Importance of shareholder targeting for the Icelandic banking sector

By Danielle Pamela Neben

In March 2017, the IMF issued a report on Iceland regarding the lifting of the currency controls and the potential impacts:

IMF Concluding Statement on Iceland

It it very interesting to note their recommendation of policies of high quality bank ownership, i.e. finding strategic buyers being both conservative and with a long term commitment to Iceland.

Having been a Member of the Board at Landsbankinn, I firmly believe this is achievable.

What is also encouraging is to see that Wellington Management recently invested 5,26% in N1, a leading fuel distributor in Iceland.

The banking sector has changed positively since the crisis:

• The Icelandic government and the major banks have had credit ratings upgrades to BBB and above
• The Financial Services Authority has been instrumental in restructuring and implementing effective monitoring of the banking sector - they are extremely proactive in both their onsight and offsite reviews
• The banks have successfully raised unsecured credit funding, attracting major institutional investors
• The banks' balance sheets have improved significantly, with some of the strongest equity ratios across Europe and excellent liquidity 
• There has been significant focus on risk management, especially the improvement of credit risk
• All banks have implemented attractive dividend policies
• GDP in Iceland strong as a result of the sustainable growth in Tourism

The current bank shareholders, i.e. the Icelandic government and international investors, have clearly stated that they wish to list the banks - most likely with dual listings in Reykjavik and in Europe.

It is crucial that the Boards and CEOs at the banks invest in their Investor Relations strategies - with the aim to attract the ideal shareholders going forward. 

Doing a gap analysis of the Investor Relations team and the strategy, and the execution thereof is crucial to attract these investors as there is a fierce competition for capital. 

Maresías provides Investor Relations advisory services, where Danielle Neben led one of the top global IR programmes whilst at HSBC: from highlighting the issues from the sub-prime crisis leading to the financial crisis, and up to the successful $17 billion rights issue in early 2009. For more information, please feel free to contact us.