Swedbank working to build trust

RIGA - Swedbank operations in Latvia and the other Baltic countries will focus on sustainable growth and building clients’ trust in the bank, Swedbank President and CEO Michael Wolf said in an interview with the business portal Nozare.lv. Commenting on the drop in Swedbank’s market share, from 23.7 percent in 2007 to 20 percent this year, Wolf admits that, in the initial stages of the crisis, the bank had too many loans and too few deposits.

Swedbank was also focusing too heavily on major clients, but now the bank will try to focus more on private individuals, as well as small- and medium-sized enterprises. Part of the market share that was lost was due to the bank’s decision to change its policy on clients. Being as close to them as possible and developing mutual trust is more important than trying to increase the bank’s market share, said Wolf.

Besides, the bank’s new relationship strategy will eventually increase Swedbank’s market share, believes Wolf. Even 20 percent is a significant share of the Latvian market, says Wolf, adding that building new relations with clients will take time.
The results of the steps that Swedbank is taking now will become apparent in only five or ten years. The bank is trying to work with local companies and politicians to achieve growth in society as a whole, as this will also contribute to Swedbank’s growth, explains Wolf.

According to Wolf, the crisis was easier on some banks because of their policies - for instance, HSBC imposed restrictions on the deposit-loan relationship.
Before the crisis, the entire industry believed that growth would never end and that banks had to be in as many markets as possible, trying to get a maximum share of them. Banks were distributing money without asking for obligations. Swedbank believes that banks should not strive for such growth, but try to attain sustainable development in the long term, believes Wolf.

Deposit volumes are increasing across the Baltic countries, while lending volumes are not - this is the lesson that was taught by the crisis, people understand that they need to have a better financial balance.
Wolf says that he “takes off his hat” to the Baltic people for being realists. After the crisis struck, people in the Baltic countries returned to the idea of sustainability and began to tackle their problems directly, without waiting for the problems to resolve themselves. This is why the Baltic countries will be able to return to normal development much faster than other countries, says Wolf.

On the one hand, it may be said that there was a lack of experience in Latvia before 2008, which concerns politicians, banks and residents alike. But all three groups were working the past two years to create a sustainable development structure for the future.

This does not mean that everybody is content now. Losing money or having to move to a smaller apartment is painful, but people have to realize that this is the beginning of sustainability. It is important that society does not try to find a scapegoat, for instance, banks, because putting the blame on someone will not solve problems. Banks could be blamed if they had refused to communicate with society or politicians, but this did not happen.

Wolf says that Swedbank does not evict tenants, but helps them tackle their problems, the bank also restructures companies to make them competitive and viable. If necessary, however, the bank can employ forceful methods.