Handelsbanken exiting from Denmark and Finland

OSLO, NORWAY: Handelsbanken has initiated the process to divest its operations in Denmark and Finland, markets that account for 10% of the income, 13% of the costs, and 8% of the operating profit within the group.

The capital allocated to the operations in Denmark and Finland amounts to a total of approximately SEK 15 billion. The common equity tier 1 capital related to these operations amounts to approximately SEK 12 billion.

In Denmark and Finland, banking operations are characterised by customers with stable cash flows, good credit quality and high customer satisfaction. Despite a lasting presence in these markets, the Bank’s market position remains small, and the bank sees little opportunity to scale up its offering without significant investment.

“Nowadays, the conditions for running a profitable banking business in various markets are hugely different from how they were when Handelsbanken originally expended its geographical presence,” a bourse filing said.

“The synergies become less and less potent as new regulatory frameworks are introduced, both locally and internationally, entailing that the Bank now needs central staff functions and infrastructure in each market. Customers have a greater appreciation for speed in restructuring and adapting to local conditions than they do for global products”.

Handelsbanken’s main markets are in Sweden and Norway, as well as in the UK, where there is an independent subsidiary bank. Together, these markets account for 91% of profits.

In these markets, the bank’s ambition has been to be a leading operator in our core areas: financing and asset management.

In recent years, the Swedish operations have been strengthened by a transformation, through which the bank has become better able to meet its customers’ expectations, as regards digital services, online meetings and 24/7 service, and meaning that mortgage loans can be granted, and expert advice provided, across several channels.

The Bank has a strong local presence and is, by a wide margin, the Bank with the most branches in the Swedish market. Over the past year, this has resulted in mortgage volumes increasing by 5%, the managed fund volume increasing by 27%, and income increasing by just over 5%. Handelsbanken is today the largest lender among corporate banks.

The Norwegian operations have exhibited very strong performance within the financing core business area over the past 15 years, particularly on the corporate side. As in Sweden, this development is founded on high levels of customer satisfaction and good cost efficiency.

In the UK, Handelsbanken has invested in the formation of an independent subsidiary bank, with a unique offering on a market with considerable potential – not least within Private Banking, where the Bank has been named Private Bank of the Year for several consecutive years. The Bank has also a strong position with further potential within corporate financing.

“From a commercial perspective, we want to have a presence in those locations offering the best conditions for profitable growth and a strong market position. With this decision, we are strengthening the Bank’s ambitions in our primary markets: Sweden, Norway and the UK,” says Carina Åkerström, President and Group Chief Executive of Handelsbanken.

The Bank’s business in the Netherlands has demonstrated good profitability in recent years, with a more focused offering within real estate finance and asset management.

As of 1 January 2022, the Netherlands will be a part of Capital Markets, together with Luxembourg and New York. In addition to the Bank’s offering to its customers in the Netherlands and Luxembourg, presence in the eurozone is also strategically important to the Bank in terms of funding.

Operations in New York will continue to be run in the same way as previously. The Bank’s presence in the USA is also of strategic consequence, as this allows for direct access to USD funding.

www.handelsbanken.com

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