Expanding, but maintaining its Nordic flavour

A giant green cube on the outskirts of Luxembourg is the unexpected location of the hub of Nordea’s fund distribution operation, which has both a new boss and a new range of alternative investments. The unusual building is a fitting home for the business. Utilitarian, yet modern and innovative, the structure could be a metaphor for Nordea. Most appropriately of all, it was designed by a Scandinavian.

Talking to PWM in his office on the top floor of the cube, Bjørn Barbesgaard, the firm’s new head of fund distribution and managing director of Nordea Investment Funds, reveals the intriguing dilemma he is currently facing over how to take the business forward.

The 48-year-old Dane joined the firm last year, working on the private banking side. In May 2005, he switched roles within the company to oversee the sales of Nordea’s funds through both the in-house bank channel, and through external distributors. His experience at the sharp end of distribution seems to have prepared him well for his new role. But, while he has joined a funds distribution operation that is at the peak of its success – a good situation in theory – it can be difficult to make your mark when there is nothing much to fix.

Switching roles

This has proved a dilemma for Mr Barbesgaard. “The question on my mind at the moment is this: should we maintain things as they are or should we do more?” He asks. “Currently, the jury is still out.”

Certainly, the firm seems to have done well with its existing strategy. It sells its funds throughout Europe and has registered the Nordea 1 Sicav umbrella range of funds for distribution in 13 counties, starting with Luxembourg in 1989, encompassing markets such as Germany and the UK in 1997, before adding most other key European economies in 2004.

Overall, Nordea manages ?285bn in assets. The Nordea 1 umbrella contains 15 fixed income funds, 12 growth funds, five value funds and one absolute return fund. It recently added three hedge funds to its product line-up: long/short European equity, arbitrage and managed derivatives. The company boasts some of Europe’s most popular funds, such as the Nordea European Value Fund – currently holding $2.45bn (?2bn).

Mr Barbesgaard reveals that there has been a shift in the popularity of particular product lines: “We have had a strong American value fund for a long time, but now we are seeing huge growth in our European funds clients.”

Nordea sells directly to retail clients only in the Nordic market, where its brand is well known to individual investors. “If we wanted to get into the retail business outside the Nordic region, we would need to be incredibly focused and take on significant numbers of new staff,” explains Mr Barbesgaard.

Elsewhere, funds are sold through third-party distributors, primarily banks and independent financial advisers (IFAs) of all sizes, including firms such as Epicon Investment in Vienna and LCF Rothschild in Paris.

Mr Barbesgaard says much work goes into servicing the different needs of these customers and marketing products to them. “We provide tremendous educational support to clients, especially the smaller offices. We also have an in-house marketing department here in Luxembourg. There are 12 people downstairs who do nothing but events, TV, billboards, and so on. We had a huge campaign in Germany last year where in the 13 biggest cities we had adverts on billboards, radio and TV. In Austria we even have a Nordic day where we bring in staff from up North and they explain our investment strategy.”

With this successful distribution model in place, the question Mr Barbesgaard is facing today is whether to change anything or not. He ponders: “Should we maintain the relatively narrow product focus? We have added a few value funds and hedge funds. Should we do more? Then there is the question of whether we should do even more in ‘growth’. We have a larger range of products for sale in the Nordic region, but do we want to sell them further afield? Or should we stick to the products that we’ve built our European reputation with?”

Another issue he is mulling is whether to increase the number of local offices. “Should we continue establishing satellites or should we be a ‘suitcase’ bank, where our salesmen travel into countries from the outside? At the moment, we are focused on doing more of the same.”

Increase new business

But it is clear that this could change soon. Mr Barbesgaard’s has plans to massively increase the new business development effort by increasing the salesforce by 50 per cent. The new recruits will be based inn Luxembourg, Germany, Vienna, Paris, Zurich and Geneva. Nordea already has offices in all of these locations.

He is also certain that Nordea should open offices in two new locations: Milan and Madrid, which signals a push for Southern European customers. “London is also on our radar screen, but how we are going to tackle that market is far from clear. Our infrastructure is slim, but we do have presence throughout Europe. Local contact and being in the market every day is not the only way to do it.”

The company is also making a bid to be seen as slightly less Scandinavian and more international. Mr Barbesgaard says that a key step on this road has been the recent appointment of big funds industry name André Roelants as chairman of Nordea Sicav 1. “This really represents a shift from the past. Before we had a Swedish fellow in this job. Now we have probably the most senior banker in Europe, and we are showing that we are truly connected globally.”

Mr Roelants, who was appointed to the post in March, has been at different times the chairman, president and chief executive of Clearstream and has also worked in high profile roles at Deutsche Boerse and Dexia. He replaces Klas Holmberg.

One thing Nordea will not change, says Mr Barbesgaard, is its policy on outsourcing. “We are unique in that we do everything ourselves. Managing the distribution and processing of funds is handled entirely in-house by our infrastructure of 320 people. We want control over everything. We do it this way because it is the best way to look after customers and because it works.”

Another element he is sticking with, despite the move to become more international, is what he calls the ‘Nordic touch’: “It’s an attitude, a way of doing things that is straightforward and involves no nonsense. Every time we see these statistics about where people are the happiest, Scandinavia is always up there. It’s about good design, quality and simplicity. These are the characteristics associated with the Nordic people and it’s something that we are actively using in our marketing strategy.”

Bjørn barbesgaard: CV

2005: Head of fund distribution, Nordea Investment Funds, Luxembourg.

2004: Joins Nordea as Executive Director and part of the Nordea International Wealth Management and Funds management team.

1998: Joins Dexia Banque Internationale à Luxembourg in mergers and acquisitions, later becomes director with responsibility for International Private Bank.

1989: Bank of America

1982: Chase Manhattan Bank, Copenhagen, relationship manager and head of institutional banking

Education and training: Banking apprenticeship with Sparekassen SDS, Copenhagen (now part of Nordea). Served with Danish Royal Navy, studied law at University of Copenhagen, holds a degree from the Danish Banking Academy.

Personal: Born in 1957 in Copenhagen, lives with his wife and three children in Senningen, Luxembourg.

The imposing cubic headquarters of Nordea in Luxembourg