The milestone branch, located in the West Yorkshire spa town of Ilkley, will open for individual and corporate business over the coming weeks, once the local team is in place.

With over 700 branches in 22 countries, Handelsbanken has built its success around a unique combination of decentralisation, customer satisfaction, and prudent financial management.

An independent survey of British bank customers has ranked Handelsbanken number one for satisfaction and loyalty among both business and personal customers for the second year running. This is a position the Bank has enjoyed in Sweden since surveys began in 1989.

Despite the continuing economic downturn, Handelsbanken last year announced the opening of a record 27 UK branches, leading to the establishment of a third Regional Head Office in Birmingham to support further expansion in Great Britain, its fastest growing market. Already, the Bank employs over 800 staff nationwide, with just under 600 of these working in local branches from Glasgow to Truro.

“This milestone has been reached thanks to the confidence that our customers have shown and by us sticking to our knitting, offering traditional community banking based on close personal relationships with customers” Anders Bouvin, Chief Executive of Handelsbanken in the UK said, speaking ahead of a series of regional events to celebrate the 100th branch opening.

He continued, “Our belief in entrusting local decisions to experienced local staff has seen us grow rapidly, both in scale and reputation, throughout the economic slump. Although we don’t set out with specific targets, we’re well on course for another record year of expansion in Britain, as more and more customers appreciate our way of local banking.”

Sue Toulson, who will open and manage the 100th British branch said, “As a home-grown ‘Handelsbanker’, I’m thrilled to be a part of the Bank’s ongoing growth and opening a new branch, but my real focus is on giving people in Ilkley a personal, dependable and competitive alternative to other banks. My team will be able to make its own case-by-case assessments and decisions on everything from corporate credit lines to tailored personal savings and borrowing rates, and be able to serve our customers locally, without customers having to refer to call centres. We know our patch and people best, with head office there to support us.”

Contributed by http://www.freshbusinessthinking.com

The survey, conducted by EPSI Rating, is based on a pan European model already used to benchmark banks in 11 other countries, over 20 years.

Professor Jan Eklof, coordinator of the survey commented, “This survey shows that customer satisfaction with Handelsbanken is significantly higher than the industry average and that the bank’s customers are also very loyal. This separates Handelsbanken from other specially analysed banks in the study and depicts results which are consistent with surveys undertaken in other countries.”

Handelsbanken’s decentralised approach allows them to adapt quickly to the requirements and wishes of its customers, with decision making being made locally by its branch managers. This may appear to be a simple proposition, but it is one that is proving successful for the Swedish bank in the UK.

Handelsbanken, which has a rapidly expanding network of over 90 across the country was ranked top by both its business and personal customers in terms of satisfaction and for customer loyalty.

The survey follows record growth numbers in the UK by the bank during 2010, opening 21 branches and the announcement of the opening of a third Regional Head Office in Birmingham to support further expansion in the UK banking market.

Anders Bouvin, head of the bank’s operation in the UK said, “To be ranked top for the second year running in an independent customer satisfaction survey is of course very important for a relationship bank like ours. We have been running the bank according to the same principles for the last 40 years and it appears that our decentralised and customer orientated model is more appreciated now than ever. The fact that we don’t have sales targets or bonus schemes allows us to focus on what really makes a service organisation like ourselves successful in the long run, customer satisfaction.

“We believe in growing our business in a safe and considered way with the emphasis on a very personal relationship with individuals and businesses,” he said.

“The fact that we’re a large Swedish bank with stable finances and a good credit rating by international rating agencies also gives comfort to our customers. The leading financial newspaper in Sweden, Daggens Industri, recently ran an article describing Handelsbanken as the “Safest bank in the world”.

Handelsbanken first came to the UK more than 25 years ago to cater for Nordic businesses and their British subsidiaries, but quickly realised the potential to provide universal banking services locally; the branch network that has followed is one of the most successful branch banking operations set up outside of the high street banks.

Over the past year, the media has been full of terrible news about the availability of credit to most companies, especially SMEs. Many lenders, even relatively healthy ones, seemed to have tightened credit standards considerably.

This has often made life, already difficult in a weak economy, even more challenging for many companies. On this background, it is illuminating to look at the lending practices of Svenska Handelsbanken (also familiar to readers of the news because they just topped customer satisfaction polls.)

The common approach to lending is illustrated by the first graph which shows lending to corporate customers in the Eurozone. Most banks influence their lending decisions top down depending on their views on the economy and their outlook for loan losses. This can reduce the influence of the loan officer handling an individual case. The loan officer might have performed a thorough quantitative and qualitative analysis of the prospective borrower. But in this system, a loan that would have been approved a year ago is now declined. This is illustrated by the chart: at the beginning, when the economy was still recovering from the dot com bubble, banks were still fairly strict in their lending standards. But as the economy started growing nicely and steadily from quarter to quarter (the blue line), lending standards (the green line) were relaxed more and more. The result: loans to corporate customers were growing faster and faster (the red line). The moment lenders see signs of a weakening economy, lending standards are reined in and loan volumes fall as a result. This approach seems rational only for five seconds because drastically cutting off lending exacerbates the economic contraction that lenders were afraid of in the first place. And this policy generally leaves banks with loans made on wafer thin margins in good times when quality can really only get worse, but they do not make loans on much better margins at the trough of the cycle when credit quality could arguably only get better.

