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Upbeat Föroya Banki Set for New Era |
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Archives -
2007 Archive
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Written by B. Tyril
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Tuesday, 22 May 2007 |
Backed by very strong financial results and a giant international loan to boost liquidity and finance expansion, Föroya Banki scales up business operations — anticipating its own privatization and public listing on the OMX in Copenhagen and Reykjavík.
During its centenary celebrations last year, Föroya Banki announced its intention to be seen as a commercial bank that is “competent, committed, and proactive” — a befitting characterization considering the bank’s strong financial results for 2006. Add this year’s major event: privatization with initial public offering and listing on the OMX Nordic Exchange in Reykjavík and Copenhagen, respectively. Föroya Banki is entering a new century in every sense of the word.
While the bank is growing at very high rate, prospects suggest that trend is on track for new heights in the months and years ahead, in line with estimates of international lenders. Accordingly, to provide liquidity for expansion and development, the bank in early 2006 secured a 1.2 billion dkk loan on the international lending market, brokered by the Bayerische Landesbank, Danske Bank and HSH Nordbank.
“The fact that 21 foreign financial institutions consent to procure this loan to Föroya Banki is a clear sign that confidence in the bank on the international market is very high,” said Föroya Banki CEO Janus Petersen. “The strengthened liquidity will be used to further develop the bank,” he added.
Föroya Banki reported an operating profit of 275 million dkk (36.9m eur / 25m gbp) for 2006, up 20m dkk from the previous year’s 255m dkk (34.2m eur / 23.2m gbp), corresponding to a 7.7 percent increase. Net profits before tax climbed 22 percent to 193m dkk (25.9m eur / 17.6m gbp), rising 35m dkk from the previous year’s 158m dkk (21.2m eur / 14.4m gbp).
Net profits after tax reached 159m dkk while the return on equity averaged 13.7 percent. With a solvency ratio of 23.8 percent, Föroya Banki’s equity now amounts to 1,246m dkk (167.3m eur / 113.4m gbp). The bank’s balance increased by one-eight, up 800m dkk from 6.4bn dkk in 2005 to 7.2bn dkk (966.5m eur / 655.3m gbp) in 2006. In addition, said the Annual Report, a number of guarantees not included in the balance increased by 122m dkk to 359m dkk (48.2m eur / 32.7m gbp) in 2006.
The bank’s lending portfolio grew one-third, up 1.3bn dkk from 4.1bn dkk in 2005 to 5.4bn dkk (724.8m eur / 491.4m gbp) at year-end 2006.
On 2 May 2006, the Lögting (Faroese Parliament) adopted a proposal from the Minister of Finance concerning the selling of a majority of the shares in Föroya Banki, 99.4 percent of which are currently held by the Financing Fund of 1992. The Lögting has expressed its objective that Föroya Banki be privatized in 2007.
“The privatization process is well underway,” the bank said in early 2007, referring to the Financing Fund’s appointment of Handelsbanken Capital Markets, in November 2006, as main advisor for the process. “The advisors are now preparing the sale together with the Fund and the Bank,” a statement said.
The privatization model chosen will entail the listing of Föroya Banki shares on the Faroese Securities Market/OMX Nordic Exchange in Iceland as well as the OMX Nordic Exchange in Copenhagen, Denmark.
It is the explicit goal of the bank to become an “international provider of selected financial services.” In this context, Föroya Banki has been funding several major investments abroad for leading Faroese businesses, including Vónin, Thor, and Christian í Grótinum.
According to Mr Petersen, one of the main objectives in the bank’s strategic growth plan is to introduce new business areas. “This process accelerated in 2006,” he said. “In June we became a member of the OMX Nordic Exchange in Iceland, to which the Faroese Securities Market is affiliated. And subsequently we became a member of the OMX-C in Copenhagen.”
Last year likewise saw the introduction of Föroya Banki’s new Corporate Finance department, designed “to satisfy the need for advisory services in connection with the buying and selling of companies.”
Together with two other investors, the bank established the venture firm Lökir with an eye on upcoming privatizations as well as companies set to undergo generational change and companies in need of capital for growth.” The bank also set up the real estate brokerage firm Skyn, a fully owned subsidiary. As to the insurance sector, Föroya Banki holds 100 percent of the shares in Trygd, which in 2006 yielded a 5.7m dkk net profit after tax, the best result reported since the bank resurrected the dormant insurance company in 1998.
Link to pdf presentation...
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