The 2000s begin with uncertainty as the dot com bubble bursts. The major test during the decade arrives in 2008, when the financial markets freeze to ice.
Nonetheless, the Bank manages to also weather this period without needing government support. Rather than struggling under the strain, the Bank is able to continue lending to both households and companies. In Sweden, Handelsbanken stands for a substantial proportion of new lending as other operators struggle. The prudent line taken by the Bank is yet again shown to be a source of strength when so many other banks are experiencing problems.
Low risks, high trust
Handelsbanken’s model is based on detailed credit assessments, low risks and the confidence to always stick to its chosen path. This is often expressed as scepticism regarding short-term trends that rarely come across as sustainable.
The trigger behind the 2008 financial crisis is the collapse of a huge number of subprime loans in the USA. These are high-risk loans made to customers with poor repayment capacity, which are then bundled together and packaged as complex financial instruments, traded in the market at high prices. Long before the bubble bursts, Handelsbanken makes the choice to stay away from the subprime market. The Bank’s management under CEO Pär Boman sees risks in the complex arrangements and decides that the prospects seem too good to be true. The prudent line is yet again shown to be a source of strength when so many other banks encounter problems. The Bank’s low risk level, stable financing and decentralised lending mean that business as usual is possible even when the liquidity in the financial system is put under pressure.
In Sweden, the Bank continues to lend to households and companies, even when other operators are forced to pull the handbrake.
Acceleration of digital services
At the same time, the development of the Bank’s digital services starts to speed up. Everyday tasks are done more and more via the internet, secure electronic IDs are established, payments made quicker and more widely available. The branches focus on advisory services, complex needs and comprehensive solutions. The customer decides on the meeting place depending on their needs.
The lessons learned from the crisis reinforce the low risk culture that has characterised the Bank for decades – healthy credits, robust own funds and a local presence. It serves as the foundation for meeting the next wave of regulations, digitalisation and changing customer behaviour.
