Customers flock to the Swedish bank that does not pay bonuses

In the light of numerous British bank scandals and growing disenchantment among customers at bankers’ bonuses, Handelsbanken reported a 17 per cent rise in lending to British customers in the fourth quarter of last year.

Handelsbanken places strong emphasis on customer service and does not pay its staff bonuses, nor does it set sales targets for products, which means its employees are not incentivised to persuade customers to take out the bank’s products.

Its only target is higher return on equity than its peers, which it claims to have achieved for 40 years.

Handelsbanken’s head of the North, John Parker, said that only a “handful” of employees working in capital markets receive a bonus.

This is out of a total of 12,500 staff across the group.

That means that no-one else, from the chief executive to branch staff, receives a bonus. No bonuses are paid to any staff in the UK.

Business lending increased 13 per cent in 2013 to £8.68bn, while lending to personal banking customers rose 29 per cent to £3.58bn.

UK customer deposits increased 60 per cent over the year to £4.95bn.

Handelsbanken has 21 branches in Yorkshire and 171 British branches.

The bank reported growing demand in Yorkshire for local advice, decisions and service.

“We have always maintained a business model predicated around customer service,” said Mr Parker.

“We don’t have any call centres as it’s all relationship banking. All our branches are in small locations staffed by local bankers who know their customers. There are no centralised call centres.

“We’re growing and word of mouth is very important. Our good customers recommend other good customers.”

The group opened 28 new branches in 2013, including a second office in Hull which opened last week.

“We don’t want enormous branches staffed with 20 to 30 people,” said Mr Parker.

“When a branch becomes very successful we open another branch. Our largest branches employ 10 to 12 people.”

Handelsbanken said its local, customer-led approach means it has been rated top for satisfaction and loyalty in the UK over the last five years, according to the latest ESPI independent annual survey of British banks’ personal and business customers.

“Customers want to come and see us. They want a local representative,” said Mr Parker.

“We offer traditional banking, but modern traditional banking. We have a bang up-to-date IT system and a fantastic app. At the same time most of our branch staff know our customers. Because our staff have no bonuses or sales targets, they will only offer what is in the customers’ interests.

“We will never try to talk to a customer about something that’s in the short-term interest of the bank rather than the long-term interest of the customer.”

David Brady, manager of Handelsbanken’s Leeds The Embankment branch, added: “The success we continue to have locally is due to our traditional approach to banking with local teams looking after their local customers.

“Our unique approach to banking with credit decisions made in the branch is welcomed by our customers as shown in our continued top rating in customer satisfaction surveys.”

Anders Bouvin, Handelsbanken’s UK chief executive, said that over recent years the bank’s customer-led, local banking approach has attracted customers across more and more British communities.

“Our customers are looking for a long-term relationship with their branch team, who have full power to provide advice, decisions and service locally.”

Handelsbanken said it has robust capital and liquidity positions and low credit loss ratios, giving it one of the highest credit ratings of any international bank.

The bank was recently judged by Bloomberg to be the strongest bank throughout Eur- ope.

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