Svenska Handelsbanken, SHB, is the largest Nordic bank in Asia and the strategy is to continue on that track. Growth, both in terms of added offices and more services – also to private individuals, is on the priority list for the coming years. And while Sweden’s no to the Euro in the September referendum went against the official wishes of government and industry, the outcome made little if any impact on the bank’s business in Asia.
Those are some conclusions made from this interview with Ms Maj-Liss Olsson, General Manager for SHB in Singapore.
Having been posted there since the mid-1990’s she is one of the most experienced Swedish executives in the island state.
From the outside you seem to be one happy family in the banking community here in Singapore. We don’t hear much talk about competition. But you do compete to get clients and keep them. How is that done in Asia?
“If I may be a bit boastful we are the only Nordic bank with five offices in Asia. The closest competitor has two. We have a mandate from our management to grow even further in Asia where the market is ready for it. Most companies have more than one bank. They look for a variety of services. We are, I believe, the only Nordic bank in Asia that accepts private individual customers. And we will develop the segment further. In Asia half of our clients are local, Asian companies having some kind of business relation to the Nordic region.”
Did the Swedish Euro referendum, and the no vote, affect your business in Asia?
“Almost not at all. Euro is not a big currency in these economies anyway. And as a bank we did not have to invest a lot of money to adapt our systems for a Euro conversion.”
Are there any clear business trends so far in Asia this year?
“I cannot really say that the appetite to invest in South East Asia has increased much yet. It is more obvious that investments increase in North Asia. Despite the change process that began with the Asian crisis to cut the number of expats and move out regional staff to the national markets, have basically all Swedish and Nordic companies kept a regional base in Singapore. I believe Singapore has not lost its appeal as a regional base. A small trend, if any, is that a number of manufacturing companies select Singapore as base for their regional warehouses.”
Why do they set up regional warehouses here?
”The very simple answer is that they can give their customers better service, by delivering one, two maybe three days quicker and maybe even more depending on industry. This also means that their customers need not build up stock unnecessarily, which is highly appreciated also from a cost point of view. Singapore’s geographical position with a very good infrastructure, high class logistic capacity, the second biggest container harbour in the world and the world’s best airport ten minutes away from your warehouse is why.”
Has SHB introduced any new services lately in Asia?
“We have during the last five years added on services continuously so that we today can be compared to any branch in our home market. Earlier lending was dominating, but also today cash management services of various formats are more important and now available. One example is Internet Payments and Trade Finance on Internet. Why? Our branches in Asia operate very much like any other branch in the bank, and therefore the same standard of services is and should be available. Trade between Asia and the Nordic countries is extensive, manufacturing as well as warehousing in Asia is on the rise, and thereafter follows invoicing and payments here. Therefore cash management services with good system support will be more and more important for our customer here. And that is why we have been investing in this area. One area of interest to explore and improve further is basic services for private individuals, loans, cards, payments, internet banking etc. That has often been our instrument to build a profitable base in other places outside our home market, once your ambition is to expand further. And why change a winning team?”
What Swedish industry segments are doing good business in ASEAN and what segments do not?
”Generally manufacturing in many segments are moved from other locations to China, Thailand, Malaysia and India at the moment. It is seen as both something unavoidable, i e a must to be price competitive today, and also an opportunity because they are in a market with strong domestic growth, and long term even cheaper production will be possible when local contents and local staff experience increase. Car industry is doing fine at the moment, especially in China, but also in Thailand and the rest of Asia, where a big group of newly rich consumers now want to spend their money on a nice car, maybe for the first time. But also other segments, eg. companies supplying the local manufacturing industry with tools, spare parts and other equipment of course. Plus shipping due to higher activities in China and ahead of the Olympic Games 2008.”
Where does SHB have its largest and smallest portfolio?
”As I mentioned we have five units in Asia, Beijing, Shanghai, Taipei, Hong Kong and Singapore, more than any other Nordic bank or financial institution. Together we cover 19 countries in Asia. Out of the five units, so far two are branches, and we hope that number will increase in the not too distant future. Of course places where we have full branches, are the most active and therefore provides the biggest volumes, i e Singapore and Hong Kong, but also Malaysia, China, Australia, New Zeeland, Taiwan and Thailand represent considerable volumes. Out of the 19 countries, of course there are many with limited activity for us, like Burma, Laos and Cambodia. They would definitely be the smallest.”
Today you have five offices in Asia. How many more will there be by December 2004?
“I believe it will take a little longer than end of next year to have another office in place, but we are working hard on the matter and follow closely the activities of Nordic companies and private individuals in the region.”
In what Asian countries can SHB from a legal and regulatory point of view operate as a full service bank?
”Out of the countries of interest for the Nordic companies active here, as far as I know it is only Malaysia that restricts us to open, if so, a subsidiary bank only, not a branch. In all other countries of interest to us, you can. But of course there are local requirements to be fulfilled to receive a bank license and these requirements vary very, very much.”
What lessons did SHB learn from the Asian crisis? And what has been done to make you better prepared?
”I think it would be fair to say that we learned that our policy held and holds very well to protect us from impacts from a crisis similar to the one we saw in 1997/1998, which had very limited impact on us in the form of loan losses etc. Our policy says we are supporting our Nordic customers and their on going trading partners’ activities here, and of course that means that we know our customers very, very well. It means that the church spire principle actually works and that is the best position also on the future. Low loan losses build confidence and with high confidence and long experience from the local market you can grow.”
What is SHB´s recruitment policy for the Asian offices? I am thinking of the mix between Swedish and local employees and how that mix should be adapted to various markets in Asia. How can the bank make the most out of local and Swedish competence respectively? Is there any overall corporate policy regulating that some positions, for example senior managers, must be with Swedish citizens? How do SHB, from a HR perspective, deal with ethical issues, like the risk of (and view on) corruption – raw as well as friendly, in Asia?
”The Nordic staff is important to us as bearer of our home market culture/s. Our Nordic customer appreciates that there is staff here that can speak their own language, in more ways than one. They can also use their own internal network to quickly find the right person to talk to and solve problems easier. Therefore we have today 12 staff from a Nordic country, often on the management level. However in parallel the local staff is as important, since they are the experts of the local markets and communicate well with our customers, who of course also have local staff taking care of main part of their business. To be honest we never encounter ethical problems, like in risk of corruption. The financial industry is very well supervised by the relevant authorities, and that has eliminated effectively room and ground for corruption. The only thing I can come to think of is that I almost daily receive mails from people in Nigeria that wish to convince me to participate in various money laundering activities. But they are also no problem, there is always a delete button nearby.”
Please elaborate on the potential for SHB in China, PRC.
”That is something we are looking forward to, to be able to open a branch or branches in China. From meetings with our customers we know that there is a strong demand for a Nordic bank to come in as soon as possible. Even if the terms to obtain a bank license are extremely demanding today, that is still high on our wish list. And investments from the Nordic companies into China continue to grow….“
