Hard to believe: A Good, Honest Bank and Banker!
- Kamran Mofid
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With trust in banks and bankers at its lowest level, it is a breath of fresh air, to hear about a bank and bankers that are honest, trustworthy, efficient and profitable.
Handelsbanken: The most successful bank you've probably never heard of
Founded in 1871
Has no sales or market-share targets
Staff get flat salaries without bonuses
Claims to have achieved higher profitability than the average of its rivals for 41 years in a rowNow let’s Anders Bouvin, the UK chief executive of Handelsbanken tell us more about the bank and himself. And I am sure he, like the bank he runs, will challenge your preconceptions.
For starters, as noted in an article on the BBC website ‘this African-born, Swedish chief executive, of Handelsbanken's growing UK operation, doesn't receive an annual bonus.
‘He hasn't seen his bank fined for incentivising his staff to flog inappropriate products.
‘And unlike many high-flying bank bosses who seem driven more by short-termism and share options than corporate loyalty, Mr Bouvin has been with the Swedish bank for 28 years.
‘Mr Bouvin's father was Sweden's honorary general consul to Rhodesia, as Zimbabwe was then called, and the head of an asbestos mine.
‘Mr Bouvin recalls childhood memories of he and his brother fighting with bundles of fluffy asbestos, savannah watering holes fringed with antelope, zebra and lion, and their car being chased by angry rhinos through the bush.
‘But all that changed abruptly when his parents moved back to Sweden in 1968.
‘The contrast between the rigid formalism of Rhodesia and the liberalism of 1960s Malmo was extreme, he says.
"Sweden was very good for me. It was like total freedom after my regimented boys' school [in Zimbabwe]," says Mr Bouvin. "As a Swede who didn't speak Swedish I was quite an exotic figure."
‘Bu he picked up the language quickly, fitted in, and was obviously academically gifted.
"At first I thought I wanted to be a diplomat," he says. "But then I realised I was actually more interested in business and macroeconomics."
‘He received a degree in economics from the University of Lund, Sweden, as well as spending two years in France, at the Sorbonne in Reims and the University of Montpellier.’
Ant then in 1985 he joined the Handelsbanken, the first company he had applied for a job.
"I had no idea about the bank's business model at that stage, but was thrilled to be offered a job," he says.
‘As luck would have it, he soon realised that he'd landed in a company "whose values coincided completely with my own".
‘Those values - long-termism, and a philosophy of decentralisation encapsulated in the slogan "the branch is the bank" - seem almost too good to be true in a current banking era of fines, debt crises and outsourced customer service.
‘Big banks, according to the popular narrative, were the primary causers of the global debt crisis thanks to their reckless investment in high-risk mortgage-backed bonds. Critics dubbed them "casino banks" that had subverted old-fashioned, prudent banking.
‘But Handelsbanken remained above the fray, emerging with a balance sheet strong enough to make European banking regulators purr with delight.
Mr Bouvin argues that the group's success - it made £1bn in global after-tax profits for the first nine months of 2013 - is down to the bank's belief in the primacy of customer service and localism.
The branch manager is trusted to make prudent lending and investment decisions based on one-to-one relationships with customers.
"Working in the branch network was the best thing I ever did," says Mr Bouvin. "I flourished building customer relationships, and being empowered to make customers satisfied was really great."
‘This local empowerment - the apparent antithesis of modern automated banking - is core to Handelsbanken's philosophy, first proposed by the bank's then boss Jan Wallander in 1970.
‘He persuaded shareholders it was in their long-term interests for the bank to grow organically, using profits, not debt, to fund new branch openings.
‘And the bank does almost zero marketing because, as Mr Bouvin says: "Our customers don't feel better because they can read the bank's name on a football shirt or on the side of a bus."
‘This next to no marketing keeps overheads down and return on equity up.
‘At Handelsbanken returning a share of the profits to long-term staff is also key. If the bank exceeds the average profitability rate of its peers, then surplus profits are put into a fund and distributed to all the staff.
‘But they can only receive these accumulated benefits when they turn 60, thus encouraging long-term thinking and loyalty.
‘Some long-serving staff retiring now are receiving payouts in the region of £1.4m, says Mr Bouvin.’
To me, this seems to be a bank and banker for the common good. The pertinent question thus must be: Why others are not like them?
See the original interview:
See further about the banks and bankers deciding to behave differently to the Handelsbanken and Anders Bouvin: