with Jan Rasmussen, Nordea Markets
Global Finance: What, in your opinion, will be the chief challenges for investment banks in 2015?
Jan Rasmussen: One challenge, if you look at the economy as a whole and business activity, is that it doesn’t grow, and that is really the major challenge. Each and every institution needs to extend what they are doing and to some extent to extend their market share. We would like to do that. If you look at our business, there are areas where we could gain some market share.
Second—diversify. Now we’ve had an IPO window for 18 months, maybe two years, and we’ve been very active in that business, but as we all know IPOs come and go, and when they are away, you need to do other types of business. So to cover the whole product range and be relevant to your clients in different types of markets—that is essential, at least for us.
GF: What is the M&A outlook for 2015, and how might investment banks best serve their dealmaking clients?
Rasmussen: We’re not really able to forecast any growth there. On the other hand, if you look at the private equities sector, they have a lot of dry powder—so they are looking to do more investments. If you look at the leverage ratios of the main corporates, it’s very low—a lot of them have quite nice amounts of cash, and I assume they would like to somehow put it to work. Banks can best serve their clients by being forward-leaning to understand what is happening in the market and what can be done, especially if you look at the financing part of it.
Be very close to your clients, try to understand their agendas and what they really want and then assist them in the transactions that they decide to do. By working very hard every day, trying to assist your core clients—if you do that over time, it yields results.
GF: How do the Nordic markets compare and compete with the rest of Western Europe?
Rasmussen: It is, of course, smaller, but maybe it is more stable in one sense, at least up till now. If you look at the four major economies, they have all done okay, with stable systems, if you compare them with politics, demographics, or whatever. How long that continues remains to be seen.
Finland has challenges in terms of continuing growth, while Norway is influenced by falling oil prices, and it remains to be seen how that will affect our markets. Scale is also a major issue.
You need to be in the market all the time, and the Nordic market is not that big, so covering all of the Nordic countries gives you an opportunity to do more transactions and understand the market better, and that, in turn, helps to make you more competitive—creating a positive circle.