Saxo Bank

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Saxo Bank A/S

Type	Private
Founded	1992
Headquarters	Copenhagen, Denmark
Key people	Henrik Thufason, Chairman Florian Wendelstadt, Vice-Chairman Kim Fournais, Chief Executive Officer Lars Seier Christensen, Chief Executive Officer
Industry	Finance
Products	Investment Banking
Revenue	▲DKK 2,518 Million (2008)
Net income	▲DKK 339 Million (2008)
Employees	914 (May 2009)
Website	www.saxobank.com

Saxo Bank is a Danish online investment bank. It was founded as an online broker in 1992, under the name Midas Fondsmæglerselskab by Lars Seier Christensen, Kim Fournais and Marc Hauschildt. The name was changed to Saxo Bank at the time the bank obtained its banking license in 2001. Saxo Bank offers capital markets trading through its online trading platform, SaxoTrader, in instruments such as Forex, Stocks, CFDs, Futures, Funds and Bonds. Private Wealth Management services are also offered. According to the bank, roughly two-thirds of the Bank's activities are derived from partnerships with banks, brokerage firms, FCMs and institutional trading partners. One will not find Saxo Bank branches in Denmark or elsewhere, as no traditional banking products are offered. The bank is, so to speak, an online broker with a bank license, and customer funds are held by other banks.

Internationally, Saxo Bank is world renowned for its success in exploiting new business opportunities offered by the Internet. In Denmark's financial community Saxo Bank remains highly controversial, with its founders' documented history in so-called bucket shops^[1][2] and media stories on fictive market rates on the SaxoTrader.^[3] According to its annual report for 2009, Saxo Bank currently employs almost 1000 employees. In September, 2008, Saxo Bank fired about 310 employees, for purely rational purposes. According to the Danish newspaper Børsen,^[4] at the same time a blogger accused the bank of repeated manipulation with its Wikipedia articles.^[5] Later the bank admitted the edits.^[6]

Contents 1 History 1.1 The Nineties: The Midas Era 1.2 The Bucket Shop Report 1.3 The Breakthrough: 2000s 1.4 Success and global expansion 2 Corporate headquarters 2.1 Architecture 3 Ownership and business model 4 Public relations 5 External links 6 References

[edit] History

[edit] The Nineties: The Midas Era

In the early nineties Lars Seier Christensen worked as a broker with Gerald Metals in London, when he met Kim Fournais, working as a currency broker at the now defunct Lannung Bank. As part of their work, the two Danes would speak on the phone up to ten times a day. Later, the two entrepreneurs, now billionaires, described that they both felt like they had found their business soul mate. ^[7] According to Economical Review, The two entrepreneurs founded Midas, initially operating as a broker without obtaining the required licenses, selling option products. When Midas obtained a limited broker license, the news was reportedly received with much astonishment and surprise in the financial sector. With high school as the highest level of completed education^[8], both of its CEOs seemed to lack formal qualification to run a financial institution, according to normal Fit & Proper requirements as set forth by Finanstilsynet. Around the time Midas received its license, the periodical Økonomisk Ugebrev, "Economic Weekly" began publishing an article series on sidegadevekslererne, the bucket shops of Denmark. A group to which the company belonged, according to the publication.^[9][10][11]

[edit] The Bucket Shop Report

During the fall of 1996, Midas and Kim Fournais became front page news when a series of investors suffered devastating losses using Midas' wealth management services. One of the investors was Karsten Ree. Like many of Midas' other investors Karsten Ree was a successful businessman, and one of Denmark's wealthiest men. Reportedly, he felt cheated by Midas into fictive investments. Ree suffered losses exceeding 800.000 DKK in one month.^[12] The article series further uncovered that Kim Fournais had a background in MSC Gruppen, an unlicensed entity that collapsed after defrauding its wealth management customers that was left behind with a 200 million DKK loss. According to the investigation, after the collapse Kim Fournais was subsequently employed by Lannung Bank, and remained with Lannung until it was sold in the collapse of its holding company, Accumulator Invest. Accumulator was owned by the white-collar criminal Klaus Riskjær Petersen, and Kim Fournais was subsequently fired by the bank's new owners. The periodical and later print media describes how employees without formal qualifications or after unsuccessful attempts to obtaining licenses or jobs at established institutions were attracted and employed by Midas, later Saxo Bank.^[13]

