Handelsbanken: We are well prepared for the sovereign-debt crisis

Transcript

With another global financial crisis on the horizon, the international banking community is bracing for greater volatility. Michael Green, CEO of Handelsbanken Sweden, discusses Handelsbanken’s approach to risk, its profound understanding of its customers, and what the future may hold from a sovereign-debt fuelled financial crisis.

World Finance: With another global financial crisis on the horizon, the international banking community is bracing for greater volatility. Here to tell us how one major player is doing so, Michael Green of Handelsbanken Sweden.

So, we know that another banking crisis is coming; this time it’s going to be sovereign-debt fuelled. So tell me: how are you bracing for the future?

Michael Green: Let me first go back to 2008-9, with the start of the latest financial crisis. We’ve had a lot of crises since then: we started with the Lehman crisis, we had the sub-prime crisis, we had the Nordic-Baltic crisis. We’ve also had liquidity crisis, we’ve had higher interest rates, and now negative interest rates!

And throughout that time Handelsbanken has proven with our business model, that we’ve been able to keep our performance pretty stable and non-volatile through these different crises. And we’ve also created a lot of shareholder value through that time.

So we have a business model that’s proven to work even through bad times.

World Finance: Very interesting; now, part of that strategy was a conservative view of risk: tell me, what is the strategy this time around?

Michael Green: We have been pretty OK with our approach to risk throughout these years. And one of the explanations that I see is that we have a very strong business model that actually takes aim on our branches, the local decisions.

We have a business model that is actually scalable, repeatable, and which works very well in our six home markets – that is, the UK, Sweden, Norway, Denmark and Holland.

World Finance: A nice cross-regional representation there; so tell me, how does your clients’ understanding of risk influence your bank’s schemes?

Michael Green: I think with our profound knowledge of our customer locally within every one of our branches, both individual and corporate customers. We work very closely with our customers to really understand their risk approach, and give them our view on that, and try to make out the best solutions for each and every client as we go.

World Finance: So we talked about some of the challenges that come along with this next crisis; let’s talk about some unexpected opportunities.

Michael Green: I don’t know where the EUR/USD is going to trade tomorrow. I don’t know how the interest rate is going to close today. But we do know how to manage risk – and that is credit risk. We like credit risk, and we are not really into the market risks.

While saying that, we still create a very strong balance sheet. We’re one of the strongest banks in Europe right now. And why do we do that? First of all, we are here for our customers in good times and in bad times. We need to be prepared for the bad times to be able to help our customers.

Secondly, we have never received any governmental support, we haven’t received any central bank funding, and we have never asked our shareholders for new equity throughout the last financial crisis. So that’s the reason why we have a very strong financial position: to be able to support our customers and take care of our own balance sheet.

World Finance: Finally, what does the future hold for Handlesbanken?

Michael Green: We’re a full-service bank. In our six home markets we bank with both private individuals and corporate clients. We’ve been able to manage to achieve our corporate goal for the last 43 consecutive years.

We have very satisfied customers, and we have a very strong branch network that we combine with our digital platforms, in terms of the internet and smartphones. And I think we have a very strong business case moving forward.

World Finance: Excellent. Michael, thank you so much for joining me today.

Michael Green: Thank you.