Handelsbanken holds firm on one clear principle – saving viable businesses, not speculation. A line that requires patience, industry knowledge, financial strength and also close co-operation between branches, customers and management.
A prevailing presence during uncertain times
The post-war years saw rapid developments within both the economy and Sweden as a whole. The 1920s was, for many, a period of growth. This was met by an increased appetite for risk. The Bank remains steadfast with its choices of thorough credit assessments, collateral that can withstand economic ups and downs and follow-up via the branches. A certain cultural competency is also required to turn down certain business opportunities and transactions, a skill that would prove sustainable and profitable in the long term.
The Bank continues to spread geographically. Through acquisitions and new branches, Handelsbanken’s network covers most of the country by the end of the 1920s. The merger with Bankaktiebolaget Södra Sverige means that the Bank is now a nationwide concern, leading to a change of its name to Svenska Handelsbanken. In conjunction with this, the Octagon is adopted as the Bank’s symbol.
The Kreuger crash tests the model
The Kreuger crash reverberates through Sweden in 1932, representing a true test of the Bank’s business model. Companies with essentially sound businesses are provided with support to continue operating and are given time to adjust. Assets that flow into the Bank are managed sensibly and with a long-term approach, with the objective of stabilising and developing them. This later results in holdings being consolidated in Industrivärden, including all of SCA and parts of LM Ericsson, where they can be managed professionally.
Advice, security and stability
At the same time, households need to save and companies need to fund inventories, machinery and exports. Close relationships with customers lessen credit losses and provide a stable foundation when the economic situation is less predictable.
As the end of the 1930s approaches, society faces new challenges. For Handelsbanken, it is a case of maintaining the culture and methods that have shown themselves to function well. Healthy credits, low risk and decisions made close to the customer. What began as an ideological principle has now developed into a proven, successful way of working, no matter what is happening with the economy.
