Swedbank in Estonia going strong

  • 2010-09-08
  • By Olya Schaefer

TALLINN - According to Kristiina Tamberg, head of Communication at Swedbank Estonia, Swedbank is committed to Estonia, which it considers part of its home market. Due to the economic slump, and its particularly lingering effect on the banking industry, there was speculation among insiders as to whether some Nordic and European banks would leave the Baltics. According to Swedbank’s official representatives, there was never any question of Swedbank departing. In fact, there are expectations of moderate growth and hope that the last quarter’s results are a turning point.

Swedbank’s strengths and understanding of the local market have brought it a large market share as well as international recognition. In July, Swedbank was ranked as the best bank in Estonia as well as in Lithuania by Euromoney, one of the world’s leading financial markets magazines. Euromoney announced the winners in its annual Awards for Excellence 2010 competition, one of the most prestigious awards in the global banking industry.

All things considered, Swedbank is doing reasonably well, and there is certainly a reason to be optimistic about its future in Estonia. “For some time there have been positive signs in the economy and in the clients’ behavior, and now we can see them in the banking sector as well – after negative economic results for five quarters in a row, this quarter we can show a positive result,” said Priit Perens, country head of Swedbank in Estonia, after the second quarter figures were officially released. Revenues in the second quarter increased by 10 percent in comparison to the first quarter of the year. The number of employees remained constant, while the number of branches decreased by 2.

Swedbank currently has 67 branches and over 700 cash machines throughout Estonia. Swedbank maintains its position as the bank with the most extensive network of branches and the largest number of personnel in Estonia. There are plans to open two additional branches in Tallinn this year. Swedbank additionally holds a 43 percent market share in the loan market and a 47 percent market share of deposits in Estonia.

Mart Siilivask, official spokesperson for Swedbank Estonia, noted that the economic downturn affected Swedbank, as it did every other bank, but that adaption and continued success are possible. “Our clients are choosing electronic channels - Internetbank, ATMs, telephone and mobile bank - more and more when communicating with the bank. Today over 97 percent (and growing) of our transactions are made through electronic channels. This trend and the economic downfall forced us to make changes in our branch network and decrease it.”

The arrival of the euro has also given observers and insiders a reason to feel confident in Swedbank, as the impact of the euro is expected to be very positive for Estonia as a whole, and the banking industry in particular. “The euro is an important step in Estonia’s development,” says Siilivask. “With the euro, we will have entered into one of the world’s most powerful monetary unions, which will increase the reliability and stability of the Estonian economy. This will bring about several good things - a more stable environment to attract foreign investments, a simplified way of selling Estonian goods to the euro area countries, savings in exchange and transaction fees. It will all help to further develop the economy and through that create jobs much needed in the current situation.”

In order to maintain its market lead and attract more foreign clients, Swedbank has been actively preparing for the currency change, and is working hard to keep private and business clients appraised of the upcoming changes. Siilivask mentioned several important pieces of information relating to the euro transition. “Our private clients should know euro transition time, rate and campaign times when one can exchange cash and coins. In addition, the private client should know that money [Estonian kroons] in bank accounts will be automatically converted to euros, without service fees and at the central bank rate. It is also important to know that the euro will not change any agreements made in contracts.  Business clients have to know how and where to get euro cash for the parallel period [kroons and euros together]. Also, our business clients should know that from January 1, 2011, all the communication between the bank and client is euro-based.”

Created in 2006 by a merger of the Swedish Forenings Sparbanken and Baltic Hansabank, Swedbank has since been one of the major banking entities in Estonia.