and press releases. Additionally, data from the outside world have been collected in the form of newspaper articles, information from government institutions, scientific journals, books and more.

Consequently, the available data can be characterized as secondary data because they are defined by others. (Andersen I. , 2005, p. 151)

The main point that can be criticized on the sources is measurement problems; only FIH’s public accounting numbers are known, the precise impacts of environmental factors are not clear due to incomplete data and the outcome of strategic decisions can only be observed which means that it is hard to be completely sure that they are the full reason behind detected changes.

The strategic reflections on the subject in the sources must also be considered as being only partly fulfilled. The reason is that the subject covers a very complex area where in-depth knowledge and pre-understanding is a prerequisite for meaningful results.

Nevertheless, the point of view is that although reflections are partly subjective they will, when they are analyzed, approximate the true reality due to the hermeneutical circle.

1.4 Delimitations

The delimitations of this project will, in the following, be set forth to make it clear under which conditions the analysis is carried out.

Firstly, since FIH Erhvervsbank A/S is the center of attention, the business units which relate to it are also of interest8. These are narrowed down to the fully-owned subsidiaries of FIH Erhvervsbank A/S and hence, the analysis will not include other ownership interests and investments in other companies.However, the three subsidiaries; FIH Realkredit A/S, FIH Kapital Bank A/S and FIH Partners A/S will not be analyzed in detail due to very limited availability of information regarding their businesses. The owner of FIH, Kaupthing Bank will only be centered upon in places where it contributes to the analysis.

Secondly, the geographical area of interest will be limited to Denmark. Despite FIH’s relations to Iceland, this country’s influence will not be touched. Moreover, even though macroeconomic events in the Danish Economy are interconnected to other countries’

8 See section 2.2 for further details on the ownership structure

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economies, the analysis will only be seen from the Danish point of view as FIH is a Danish company and have most of its business operations placed and related to that country.

Thirdly, the financial aspects of FIH and its competitors cannot be analyzed in great detail due to the fact that only annual reports and company releases are available.

The figures that are available can be compared to other industry players as they all adhere to the same rules of accounting. All financial company information will be based on book-values from the consolidated financial statements.

Fourthly, in September 2010, FIH was sold to a group of investors with ATP acquiring the most shares. (Appendix 9) Due to the fact that there has not yet been released much information regarding the implications of the sale and since it has happened so close to the deadline of this project, I will not take the sale and the new owners into account in the analysis. Thus, Kaupthing Bank will be treated as FIH’s owner.

Last, but not least, limits are set upon the use of data and materials. New data will not be included in the project after July 2010 due to the short time period left to process the details.

1.5 Structure

The project structure of this thesis is illustrated on the next page.

This project consists of three main parts; introduction, analysis and discussion and conclusion.

The first two introducing chapters set the frame for the area of investigation and provide a basic overview of the bank.

Firstly, chapter 3 contains the main analysis where the internal and external elements are discussed and combined. In the systemic analysis in chapter 4, FIH will be related to the micro- and macro-economic factors with the aim of obtaining an idea of the influences from the environment. Next, chapter 5 will put up analysis components in the perspective of FIH’s future strategic decision-making.

In addition, a brief source criticism is provided in chapter 6.

At last, chapter 7 will outline the results of the analysis and thus, answering the problem statement.

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Figure 4: Project structure

Source: Own creation

2 Presentation of FIH Erhvervsbank A/S

The following sections contain a description of FIH in order to give an overview of the bank’s historical background and current business model. The aim is to lay a solid foundation for the next chapters.

2.1 The History of FIH

FIH is a rather old company and it has gone through many different interesting stages in its life cycle. Its business has evolved throughout its history whilst its profile has been altered as a result of changing circumstances internally in the company as well as environmental influences.

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A historical focus is of interest because it provides an understanding of what FIH was and to some extent, what has made it the company it is today.

