Fresh off the plane from Denmark, Kim Fournais talks rapidly, his passion unmistakable. He is in celebratory mood. “Saxo Bank is 18 years old today – we are old enough for a driving licence!” Evidently, to Fournais the company he helped found is still young. “I love it. I love what we’re trying to do. I log in to our platform and I get a lot of ideas daily.”
Many traders don’t realise how much they rely on the Danish investment bank, which provides white label services to other financial institutions, customising trading platforms based on their underlying technology. Saxo Bank’s net profits in the first half of 2010 were DKK 551m (£62m). The bank’s clients’ collateral deposits are DKK 26.6bn, while Saxo Asset Management has DKK 28.8bn under management. Since 2008 the bank has opened new offices in nine countries. It is applying for a separate licence for its London office to stay local and flexible.
Saxo Bank began in the friendship of Fournais and Lars Seier Christensen, who was based in London, working as a broker for Gerald Metals. It wasn’t an easy start, as Fournais remembers: “We had $100,000 in capital to start – it would be hard to do it like that today – we had just three and a half months to get a positive cash flow.”
For Fournais and Christensen, it was a chance they had to take. Their entrepreneurial drive has always been matched by their libertarian beliefs. A copy of Ayn Rand’s novel Atlas Shrugged sits proudly on display in the office where we talk. The book is so important to Saxo Bank’s founders that they arranged a Danish translation and gave copies out to their employees. They are outside Denmark’s intellectual mainstream: it is known for social democratic politics. But they were able to see opportunities that conventional opinion missed. They achieved positive cash flow within just two months.
“We are always competing on product, price and service,” says Fournais. “We saw an opportunity in Denmark. It was not optimal conditions but we had a low cost base and we provided a service that was closer to clients.” Saxo Bank’s drive to create greater transparency soon came into its own with the arrival of the web: “We hadn’t heard of the internet when we started. But we saw E-Trade and others in the United States and in 1995 we began discussing how to use it.” This year, Saxo Bank launched a new online equity platform and in June they won the title of the world’s best white label solution provider. They have 200 IT staff in their Copenhagen office, and more in India and the Ukraine.
Still, Fournais is clear where his biggest problem lies, and it isn’t the challenge of managing giant IT projects. “Saxo Bank’s biggest challenge is the regulatory environment. Regulation is important, but over-regulation is not creating a safer or more sound system. Rule changes are very resource intensive for us.”
Recent cutbacks at Saxo Bank have certainly helped to reduce other costs. “We had a little too much ‘social democracy’ at Saxo Bank,” Fournais jokes. They brought in “someone with a sharpened pencil”, Eric Rylberg, to execute greater corporate discipline. That hard decision has brought their best ever half year results.
Fournais is less optimistic about the power of politicians to stop running up unsustainable deficits. “A private person couldn’t keep buying cars with money they don’t have. At least in the UK you are trying to change. In Denmark we are paralysed. Politicians wait for the platform to be burning, so there could still be a more drastic development.”
Yet in Asia, he sees the passion that drove his own success: “‘Political correctness’ won’t help the welfare societies of Europe. People become complacent. In Asia there are people who work hard for what is a low-paying job here. They want it as much as we did when we started.”
Fournais has clear advice for anyone in the City with ambitions to follow in he and his partner’s footsteps: “You need persistence. You have to burn with everything you’ve got. Then from nothing you can be part of changing the environment.” Still a man in a hurry, burning with energy and looking for new frontiers, Kim Fournais has clearly only just begun.