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Landsbanki expands the mix

Once a small real estate bank, Landsbanki is now trying to build business in new areas such as corporate finance. But concerns about the size of its equity holdings persist

"We have an active central
risk control and apply a
systematic stress test to all
the market risks that the
bank takes on."
Halldor Kristjansson

Landsbanki made one of the two Icelandic assaults on the UK banking market in 2005 – the other being Kaupthing's acquisition of Singer & Friedlander – with the acquisition of merchant bank Teather & Greenwood in February. Landsbanki has already embarked on an ambitious strategy of growing Teather & Greenwood's business, using the expertise it has developed from serving the Icelandic corporate market.

Although the initial benefit of purchasing Teather has been the attractive fee income it contributes to revenues, Landsbanki intends to get much more from its acquisition. "We believe that by teaming up we can expand its existing business by increasing its capital base, allowing it to do more market making and over time pre-equity activity," explains Halldor Kristjansson, CEO of the bank.

Landsbanki also aims to grow Teather through its ability to offer structured and asset-backed products to Teather's existing client base. "Instead of focusing on providing the equity for expansion or being the stockbroker for a company we will be able to offer it both the equity and debt components when a client is expanding or restructuring," Kristjansson says.

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