On October 10, 1996, Danish national television, DR, aired the investigative journalism programme Rapporten on bucket shops. The documentary showed a sales trader from a bucket shop called Bernstein applying a high sales pressure technique on a handicapped man in a wheelchair, pushing what was presented as allegedly ficitive investment products. Additionally, Kim Fournais was asked point blank if he had stolen customer funds, which he denied.^[2] The result was a massive public outcry and Midas underwent a criminal investigation by the Danish special police unit for serious economic crime, Bagmandspolitiet. Midas hired the high profile star lawyer John Korsø Jensen of law firm Mazanti-Andersen, who convinced the police that nothing illegal had taken place. John Korsø Jensen was later offered a seat on the board of the company. Midas turned abroad to Sweden, in an effort to sell options-based products to a Swedish clientele, and the company now hired Swedish sales people to work in its Copenhagen office.^[14]

[edit] The Breakthrough: 2000s

The company now turned to the Internet, and in 1997 Midas launched its first online trading platform for currencies, ultimately paving the way for Saxo Bank's current success. The first trading platform was called MITS. It was later replaced with what is today the SaxoTrader platform. Midas decided to change its name, and obtained a Danish banking license in 2001, using the name Saxo Bank. Saxo Bank began expanding its online presence focusing primarily on retail forex, and at the same time it moved to new headquarters in the Copenhagen suburb of Gentofte. In the beginning of 2003, Saxo Bank decided to focus its online investment services offering on the relatively new customer segment, retail forex. Since the time-to-market of new banking software products is considered a challenge in the competitive financial services market, Saxo Bank decided to outsource its software development. It chose Reksoft in St. Petersburg, Russia, which worked on the software from August 2003 to December 2006.^[15]

[edit] Success and global expansion

In March 2004, Saxo Bank was in the process of global expansion, when it had to halt its business in Australia^[16]. The Australian Securities and Investment Commission, ASIC, passed regulation requiring an Australian bank license to offer foreign exchange to private customers ^[16]. Saxo Bank had to terminate all its Australian retail clients and passed the accounts to two Australian brokers^[16]. Saxo had particular problems with the Australian authorities, as Danish legislation did not allow the country's regulator to sign a bilateral agreement with them^[16]. On September 17, the issue was resolved, and ASIC granted Saxo a license to trade in Australia.^[16] In the beginning of September 2004, Saxo launched its first US white label partnership, according to director Daniel Darst, after seeing increasing interest from retail traders there.
In 2005, Saxo Bank reported a 39% increase in pre-tax profits, net profits rose DKK 161 million (EUR 21.6 million) to DKK 223 million. In FXweek, the CEO commented, "Once again, we have experienced growth in earnings in our foreign exchange trading and have more than doubled our earnings in other business areas, contracts for difference and futures," Lars Seier Christensen said. "We can only be pleased with our progress, which also reflects the general growth in number of clients during the year." Saxo said the growth was due to direct client business as well as its many white-label partnerships, and at the time, Saxo Bank was still looking to headcount, having already expanded its number of employees by approximately 150 in 2005.^[17] Saxo Bank started buying advertisement space in the FX industry periodical, FXweek. In 2005 it won FXweek's e-FX Award, in the category Best Retail Platform.
In 2006, Saxo Bank started expanding its physical presence worldwide, primarily through buying its own white label partners. Same year, Saxo Bank made significant changes to its structure, as it sought to boost its retail forex business with hires from the Danish business world. Internal restructuring took place, with its former head of marketing becoming head of white label partnerships. Lars Seier Christensen said the changes were made to reflect growth at the bank, "The hires are part of the ongoing process of growing from a small specialized operation to a global business with more than 500 staff."^[18]

In September 2007, Saxo Bank announced acquisition of its Swiss white label partner, Synthesis Bank. In late May, Saxo joined forces with the French brokerage Cambiste, later to be renamed Saxo Banque France. During 2009, Saxo Bank opened offices in Milan, Prague and Dubai, where it broke ground as the first Danish bank to establish a presence in the Gulf Corporation Council region. By year-end, Saxo Bank will have around 13-14 foreign sales offices, up from eight last year, Lars Seier Christensen told Dow Jones in May 2009^[19]. The bank is planning two additional office openings in Amsterdam and in an undisclosed European city later in the year.