2.1.1 The Early Years

In 1958, the company Finance for Danish Industry was established by the Danish Central Bank, Danmarks Sparekasseforening, Assurandør-Societetet and Industrirådet9. The company was set up as a limited joint-stock company. (Jessen C. , 2004)

Originally, it was focused on medium-term lending activities for Danish companies. (FIH.dk) FIH was a unique market player – the initiation of the company was on behalf of market interest parties and FIH was servicing the financing needs that were not fulfilled by other financial institutions.

Furthermore, FIH had a very privileged position in the market – a special law was made which meant that FIH was not alleged to pay corporation tax10 and it did not adhere to the same strict rules as other financial institutions. This meant that FIH was able to raise capital from the foreign exchange market and on the Danish bond market. (Bøggild, 1999)

According to Bøggild, “both elements meant that FIH’s funding costs in comparison were reduced to those of the mortgage credit institutions “11, and as such FIH had a clear competitive advantage in contrast to other market players. (1999, p. 24)

In 1973, FIH got another competitive advantage served on a silver platter; the State subsidized the company which made it able to issue loans with an interest rate below that of the market.

Due to these advantages, another company called Dansk Håndværks Finansieringsselskab was founded with the purpose of providing loans to small corporations and competing with FIH, which only favored big corporations, but the two merged in 1983. (Bøggild, 1999) In 1988, the FIH became listed on the Copenhagen Stock Exchange and was a publicly traded company until the year of 2000. (Moody's Global, 2009)

9 Industrirådet is today known as Dansk Industri which is an industry- and employer-organization.

10 This tax advantage was kept until 1987 (Bøggild, 1999, p. 25)

11 My translation of: “Begge dele var med til at reducere FIH’s fundingomkostninger sammenlignet med realkreditinstitutterne”

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FIH kept is special market position as the lender to the business environment, but during the years, many aspects of FIH’s business model were changed. Most of the original benefits were eliminated again, but it kept its focus on corporate lending.

All in all, the beginning years of FIH was highly supported by the outside world and in 1998, it had 6.000 customers, low write-offs and competitive advantages. (Bøggild, 1999)

2.1.2 The Acquisition

In August, 1999, Kapital Holding, which was owned by BG Bank and Realkredit Danmark, made an acquisition offer to FIH at a bid price of DKK 222 per share. However, FIH’s CEO

“wanted to keep the corporation as an independent alternative to the banks”.12 (Gardel, 1999, p. 2) Kapital Holding was thus, not of interest to FIH, but yet another reason was the bad reputation BG Bank had – FIH did not want to risk losing its legitimacy among its corporate customers. (Andersen L. , 1999)

Luckily, the takeover was avoided by a quick action from Swedbank and ATP, Danish Industry, Dansk Arbejdsgiverforening, LD and Den Nationale Investeringsbank. Together, they owned FöreningsSparbanken which made a bid of DKK 255 per share through the company FI-Holding A/S. (Ritzaus Bureau, 1999)

The purchase argument was based on the easy access to corporate customers through FIH’s market shares. Moreover, expansion into an internet banking platform for private customers was also in sight. (Rosenbak, 1999)

FöreningsSparbanken’s acquisition was approved by the authorities in November 1999, (Ritzaus Bureau, 1999) and it acquired the necessary shares at a total price of DKK 6.5 billion. (Hansen & Mikkelsen, 2004)

The mentioned coalition of other interest parties remained owners of 23% of the company shares. A special option agreement was set up so that the shareholders could sell their shares at a specified price in the future. (Hansen & Mikkelsen, 2004)

Under the management of Swedbank, FIH kept a strong market position. FIH was delisted, as also earlier mentioned and on July 1st 2001 “FIH got the legal status of a bank”, but it did not result in corporate changes. (FIH AR, 2001, s. 19) It was not until 2003 that FIH took changed its name to FIH Erhvervsbank. (Jessen C. , 2003)

