Storebrand Bank

Storebrand Bank offers traditional banking services such as accounts and loans in the retail market and a broad range of financial services to corporate customers within the commercial real estate segment. The bank also offers investment banking services and stockbroking.

The bank aims to actively recruit new customers to Storebrand through its position as a charge-free online bank. The bank has experienced considerable growth in recent years, especially in the retail market.

The bank's business model differs from the general banking market in that a large proportion of loans go to the retail market (almost exclusively mortgages) and corporate customers are mainly in the real estate segment.

Another important difference is that the bank, to date, is not a large distributor of other savings and insurance products offered by Storebrand. Whilst most Norwegian banks sell (and own the companies that produce) savings and insurance products and through this achieve a high level of 'other income', the situation in Storebrand is different.

The life insurance company owns the broad distributions platform in the group, whilst the bank from 2009 has established direct distribution via the Internet and its call centre from which it aims to build up recurring revenues from cross sales of Storebrand group products and services. For now, the bank's key source of income is the net interest margin. Net interest margins have been under sustained pressure in the Norwegian market in recent years.

The bank has in the last few years experienced moderate losses from lending and the loan portfolio is of uniformly good quality. The bank has established subsidiaries, Storebrand Boligkreditt and Storebrand Eiendomskreditt, to utilise the financing advantages of 'covered bonds'. Portfolios of suitable loans are transferred to these companies from the bank holding company's balance sheet.

The most important profit driver in the retail market in the future will be utilising the well-established customer base to increase cross-sales since this will increase 'other income'. Sustained clever and competitive pricing will also be important.

The priority in the corporate market is primarily cross-sales (investment banking) and closely monitoring credit to ensure that lending losses continue at low level.