Fifteen years ago, three young guys not all even out of university in far-away Iceland decided to come together and set up a company.

They did not know what they were about to do and nobody told them that what they were trying to do was impossible.

On the other hand, those were early days for the internet and these three guys came up with the idea of setting up a platform to collect and distribute credit information on companies as well as individuals.

Reynir Gretarsson was one of the founders of Lánstraust hf., the predecessor of Creditinfo Group, in 1997. He has been the CEO of the company from then.

A law graduate of the University of Iceland in 1997, he was admitted to the bar as a District Court barrister in 1998.

Apart from being a specialist in data protection laws, he has also experience in programming and database structuring. He has written manuals on credit management both in Icelandic and English, as well as many articles about data protection and credit management.

Reynir has been a speaker in various conferences and seminars about credit management, in Iceland and other countries. Reynir was also co-founder of a few other companies, with operations in IT and in real estates. He has also served as a member of board of several companies.

After about a year and half of hard work, the market had accepted Lánstraust hf., to the extent that the financial community made the founders offers for their shares. Reynir remained in his position, holding a minor share, until March 2008, when he purchased back majority of the company. 

In 2002 year, Reynir tried to interest the board the company needed to expand abroad. The other directors were not really keen on the idea, but Reynir persuaded them to allow two directors to come with him in an exploratory trip to Mosta, Malta where he intended to set up shop.

The offer persuaded them to come and thereafter the joke in the company was that it should hold an AGM in Malta every so often.

The board then accepted Reynir’s idea of opening up shop in Malta. Malta was a small market, anyway, and not much harm could come to the company here, they felt.

So Reynir held talks with MFSA and with the banks and by July the company had opened in a small office in Sliema. Right from the beginning, the company had good people working for it. By November, the product was up and running and this is what is being celebrated these days – the 10th anniversary of Creditinfo.

After a few months, Reynir moved to another office to allow the team in Malta to get used to him not being around, without him being 4,000km away. There he created a strategy and business plan for making the small Icelandic company a multinational one. 

His business plan, which he then presented to the board, was to use the Malta experience and open up in 10 countries. The plan was presented to the board and it accepted it.

Today, the company has 250 employees and is present in 11 countries. It has grown ten-fold both in sales and in employees in the 10 years since opening in Malta.

Today, the company is repeatedly invited to tender for IMF and World Bank tenders. It is one of a very elite group of companies on credit rating.

Even so, the company, along with Iceland and the world, had its own bad moments. However, it was always ahead of the curve.

By 2007, it was present in 27 countries and had registered growth averaging 72% every year from the beginning. That was when it began hitting the outer barrier of its resources – financial, human resources and IT. The company decided to restructure. It sold those parts of the business further away from its main operations and focused on the rest.

The company also decided it would not try to enter the bigger markets, such as Russia, India or China and instead it would focus on smaller markets like Malta or Jamaica where one could look people in the eye and gauge their credit worthiness.

So in 2007, the company started to change its strategy. Had it continued with its previous one, by the next year, when the Icelandic economy and banks collapsed, the company would have been buried, like so many others. There was this feeling, Reynir says, that the party was coming to an end. Something had to give.

Then, of course, the problem in Iceland became the worldwide crisis. That was, Reynir argues, precisely because the principles of sane credit lending were thrown out the window.

With the previous credit scheme, banks would not lend to those who ranked less than a set level. But some wise guys found that if money was lent to those below this set level, there was a huge market for credit there. Many banks went that way, despite the amount of people who did not pay back their debts. Presumably, many bank managers were more eager to get the bonuses for lending than care about what happened to the sums that were lent.

A case in point, CreditInfo was present also in Greece until last year when it sold its share, once again right before the curve.

Since then, the worst period of the crisis has passed and things are now looking up once again. The company, correspondingly, started to open up in new areas. In 2011, it opened up in Jamaica and it has now applied to open in Tanzania, Guyana and Care Verde after winning a World Bank tender.

 

Malta set for growth

Malta, as said, was the earliest foreign investment made by the company. Yet, although it continued to grow, its growth has always been rather weak.

Reynir describes the credit info provided by the company. There is what he calls negative information and positive information.

Negative information is when the information that is shared relates to companies and people who have not paid their debts, sometimes not even their bank loans or mobile phone charges.

But only around, let’s say, 7% of people and businesses can be found in this category and even then many of them make huge efforts to dig themselves out from this position as they know they will not be given credit anywhere.

Then there is what he describes as positive information. The remaining, say, 93% do pay their dues but with varying degrees. What is called positive information establishes degrees of credit worthiness.

This would be information that is very important for banks when they come to decide who is worthy of credit and who is less worthy.

The way CreditInfo comes to this positive information is by taking all the data that is provided by the credit institutions as well as utilities and others possessing information of relevance and passing it through special analysis with predictive models that would establish, with some reasonable certainty, what the company or the individual stands to do in the future.

In itself, this predictive analysis is not much different from the banking rules that are coming in Europe, the Basel II and III. The evolution of companies is of course monitored to see that the company is doing what it said it would do. Performance of individuals can be monitored as well.

This is the level that CreditInfo is now trying to bring to Malta. As stated earlier, the company, and the Maltese economy as well, have not been doing bad at all, but they could do so much better.

Last year, the company decided to develop the Malta company. A managing director was employed and number of employees doubled to 12. A new office was opened and its systems were renewed.

The company is now opening up to banks and financial institutions in Malta to see who can support its initiatives, offer credit, speed up the processes, and so on.

Although today, the number of write-offs is declining, many companies, especially SMEs, are finding it difficult to get credit. As everyone knows, a strong SME sector is very good news for any economy.

This is one of the reasons why CreditInfo is many times chosen by the World Bank and IMF to set up credit information companies even in countries where CreditInfo is not present, such as Iran, Sudan and the Palestinian land.

The company is now putting on balance all its expertise and global standing behind this Malta effort to try and take up not just the local company but also the Maltese SMEs and through them the Maltese economy up to the next level.

The company believes it can help Malta improve by as much as 30 places in the Doing Business World Bank classification if the SME sector is properly fostered and encouraged.