Swedbank is here to stay

Jun 11, 2008
By Mike Collier

The rumours are true - Hansabank is leaving the Baltic states.

But there's no need to panic because the familiar longboat logo will simply be replaced by the orange tree of parent company Swedbank.

"The rebranding from Hansabank to Swedbank will be completed in the next year or so. As we did in Sweden, we will make it very cost efficient, so we will not do it immediately overnight,” Jan Liden, President and CEO of Swedbank told The Baltic Times.

"We are committed to the Baltic market and we believe in the long term potential of the market,” Liden said, which will come as good news to around 5 million account holders throughout the Baltic states.

A day earlier the Swedish Riksbank issued a statement warning that ”borrowers in the Baltic countries may experience problems paying their loans. This would lead to a greater risk of loan losses for the Swedish banks with substantial activities in these countries.” However, Liden was relatively unconcerned by the prospect when speaking at the Baltic Sea Region Business Forum in Riga last week.

The image switch is designed to put a stop to rumours that Swedbank is planning to quit the Baltic over precisely those sort of post credit-crunch fears about its exposure in the Baltics.

Swedbank’s share price has dropped from a high of Skr280 in February 2007 to around half that level today, largely as a result of such fears. Recently, however, several important regional investors such as East Capital have pointed to Swedbank as representing excellent value for the future.

"I need to be careful when talking about the valuation of our company but I think that if you do the analysis, the share price is very low if you compare it with our assets and forecasted earnings,” Liden told The Baltic Times.

"The main reason [for the depressed price] is the worry about Baltic exposure and what that could lead to. I think this is somewhat exaggerated because all economic development goes in cycles and we feel very confident that we can play an active part in the development of these economies as well. There are a lot of opportunities, long-range, but we have to be prepared for short -term problems. "

The Baltic economic slowdown will make everyone a lot more measured in their future financial decision-making, Liden believes.

"I think that clients, whether they are corporates, institutions or private will have a more sophisticated demand for financial services in the future and we’d like to stay the largest bank in Latvia and the region which means further investment in all three Baltic countries,” Liden added.

As the largest financial institution in the Baltic states, Hansabank’s actions probably have more influence on the economic welfare of the three republics than the three central banks combined.

For his part, Liden is under no illusions that all the problems associated with the much-discussed Baltic ‘landing’ are all over, or indeed that a similar scenario could not happen in the future. "One important thing for all of us to remember is that right now, those of us operating in the Baltic financial sector have the eyes of the financial world on us. Don’t underestimate that attention. How this situation is handled will set the image and determine the future credibility of this region for many years to come.”

"We think we have ways to mitigate negative effects and to secure the quality in our credit portfolio to gain both us and our customers. As a robust financial institution we also represent long-term stability for corporations and private clients in times that might be more difficult than they have been,” he concluded.

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