12 My translation of “…gerne vil bevare selskabet som et uafhængigt alternativ til bankerne”

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During 2004, FIH set a new strategy alongside a three year plan; the aim was “to develop a healthy strategic Nordic market platform”. This goal was to be reached by setting up three new business areas: investment banking, markets and private banking together with the establishment of offices in Sweden and Norway. (FIH AR, 2004, s. 24-25)

In 2004, Swedbank also took full control of all shares in the bank and hereafter, sold FIH on the 29th of September. The new owner was the Icelandic Kaupthing Bank which acquisitioned FIH for a price of DKK 7.1 billion. (FIH AR, 2004)

2.1.3 In Icelandic Hands

The new Icelandic ownership incurred changes for FIH, but the bank still sought to follow its defined 2004-strategy just slightly modified to the aspirations and characteristics of the new owners. (FIH AR, 2004) FIH took over Kaupthing Bank’s investment banking unit in the beginning of 2005 and it launched new business areas in the coming years. (FIH AR, 2008) Kaupthing Bank was head quartered in Iceland where the financial industry expanded quickly in size and in geographic location. The influence from Iceland on Denmark was a fact rather than a question. However, Icelandic companies made their purchases of Danish companies with high leverage and risks – a strategy that eventually backfired and caused an economic crisis in the whole country. (Friis, Olsen, & Zigler, 2008)

On October 9th 2008, Kaupthing Bank was nationalized. It had collectively, together with two other Icelandic banks, Landsbanki and Glitnir, so much debt that the amount of it

“corresponded to 12 times the Icelandic Economy”.13 The Icelandic exchange closed down untimely, the currency was not traded due to absence of banks and the prime minister was telling the Icelandic population not to collect their money from the banks because it would further depress the situation and possibly result in bank runs. (Rosendahl, 2008, p. 29)

The fact that Kaupthing Bank was set under administration by the Icelandic authorities also entailed that Kaupthing’s operations in other countries were closed down – this was the case in Britain as well as in Sweden. It also resulted in the decision to put FIH up for sale at a price of DKK 7 billion in order to try to redeem assets to raise money for the creditors. (Rechnagel, 2008) As of today, the creditors’ claims remain unresolved. (Kaupthing.com, 2010)

The sales process of FIH was initiated in 2008, but no purchase went through. Competitive and company-specific aspects made the purchase interest decline – in reality it was impossible

13 My translation of “…svarende til 12 gange Islands økonomi”

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for other big Danish banks to take control due to legislation regarding competition and no international banks have come forward despite the fact that FIH provides an entry to the Danish market. (Sørensen, 2009b)

The implications of the Icelandic ownership have remained to be an issue of concern to the consistency of FIH’s business. The consequences of the ownership have so far been that FIH has lost market shares and opportunities. (Sørensen, 2009b)

Also, the international funding market has come to be almost closed land for the bank and the bank’s usual funding sources has dried out. The Financial Crisis in the world economy and its implications on the Danish society did not make it any easier. (Theil, 2010)

2.1.4 The Financial Crisis and the Support Packages

In addition to the many challenges stemming from the Icelandic ownership, FIH was like the rest of the financial industry impacted by the Financial Crisis and several banks experienced bailouts.

FIH also found itself to be impacted by the crisis from several angles; many of its customers were facing decreasing sales and FIH was vulnerable because of its funding problems, the size and importance of the individual customer, and the exposure to the property market.

(Sørensen, 2009b)

To keep things in check, the Danish government decided to intervene in the financial industry.

In October 2008, the first support package was unveiled; Bank Package I meant that the government made guarantees for deposits in financial institutions. (Danmarks Nationalbank, 2010)

In February 2009, Bank Package II was initiated. In effect, the result was that it made it possible to FIH to obtain funding in the market because the Danish State was guaranteeing for its out-standings.

