Little more than a year after coming perilously close to
being acquired by Iceland’s Kaupthing, Dutch banking group NIBC is
enjoying a new lease of life. It has followed up a successful
direct banking launch in the Netherlands by kicking off a similar
service in Germany, reports Douglas Blakey.
NIBC, the unlisted Dutch bank owned by a consortium led by US
investment group JC Flowers, has rolled out its most ambitious
retail banking initiative to date: the launch of a direct banking
service in Germany to complement a mortgage operation set up in the
country in 2007.The bank’s German expansion follows the September
2008 debut of its NIBC Direct brand in the Netherlands, home of
direct banking pioneer ING (see ING
Direct: more customers, less profit).
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Five months later, and with more than €1 billion ($1.26 billion)
garnered in customer deposits, NIBC has crossed the border to
target ING’s most successful international operation, Germany, a
market for ING of 6.7 million customers and total deposits of €63.2
billion. ING Direct has earned almost €1.4 billion in profits in
Germany in the past five years.
NIBC had targeted the mass-affluent and high-net-worth segments
of the market as well as financial institutions and institutional
investors.
“Going into savings with the brand NIBC Direct
is just another step in exploring the retail market in Germany as
an interesting and promising opportunity for the bank. Another,
maybe even more strategic reason is to diversify the funding
opportunities of the bank,” said NIBC head of retail markets,
Germany, Hans-Joachim Michel, in an interview with
RBI.
NIBC’s initial savings rates are a full 100
basis points higher than ING’s German operation and Michel is at
pains to stress the opening rates, 5 percent for its instant access
savings account and 5.5 percent for term deposits, are not
introductory teaser rates.
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By GlobalData“Our aim is to offer attractive rates in the
respective local markets,” Michel added. “Being an online bank
without a branch network we do not have high overheads. Our
organisation is very lean, hence, we can pass on a lot of these
savings to our customers
According to Michel, the bank will benefit
from “transparency and security”, and has undoubtedly benefited
from the Dutch state’s widening of its deposit insurance scheme in
October to €100,000, announced one month after the direct savings
launch in the Netherlands.
“We intend to position ourselves as totally
transparent and without small print, backing up our advertising
message ‘Einfach. Mehr.’ [Simply. More]. It exactly puts across our
message of making things simple for the consumer and still have
more on offer for him. We are doing a lot of online advertising
since we regard internet users as our main target group.”
Michel said the NIBC Direct brand building
operation would be a gradual process, with print advertisements in
the Sunday newspaper Frankfurter Allgemeine Sonntagszeitung and
weekly magazines, including Stern, supplementing its online
initiatives.
“Having attractive rates for term deposits
will also attract a share of customers and I believe open and
transparent communication and being straight forward with clients
will pay off in the long run,” Michel said.
Up against a heavyweight
NIBC is also well aware it is up against a
marketing heavyweight in ING, an operation which has fuelled its
growth with innovative marketing campaigns and boosted its brand
awareness to around 90 percent.
The increasingly competitive nature of the
German market was reflected in ING’s annual results, posting
profits down by 17 percent in 2008 to €297 million.
And last year, troubled Dresdner Bank, since
acquired by Commerzbank, enjoyed an instant hit with its
Dresdnerbank direct24 operation, which debuted in May (see RBI
592). By November, it had attracted more than 500,000
customers, (one quarter of whom were new customers) and total
deposits of €8.3 billion.
NIBC has endured mixed fortunes since its
acquisition in 2005 for a reported €2.1 billion by a syndicate led
by JC Flowers and including ABN AMRO, JPMorgan Chase and Santander.
The original plan had been to float NIBC, a strategy the bank
abandoned as a result of subprime mortgage losses.
Instead, NIBC agreed to merger talks in the
summer of 2007 with Iceland’s Kaupthing, culminating in an
agreement in August for the Icelandic lender to acquire the Dutch
merchant bank in a deal valued at around €3 billion, the largest
takeover in Icelandic financial services history. As part of the
deal, NIBC’s owners agreed to buy the bank’s subprime-related
portfolio at its “fair market value” of $528 million, while the
consortium also sought to benefit from any future upside for
Kaupthing.
Kaupthing agreed to pay €1.6 billion in cash
and raise an additional €1.4 billion in shares and hybrid debt, to
be purchased by the Flowers’ led consortium, giving it a stake of
around 13 percent in the enlarged Kaupthing. But the NIBC/Kaupthing
marriage was never consummated: the troubled Icelandic bank pulled
out of the acquisition in January last year as the international
credit environment worsened.
NIBC turned instead to its own shareholders,
raising €400 million in new equity in the first quarter of 2008 and
reported an interim profit after tax of €110 million, down 17
percent year-on-year. The bank’s funding was further boosted by
tapping into the Dutch state’s €200 billion guarantee system,
raising €1.25 billion in December and a further €1.5 billion in
February of this year.
“NIBC is a healthy bank. Our liquidity
position is sound, without making use of the Dutch state’s
guarantee scheme. However, by using the guarantee scheme, we
broaden our funding alternatives even further,” said Michel.
