The chairman of Banque Havilland, who acquired Kaupthing Bank Luxembourg last July, explains why running a private bank is not a difficult thing to do.
“We have the cleanest balance sheet in the world today”
Jonathan Rowland, what is Banque Havilland and who is behind the structure?
“Banque Havilland is owned 100% by the Rowland family, and it was created out of the merger of Kaupthing Luxembourg, where we assumed a number of assets and liabilities of the old bank into a new vehicle, which became Banque Havilland. Our plan is to focus purely on private banking and wealth management for either individuals or families based around the world through our network.
Can a fund management company succeed in running a bank, where bankers failed to do so? How would you differentiate on such project?
“I think at this point that the family has been in business for 45 years and we have been primarily involved in financing and operating businesses around the world. And one of these we were running more recently was the fund management business. We do not view the running of a bank of this nature as being a difficult thing to do, because we will run it very conservatively, on a very low risk model. We are not intending to lend money. A very small piece of the business will be lending. This is purely a private bank for wealthy families and individuals, who are not usually active in the management of their assets.
Is running a bank different to operating a business like commodities, or financing mining companies?
“I don’t see any differences in terms of operations between, for instance, running a funds management business or a commodity business. We have many different positions in many different places around the world, which are more complex than a relatively conservative small private bank.
You said in a previous interview that you might take a view on buying a subsidiary of a large bank company. This was in February 2008. Why did it take so long to engage this project?
“Initially we were looking forward to establish our own bank.
And that was a process we went through during the years 2007 - 2008.
During that process this opportunity came up and took us somewhere quicker. We could then get the banking license faster, and we had a platform and people that already existed. So it made sense to start up a new situation and establish this new bank.
What will Luxembourg bring to your strategy and to the group?
“I don’t think that we were targeting Luxembourg. Initially, we favoured Switzerland more. The biggest advantage that the Grand Duchy brings us is the EU. And we were previously looking for a banking scenario that was more relevant than Switzerland. And when this opportunity came up, it didn’t really matter which jurisdiction it was in. Having the opportunity to operate from an EU country is obviously a huge plus for us.
Concretely, what will be your mission and what will be your expectations?
“I think the initial stage is to stabilise the bank and talk to our clients about what our plans are going forward. Beyond that, we see it as a unique and great opportunity to gain customers throughout the world and to inform this client network of our 100% safe place to keep their money: people who haven’t been sure over the past two years due to various bank failures.
What are your plans for the next three to five years? How do you see the growing of the bank?
“I would think that within three years our deposit base, currently about 400 million euros, will be in the multiple billion euros. That is a position we are reasonably comfortable with.
Do you plan to expand from Luxembourg throughout Europe or the rest of the world?
“The place we would like to be present in the future is the UK. I think that we probably look to move back into Belgium. We will there start from the beginning. We have a very strong relationship with the Middle-East, so we will have something there. I think we will also have something in the Far-East, although whether it will be Singapore or Hong Kong, we are not sure yet.
How do you differentiate on the private banking field?
“The advantage I think we have today is our totally clean balance sheet. We have the cleanest balance sheet in the world today as a bank. And that gives us an advantage over anyone else in the market. We have no legacy problems. We also already know who our main clients will be. We know them from the past. Therefore we already have the business. So we can create something unique, very quickly, with this network of new clients.
What makes you assert that you have the cleanest balance sheet in the world today?
Because the transaction that we did, was created on the bank on day one having every single depositor in the bank simultaneously withdraw. No other bank in the world can do that today. We are the only bank that can create a complete clean balance sheet that could stand a complete deposit withdrawal on day one.
How much latitude will you give to Magnus Gudmundsson, the former CEO of Kaupthing Luxembourg and now Banque Havilland’s actual CEO?
“The decisions of the bank going forwards will be lead by the board. The board is made up of our family. Magnus will report to the board, on each and every decision regarding financial and reputational risk. It basically means that he can go on managing his people, which he has been doing very well during this difficult period.
What will you bring from your group culture into this new bank, and what will you keep from Kaupthing?
“We will keep nothing from Kaupthing’s culture at all. And will we change the culture 100%, from the way the bank was run, to the way we run our businesses, which is very professionally, very conservatively, and we watch the out cost very carefully. The bank’s staff will start to adapt to that even in a very short period of time.”