FIHs bonds were upgraded by Moody’s due to the special circumstances of the participation in the Bank Packages. As of April 14th 2010, FIH had utilized the guarantee to obtain DKK 25 billion in loans. (Theil, 2010)

Furthermore, FIH has received hybrid capital for DKK 1.9bn from Bank Package II. (Moody's Global, 2009)

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Nevertheless, Moody’s has expressed worries regarding FIH in the long-term and states that FIH’s financial strength rating has a “negative outlook”. (Moody's Investors Service, 2010) What is of great concern is the time to come when the government guarantees expire, and FIH is, therefore, preparing for the worst possible situation. (Sehested, 2010)

2.1.5 A Look Ahead

The many aspects of the experiences and situations FIH has faced during its long history is by no doubt what has led the business to what it is today; the special market position has been nursed and its business has evolved from offering basic loan products into also having commercial banking, other financial and advisory services.

Today, FIH reaches ”corporate customers, property investors and institutional investors”.

(fih.com, 2010) and its many relationships to the Danish business environment makes it an important market player in its field.

What is very interesting is, thus, to take a much deeper look into the current business model with the aim of characterizing the bank.

This will allow for a more in-depth analysis of the strategic issues and implications which are of concern in relation to FIH’s future existence and way of making business in the days of tomorrow.

2.2 Ownership Structure

The relationship between FIH and its current owner is central to understand, because it contains some vital insights as to the implications it has on FIH’s business.

As earlier explained, FIH has had different ownership structures; it has been a joint-limited stock company, a listed company and now, as a private company.

The following diagram shows the ownership structure; the FIH Group consists of FIH Erhvervsbank A/S and its subsidiaries.

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Figure 5: Diagram of the Ownership Structure.

Source: Own creation, based on information from (FIH AR, 2009) & (Moody's Global, 2009) The FIH Group’s structure is based on the different business areas it is involved in – FIH Partners A/S is focused on investment banking, FIH Leasing og Finans A/S is aimed at issuing loan guarantees and leasing, FIH Finance A/S makes different investments in equities and FIH Kapital Bank A/S is a subsidiary bank in cooperation with ATP. (FIH.dk, 2010) FIH Realkredit A/S has the sole purpose of winding up all existing mortgage credit activities. (FIH AR, 2009)

Besides the subsidiaries, the FIH Group has also made investments in some other companies;

for example Axcel, Fondsmæglerselskabet LD Invest A/S and LD Equity 1,2 and 3. (FIH AR, 2009)

In addition, FIH also holds a 17% share in LRA 1 ApS, a 30% share in DDD Holding A/S and a 30% share in Ejendomsselskabet Borgergade Parkering A/S. (FIH AR, 2009)

Since Kaupthing Bank lost its independence to the Icelandic Authorities, FIH is on its own.

Kaupthing Bank has nothing left to do but to pay its creditors, but it will not take the Danish Bank down too – FIH is “ring-fenced from Kaupthing with no cross default”. (FIH.com,

The Icelandic

Authorities Kaupthing Bank (Moratorium)

FIH Erhvervsbank A/S (100%)

FIH Realkredit A/S(100%)

FIH Partners A/S

(100%)

FIH Leasing og Finans A/S (100%)

FIH Finance A/S (100%)

FIH Aztec Holding ApS

(100%)

FIH Kapital Bank A/S

(100%)

Other Associated Companies

Company Ownership Structure

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2010) Currently, the business of Kaupthing is still unresolved as the creditor claims has not been cleared out and therefore, the Bank is still in moratorium status. (Kaupthing.com, 2010) However, FIH does not incur any risk or changes on the books as a result of Kaupthing’s problems due to the fact that FIH is an independent entity. (FIH Q1, 2010) Despite this,

“Kaupthing’s shares in FIH have been pledged as collateral with the Icelandic central bank”.