In August 2008, Saxo Bank hired Eric Rylberg, former head of the Danish facility service and cleaning company, ISS A/S, as their new CEO. The founders retaining their executive titles as well, and shortly after assuming office, Rylberg implemented a rationalization plan and reduced the staff by around 1/3.^[20] Since then, Saxo Bank has been growing through add-on acquisitions and startups in the hope that face-to-face customer interactions will boost business. At the same time, the Bank has been building an asset management team through acquisitions. In June 2009, the Bank purchased the entire share capital of Capital Four Management Fondsmaeglerselskab A/S and 51 % of the share capital of Global Evolution Fondsmaeglerselskab A/S. The two acquisitions followed the acquisition of Sirius Kapitalforvaltning earlier that year. The asset management activities of the Bank now include management expertise for Danish bonds, Danish equities, corporate bonds and emerging market bonds.

Although Saxo Bank remains an investment bank not dependent on a loan financing business, on October 6, Saxo Bank decided to join the Danish Sector Fund (Det Private Beredskab). As such Saxo Bank is encompassed in the two-year guarantee for all deposits with and unsecured claims against Danish financial institutions, provided by the Danish government. Saxo Bank declined to participate in the Government's Credit Package, saying it would lose money if it received capital from the state-funded Credit Package. ^[21]

[edit] Corporate headquarters

Saxo Bank is headquartered in Tuborg Havn in the northern outskirts of Copenhagen, where the the parent company’s main premises has stood on the shores of Øresund since August 2008. The building, popularly known as the Saxo Bank building, is owned by Carlsberg Properties. Other Saxo Bank offices are located in London, Geneva, Zurich, Paris, Tokyo, Singapore and Marbella.

[edit] Architecture

The Saxo Bank building is a landmark building, designed by Danish architects 3XN. In 2009, it received a RIBA International Award from the Royal Institute of British Architects for its architecture.^[22] Among the building's most characteristic features are its destinctive Silhouette and its shimmering façade of diagonal white aluminum and blue glass patterns, reflecting the sea and sky just as it does Saxo Bank’s profile as a dynamic and modern bank. The interior of the building is a transparent and inspiring environment of open floor plans surrounding a softly shaped, toplit atrium, with a winding main staircase functioning as the building’s spine.^[23]

[edit] Ownership and business model

Saxo Bank is privately held with co-founders Kim Fournais and Lars Seier Christensen holding majority stakes. Private Equity firm General Atlantic bought a minority stake in June 2005. The CEOs pocketed more than $30 million each following the sale of 25% of the business to the equity firm. Florian Wendelstadt and Jonathan Korngold, principal of General Atlantic, became members alongside six others appointed by Fournais and Christensen. General Atlantic holds 25% of the bank, while Fournais and Christensen own 71%. The other 4% is owned by staff.^[24] In September 2007 Saxo Bank announced acquisition of Synthesis Bank, a white label partner of Saxo Bank for four years. Synthesis Bank CEO Charles Henri-Sabet assumed the role of Global Head of Trading in Saxo Bank. ^[25] CEO Lars Seier Christensen argued the acquisition was a perfect fit, matching the Saxo Bank 2010-strategy where presence in the major financial districts of the world is a key factor. In November 2007 Saxo Bank announced a white label partnership with Citibank, its biggest deal so far. In January 2008, Espirito Santo, took a five percent stake in Saxo Bank, making Saxo Bank’s market value at 1.26 Billion EUR.

According to Saxo representatives, their White Label Partnership business accounts for more than half of the bank's revenue providing re-distribution of the bank's core competencies to a broader public through partnerships. Private Wealth Management is a relatively new area of business.

[edit] Public relations

Saxo Bank monitors press and information sources to control the bank's public image. Several times employees have edited e.g. this article to remove objective but critical information concerning the company.^[26]. An IP number from Midas Fondsmæglerselskab, the mother company of Saxo Bank, has recently deleted this paragraph with critical statements from the article and the talk page (IP lookup on 193.178.175.46, revision difference).

In Denmark, Saxo Bank has attracted media attention as a main sponsor of CEPOS University, a free course in free market thinking and the various theories behind the free market, organised by the Danish think tank CEPOS as well as the fact that the company has distributed 10,000 copies of Ayn Rand's novel Atlas Shrugged, the book being given to every new employee. In May 2007, Saxo Bank also donated one million DKR to the Danish centre-right party Ny Alliance, which later changed its name to Liberal Alliance. By then, co-CEO Lars Seier Christensen had joined the party himself.^[27]

[edit] External links

• www.saxobank.com

[edit] References