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Interview – DNB Bank

Price of success

Norway’s salmon sector has seen a new dynamic but financiers find fresh frontiers

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onfidence in the Norwegian seafood industry is a given for the country’s senior bankers and it’s not hard to see why. Last year turned out to be a bonanza for the sector, with seafood exports exceeding NOK 90 billion (£8.47 billion) for the first time and salmon exports up by 29 per cent to NOK 61.4 billion. With the price of salmon at unprecedented levels throughout 2016, the banks acknowledge that the former cyclical nature of this business has been replaced by a new dynamic. The average price for whole fresh salmon in November was NOK 61.90 (£5.83) per kg, compared to NOK 44.86 (£4.22) per kg in the same month last year, but ‘that doesn’t mean things will be super duper forever’, said Dag Sletmo, senior analyst at DNB Bank. Sletmo, who joined DNB from Cermaq, and Anne Hvistendahl, head of seafood, bring a wealth of experience to their bank, which is among the world’s leaders in the fisheries market. Their extensive knowledge and what DNB calls ‘obligation’ to the seafood industry afford them a commanding view of the sector globally. In aquaculture, Hvistendahl notes the shift in government support in others countries. In 2016, DNB lost one of its Scottish clients when the Scottish Salmon Company announced a refinancing deal with the Bank of Scotland. ‘We have such a large part of the UK market because we finance the big players there, and it is good for the industry if the local banks also take part,’ Hvistendahl told Fish Farmer. ‘I can’t comment on client relationships but it is a huge difference in knowledge between DNB and most other banks when it comes to seafood, that’s for sure. But banks don’t compete

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only on industry knowledge, we also compete on prices and terms . In that respect they have got a better package than they had at our bank. ‘Our selling point is that as industry specialists we can help find good solutions tailored to each client’s unique business profile and that we keep our heads cool also if things turn out less well than planned. ‘We have seen upturns and downturns many times before and know how to get through the difficult times in a constructive way.’ She has observed a political change in Scotland lately, and in Canada, which may lead to more local financing in fish farming. ‘The politicians are much more in favour of this industry than they used to be and that also influences the local banks. ‘It’s always been a factor that the government in Norway has been very much behind the development of the industry and your government has been slower to catch up.’ She said politicians have traditionally favoured older industries in Norway and to an even larger extent in the UK and Chile. But the downturn in the oil industry has forced a rethink. ‘I think the change is based on the oil price. It has hit our bank and I suppose the Scottish banks too if they are into the offshore industry. So it’s good to have a balanced portfolio. ‘Even in our bank, the Norwegian kroner is so linked to the oil price so when there is a weak oil price there is a weak kroner, which is extremely good for the seafood industry, both the fish farming and the wild catch. ‘And that makes this industry counter cyclical; when oil is down fish is good! That makes it a good industry for our bank to take part in.’ The recent agreement between OPEC and non-OPEC oil producing countries to cut output is expected to strengthen the oil price and ease the slump. DNB Bank, said Hvistendahl, predicted oil could soon rise to $60 a barrel, ‘and that could of course strengthen the kroner a bit’ during 2017. But there is no immediate reason for concern in the aquaculture market: today they earn so much money, she said, that it’s a question of earning a huge amount or a really huge amount! With reduced production in 2016, and low production expected in 2017 too, ‘whatever happens to the currency it will still be good or extremely good for them for the next year and part of 2018’. ‘But I think in the long run things will normalise. The price of salmon is linked to other sources of protein. Now we have a kind of super cycle but growth will come sooner or later and then you will have another kind of

Above: Anne Hvistendahl and Dag Sletmo (inset)

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16/01/2017 11:22:35

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Fish Farmer Magazine january 2017  

Serving Worldwide Aquaculture Since 1977

Fish Farmer Magazine january 2017  

Serving Worldwide Aquaculture Since 1977

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