(Moody's Global, 2009, p. 5)

Luckily for FIH’s business activities, it is not possible for the Icelanders to drain money from FIH due to Danish Banking legislation. FSA14 has to permit the up streaming of funds, (FIH.com, 2010) and moreover, the fact that FIH is a Danish bank means that Kaupthing’s creditors cannot get access to FIH’s capital - FIH is protected against it. (Rechnagel, 2009) Therefore, FIH has been offered for sale, and it is not only in the interests of the FIH-owners, but also in the interest of FIH, to obtain a change in the ownership. (Theil, 2010)

The current ownership structure is tantamount to the occurrence of problems, because FIH is trapped.

FIH’s goal is, as earlier explained, to create value to its owners, but the profits cannot be drained to Kaupthing Bank’s estate of bankruptcy – and indirectly to pay out on the debt to the creditors. It seems that the only resolution is a sale of FIH, but the question is just if anyone will to buy it?

A change in ownership is preferable, and at the end of 2009, Moody’s expressed that “a change in FIH’s ownership is likely in the short-to-medium term”. (Moody's Global, 2009)

In consequence, despite FIH’s own conviction about risk, it does realize that it is not a good thing to be trapped in the way it is for now – the reason being that both the employees and customers are uncertain of the effects of a shift in the ownership structure. (Sørensen, 2009b).

So, it seems that the outside world is in some ways taking on a different point of view than just accepting the uncertainty of the relationship – especially regarding funding. Perhaps the reason is that other un-definable points also exist?

The question is then, why this is so and if FIH can circumvent it in any way?

14 In Danish FSA is called ”Finanstilsynet”

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2.3 The Management

The management of FIH is a matter which will be shortly addressed in order to provide a perspective on interest parties in FIH’s management.

2.3.1 The Board of Directors

It is the responsibility of the Board of Directors to “sanction major decisions and to monitor that managers are doing well” and, it is the task of the board to represent the owner’s interests. (Thomsen, 2008, p. 18)

In FIH, the Board of Directors consists of 9 members.

The employees of FIH are represented with 3 members. Another 3 persons who all have interests and board positions in other Danish companies are members– two of which are related to ATP; H. E. Hansen as the Chairman of ATP invest and J. Vorsholt as a member in the board of ATP.

The Chairman of FIH’s Board of Directors, H. S. Christensen, is also the CEO of the Confederation of Danish Industries. (FIH AR, 2009)

The last two members are from Iceland; S. Þór Guðgeirsson is the Deputy Chairman and R.

Árnason who is also in the Resolution Committee of Kaupthing Bank. (fih.dk, 2010)

In brief, the interests of the owner (Kaupthing Bank) is of course represented in the board, but links to other market players in the Danish economy also exist.

2.3.2 The Chief Executive Officer

FIH’s current CEO and Managing Director is Henrik Sjøgren who has only held that position since 2009. He holds a position as the Chairman of the Board of Directors in each of the fully- owned subsidiaries including a position in the Board of Directors in Axcel IndustriInvestor Invest A/S. (FIH AR, 2009)

The former CEO, Lars Johansen, was first a member of the board, and got appointed as the CEO and managing director of FIH in the 1990ies. Lars Johansen came to FIH after pursuing a career in the financial sector ending out as the CEO of Copenhagen Stock Exchange in 1996. He became employed in FIH in 1998. It was his policy to keep FIH as an independent competitor to other Danish banks. (Gardel, 1999)

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In June 2009, Sjøgren was promoted to CEO whilst Johansen left for retirement. (FIH AR, 2009) It is unclear if the shift was a wish from Johansen to retire, the poor bottom line results, a strategic decision, or if it perhaps was a combination of several reasons.

2.4 The Organization

The organization of the bank will be shortly addressed in the following, but it must be underlined that all utilized information is external, which means that the organization only can be understood from an external point of view.

2.4.1 Strategic Direction

The basis for the business of FIH is reflected by the identification of what FIH is, what it wants to be and where it wants to end up.

Its overall business idea is the “ambition [is] to be known as an honest, competent and dynamic financial partner for the Danish business environment”15and it is further outlined by its vision which is “to be Danish industry’s preferred financial partner”. (FIH AR, 2009, p.

