A quietly disruptive business model has seen a Swedish bank become a significant player in Scottish financial services.
Stockholm-headquartered Handelsbanken now has more than 200 UK branches, including 10 outlets north of the border with Dundee, Dunfermline, Perth and Stirling among its locations.
However, the group remains little known as it does not promote its presence in the communities it serves.
It is also unusual in the fact that it only has one corporate target to continue to outperform its peer group as it has done for more than four decades and does not impose any specific targets on individual branches or members of staff.
Handelsbanken’s model is heavily decentralised, with local managers given the authority to sign off on the vast majority of corporate or retail loans.
The bank does not pay bonuses, but staff do accrue a holding in the business that can be drawn down at the age of 60.
John Parker, head of Handelsbanken’s regional Bank North, UK, visited the group’s newly established Dundee branch at City Quay this week.
The branch, led by former RBS local director Vic Bicocchi, has started to grow its corporate and domestic books.
However, Mr Parker said the branch would only take on the right type of business and Handelsbanken was content for its offices to grow at their own pace.
“We are the oldest quoted company on the Swedish stock exchange and in the UK, our second biggest market, we have 207 branches and employ just over 2,000 people,” Mr Parker said.
“Essentially we open an office in a community where we can build a business.
“Last year we opened four branches in Scotland, which takes us to 10 in total.
“But there are many communities left in the UK and Scotland where we are not represented.
“An important point is that we are not about volume. We don’t do budgeting.
“We have no number saying how many branches we will become we don’t want to become the biggest.
“When we find the right people in the right location, like we have in Dundee, then we will open a new office.”
Rather than a target-led culture, Handelsbanken focuses on client need and has found the approach to be both profitable and sustainable.
Total lending in the UK grew 11% to £15.5 billion last year, with domestic lending up 17% at £5.1bn and corporate business up 8% at £10.4bn.
Mr Parker said local branch staff were essentially tasked with growing and sustaining an autonomous local business within a wider corporate framework.
He said the developing Tayside and Fife economies represented strong opportunities for the group’s branches, but he said growth would be controlled and organic.
“The branch is the bank and we really mean that,” Mr Parker said.
“What that means is it would be a ridiculous concept for someone in a regional office 200 miles away, who doesn’t know the Dundee market, to make decisions about lending in Dundee. Local knowledge is key.
“In the SME market, we clearly don’t take on customers that we think are weak or are going to fail.
“Our customers are customers with a good reputation and capacity that we think we can do something for.
“There is no central customer solution or direction the branch decides.
“There are lots of business opportunities in Perthshire, Fife and in Dundee itself and our businesses will grow.”