An Icelandic bank is aiming to become the first in its nation's history to open a branch in Asia, the latest step in the country's economic expansion.
Landsbanki, the second-largest bank by market capitalisation in Iceland, has opened a regional office in Hong Kong which it hopes to convert to a branch early next year, aiming to get in on the region's China-driven boom.
"If the 20th century was the century of America and Europe, I am sure the 21st century will the century of Asia," said chief executive officer Sigurjon Arnason. "For every bank that wants to grow, this is a key place to be," he said.
Just 10 years ago the entire income of the bank - which used to be Iceland's central bank - was generated from within the tiny nation of 300,000 people. But now that figure is only 50 percent as the bank has steadily expanded, most recently with the purchase of British brokerage Bridgewell for around 120 million US dollars.
Its assets have increased 10-fold since 2002 to €32.4 billion ($47.5 billion), according to its latest reported figures. The bank's Hong Kong operation will focus on providing finance to small and medium-sized companies, and it already has several clients in the seafood industry based here.
Iceland's surge in the financial sector began when the island joined the European Economic Market in 1994, and got an additional boost with the privatisation of the banking sector in the late 1990s. The country's newfound financial muscle garnered headlines when investment group Baugur launched a series of high-profile takeovers in Britain, including for department store chain House of Fraser and celebrated toy shop Hamleys.
Landsbanki chairman Bjorgolfur Gudmundsson was also the key backer of the consortium which took over English football club West Ham in 2006. The bank has been a key part of the success story, but it was also caught up in Iceland's economic struggles in 2006.
The financial system came under severe strain as large accumulated debts by companies and the banking sector as well soaring asset prices led to concerns about overheating, and prompted the withdrawal of funds by foreign investors. Arnason said that, although it was damaging in the short term, the experience made the bank structurally stronger and also raised the profile of the country's financial sector.
It also acted as a warning about over-exposure and played a part in the decision to stay away from the market for credit derivatives - steering the bank clear of the current subprime mortgage crisis. "It was the best thing that ever happened to us," he said.
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