19)

The mission of FIH is to “make basis for healthy growth in the business life by having the strongest competence, offering the best financial solutions and providing the best advising”16 (FIH.dk, 2010)

The values of the organization is branded as FIHlosophy where the key words are help, think different, clear communication and having a good relationship to the customers. (FIH.dk, 2010)

In 2009, FIH changed its strategic direction. The new strategy was introduced with FIH’s new slogan as “The Focused Corporate Bank” and a strategic focus on “loans combined with related advisory services are the core of FIH’s business.” (FIH AR, 2009, pp. 8, 27)

The strategic direction is important to take into mind because it gives an insight FIH’s beliefs about its business prospects in the long-term.

15 My own translation of: ” … ambition er at være kendt som en hæderlig, kompetent og handlekraftig finansiel partner for dansk erhvervsliv”

16 My own translation of: ”..danner basis for sund vækst i erhvervslivet ved at have den største kompetence, tilbyde de bedste finansielle løsninger og give den bedste rådgivning”

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2.4.2 Organization Elements

FIH itself states that the fact that it has expertise knowledge, experience and a flexible organization are the things that make the bank special. (FIH.dk, 2010)

The organization is characterized by limited bureaucracy, and a strong focus on professionalism together with a high performing environment. (fih.dk)

During 2009, the group had an average of 378.8 full-time employed workers across the different business entities. (FIH AR, 2009)

The organization structure is depicted in appendix 1. What is notable about the chart is that the management has direct contact to all business divisions and that two divisions are targeted at control functions; the Risk & Legal division and the Internal Audit Committee which must be seen as a way to deal with the many legal aspects of the banking business.

The division, Corporate Affairs, takes care of strategic issues, which indicates that the organization at least on a formal level has a focus on strategic decision-making.

Moreover, there is a focus on project management (the Projects & System division) and on IT. It also seems like FIH is trying to take workforce into account from a longer-term perspective due to the fact that it has a division called Strategic HR.

In short, the organization of FIH is focusing on being flexible which very well supports its business profile about targeting its products and services to the individual customers.

2.5 Markets

The markets FIH is engaged within seen from a competitive perspective will be described in the following.

2.5.1 Geographical Markets

FIH’s principal market is the Danish market which, in 2009, consisted of 66 % and in 2008 of 74.5% of the total income from net interest and fee income. (Appendix 2.1)

FIH is also operating in Germany, Sweden and Finland, but only within the business area of property finance. (FIH AR, 2009) Other foreign activities are not reported in detail. However, as the Property Finance’s income from net interest and fee income only accounts for 16.1% of the group total’s, it must be concluded that FIH is engaged in foreign activities with either other business segments or as the bank’s own investments. (Appendix 2.2)

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Consequently, the main geographical market is still the Danish one which is also further supported by the fact that it is the Danish companies that FIH is targeting its business operations at. As stated in section 1.4, the focus of this project is only targeted at the domestic market and hence, other geographical markets will not be analyzed.

Physically, FIH is locally represented in Denmark by 5 offices. The headquarters is located in Copenhagen on the fashionable address of Langelinie Allé. The rest of the offices are located in Århus, Fredericia, Herning and Ålborg. (fih.dk)

2.5.2 Competitive Arena

In general, FIH is operating within the borders of the Financial Industry which consists of banks, pension funds, insurance companies and mortgage-credit institutes. (Finansrådet, 2007) The industry provides financial products and services to different customer profiles and for different purposes.

FIH’s business activities can be further limited down to mainly relating to a part of the Financial Industry – that being the Banking Industry which consists of banks, cooperative savings banks and savings banks. (Finansrådet, 2007)

What is important, though, is to understand, that despite the fact that FIH does not provide the exact same products, as for example compared to those of mortgage-credit institutes’, FIH is still competing against them in the market place, because they provide alternative products to FIH’s customers.