Figure 1: Eurozone GDP growth (quarterly), lending to corporates and bank lending standards

Handelsbanken, by contrast, does not change its credit policy over time. It does not believe in GDP or other macro forecasts. It rather believes in sound credit analysis of an individual customer. Hence no need for the bank headquarters to tell the loan officer at the front line how to do his or her job. In addition, the bank believes in Warren Buffett’s insight that “it’s only when the tide goes out that you know who is swimming naked”. In other words: during good times both good and bad credits look similar, but in tough conditions like today’s it is fairly easy to spot the good customers you want to continue lending to. Handelsbanken’s bankers have a much more satisfying and intelligent job where they can use their expertise and judgement to come up with their own best credit decision.

As a result of this policy, Handelsbanken’s lending to corporates is highly counter-cyclical. When everyone else is competing to lend, Handelsbanken’s market share drops, and when no loan is to be had from any other bank, Handelsbanken keeps lending happily and increases its market share again.

Does it work? By following this very simple and common sense approach, Handelsbanken has achieved a twin goal of having higher margins than their competitors AND loan losses that are consistently about 50% lower. The bank follows the same approach with the same results in other countries such as the UK. The loyalty to their customers even in bad times may be one of the reasons behind their stellar customer satisfaction.

Unsurprisingly, many other banks are looking at the Handelsbanken model today. Experienced loan officers should be in for a bright future.

Figure 2: Sweden, lending to corporates

Article contributed by Niels Kroner, author of ‘A Blueprint for Better Banking‘

Article cover image copyright: Flickr

Staff at Handelsbanken London, are celebrating after the bank topped a national opinion poll for customer satisfaction. 

The survey by EPSI Rating is the first of its kind for the UK banking sector and is based on a pan European model already used to benchmark banks in 11 other countries, over 20 years. Professor Jan Eklof coordinator of the survey commented “This survey shows that customer satisfaction with Handelsbanken is significantly higher than the industry average and that the banks customers are also very loyal. This separates Handelsbanken from other specially analysed banks in the study and depicts results which are consistent with surveys undertaken in other countries.” 

Handelsbanken’s decentralised approach allows them to adapt quickly to the requirements and wishes of its customers, with decision making being made locally by its branch managers. This may appear to be a simple proposition, but it is one that is proving successful for the Swedish bank in the UK. 

Handelsbanken, which employs 130 staff across London, and 480 across the UK, was ranked top by both it’s business and personal customers in terms of satisfaction and for customer loyalty. 

The survey follows a strong set of results from the bank last month when it reported record profits on the back of strong demand for its services.

Magnus Uggla, Head of Regional Bank Southern Britain, said: “The results are a strong vote of confidence from our customers. Excellent personal customer service is our key competitive factor. Therefore it is very encouraging that we score so much better than the competition.” 

The London West End branch was the 38th UK branch to open in 2007 and is now one of 63 across England, Wales and Scotland. 

John Hodson, Branch Manager of Handelsbanken London West End, said having satisfied customers is something Handelsbanken has always focused on and the survey demonstrates the success of Handelsbanken’s ‘old fashioned’ approach to banking. 

“We believe in growing our business in a safe and considered way with the emphasis on a very personal relationship with individuals and businesses,” he said.

“The fact that we’re a large Swedish bank with stable finances and a good credit rating by international rating agencies also gives comfort to our customers.” 

Handelsbanken first came to the UK more than 25 years ago to cater for Nordic businesses and their British subsidiaries, but quickly realised the potential to provide universal banking services locally; the branch network that has followed is one of the most successful branch banking operations set up outside of the high street banks.  

EPSI Rating (Extended Performance Satisfaction Index) is a system created to collect, analyse and disseminate information about how an organisation is perceived by its stakeholders. The assessment is done in terms of image, preferences and perceived quality as well as loyalty and attractiveness by customers, employees and other interested parties. With a system of databases including more than 70,000 indices derived from some 2 million interviews taken during surveys in numerous country studies over almost two decades, ESPI Rating is the European leader in stakeholder management and benchmarking.

Contributed by John Hodson, Branch Manager of Handelsbanken London West End

About Handelsbanken: Founded in Stockholm in 1871, the Handelsbanken Group has 461 branches in Sweden, 48 in Norway, 45 in Finland, 54 in Denmark, and 62 in Great Britain.  The bank has a growing presence internationally, with branches in Russia, China, and India. Handelsbanken is rated Aa1 by Moody’s

www.handelsbanken.co.uk