Despite the differences, I will in the analysis in chapter 3 examine the Financial Industry as a whole. Thereby, the analysis of each individual business segment is opted out of because a detailed treatment would be far too comprehensive.

2.6 Products

FIH is as a bank offering a range of money related products. The business operations that are carried out are built upon a broad, but specialized, and complex portfolio of financial products and services.

In general, FIH can be characterized as mainly being involved in commercial and investment banking. The product type FIH historically has been renowned for is its loans to the corporate sector. Today, these are supplemented with deposit accounts and other financial services.

(FIH.dk, 2010)

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2.6.1 Division of Products within the Different Business Segments

The composition of FIH’s business activities is illustrated in the following figure.

Figure 6: The Relation between the Three Business Units and their Product Segmentation.

Source: Own creation, inspired by information from (FIH.com, 2010) and (FIH.dk, 2010) Figure 6 looks different than the organizational structure shown in appendix 1. The reason why the above categorization is illustrated is because it more distinctly illustrates the span of the business portfolio. It is the above segmentation that is utilized in FIH’s marketing efforts–

this division of the business is the one that is clear to the customers and other visitors on FIH’s website. In addition, these segments are also the ones that FIH publishes financial information on in its reporting.

FIH’s products are grouped within the different business units and segments. The three business units; banking, capital markets and corporate finance will be shortly described for each individual segment in the following sections.

2.6.2 Corporate Banking

Corporate Banking has the objective of becoming “the preferred bank of the corporate sector in Denmark”. (FIH.com, 2010) and is focused on advising and financial services to the corporate sector - for example, corporate loans and advising on for example foreign exchange, interest rates, derivatives, loans and leasing etc. (FIH.dk, 2010).

2.6.3 Property Finance

The Property Finance segment is aimed at “professional Danish property investors investing in commercial and rental properties” (FIH AR, 2009, p. 22) - per se, the field is taking care

FIH Erhvervsbank

Business Units:

Business Segments:

Banking

Corporate Banking

Property Finance

Structured Finance

FIH Netbank

Pro

Capital Markets

Capital Markets

FIH Partners

Corporate Finance

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of both advising and lending to property investors which are involved in rental and commercial property investments. (FIH.com)

2.6.4 Structured Finance

Structured Finance provides loans for big Nordic corporations’ and private equity funds’

takeovers and buy-outs of companies - the products are offered to assist the customers in ownership changes. (FIH AR, 2009, p. 24)

The high risk related to this type of financing is handled by requiring detailed documentation and carrying out analysis before the providing loans. FIH is the “arranging bank” and considers itself being a “strategic business partner”. In problematic cases for existing customers, FIH has acquired shareholdings in the companies. (FIH AR, 2009, pp. 24-25) 2.6.5 FIH Netbank Pro

In 2008, FIH established an internet bank offering deposit agreements as its only product.

First, it was only available to private customers in Denmark, but due to its success FIH soon expanded into opened up for corporations and non-Danish citizens. (fih.com, 2010)

The deposit account has a variable interest rate, no requirement of a minimum amount and no BPS other types of payments. (fih.dk) Money can also be tied up for a specific period of time – either 3, 6, 12, 24 or 36 months. The minimum deposit for receiving a high interest rate is DKK 50,000. (fih.dk)

2.6.6 Capital Markets

Capital Markets is engaged within trading in the financial markets and finding financial solutions for its customers – it offers different types of options, investment funds, bonds, and swaps. (FIH.com)

2.6.7 Corporate Finance

Corporate Finance offers investment banking services and it is gathered in the subsidiary, FIH Partners A/S. The unit was founded in 2006 by FIH Erhvervsbank and some partners. Two years later, FIH became the full owner of the unit. (fih.com, 2010)

Corporate Finance works with mergers, acquisitions and other financial services like divestments etc. and has been involved in many big business deals. (fihpartners.dk)

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