Thommy Mossinger, head of the regional bank
in Stockholm for Sweden’s Handelsbanken, says his bank’s recently
launched 0 percent, no-fee housing loan product proved so popular
that the bank had to open the majority of its branches on a
Saturday to cater for demand. Dan Jones

Thommy Mossinger, HandelsbankenSvenska Handelsbanken, Sweden’s largest retail bank by
branches, has hit its domestic market with a new 0 percent interest
loan exploiting a new tax break launched by the government. The ROT
loan – standing for ‘repair, renovation, extension’ in Swedish –
allows householders to borrow up to SEK100,000 ($12,600) at 0
percent interest and without charges for one year.

Launched on 4 May, the product is unique in
the Swedish market and has not yet been replicated by any of
Handelsbanken’s domestic rivals. Both Nordea and Swedbank said that
introducing such a product was not on the agenda, though Danske
Bank spokesman in Sweden, Carlos Cancino, told RBI that
Danske was “discussing the product and looking closely into the
offering from Handelsbanken”.

“Banks and customers have been living with
this kind of margin pressure and interest rate pressure for a long
time now. There has been a very sharp focus on these questions in
Sweden for the past five years,” Cancino said.

Handelsbanken itself says that the “enormous”
levels of interest in the product led it to open over 400 of its
461 Swedish branches on Saturday 16 May.

“In Stockholm we have 10 branches that are
always open on Saturdays, but all 95 of them will be open this
Saturday to encourage sales of this and other products,” said
Thommy Mossinger, head of the regional bank in Stockholm, speaking
to RBI.Handelsbanken - retail loans and deposits

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The Stockholm regional bank is one of six such
decentralised institutions run by Handelsbanken in its domestic
market; each regional bank is responsible for its own profit and
attempts to maintain the delicate balancing act of providing higher
quality service at a lower cost than at other bank branches.

Handelsbanken was successful in this regard in
2008 – its cost-income ratio fell from 45.6 percent in 2007 to 44.3
percent last year, versus a Nordic banking cost-income ratio
average that rose from 53.5 percent to 55 percent over the same

The bank also says a 2008 comparison of the
four largest Swedish banks – SEB, Nordea, Swedbank and
Handelsbanken itself – found that customer satisfaction levels were
highest at Handelsbanken.

“We have been working like this for 35 years
and the branch is responsible for all kind of customers –
individuals, corporates and others. I think that is one of the keys
to our success and why we have been a bank with low losses,” said

First-quarter results from the leading banks
in Sweden show this strategy has indeed limited Handelsbanken’s
loan losses, though this is in equal part due to its rivals’
greater exposure to the troubled Baltic region.

Net loan losses at Handelsbanken in the first
quarter stood at SEK869 million ($109.6 million), compared with
€356 million ($484 million) at the Nordic region’s largest bank,
Nordea. As a percentage of total lending, Handelsbanken says its
loan losses stand at under 0.25 percent compared with a regional
average of almost 1.5 percent.

There are signs that the more autonomous
branch strategy is beginning to catch on in Sweden: on 6 May
Swedbank announced that it will restructure its banking divisions
to give regional heads “a clearer business mandate as well as
increased operational responsibility”, with operations in Sweden
being organised into six regions. Swedbank, the bank said in a
statement, is now “shifting the decision making power closer to the

That endorsement of the regional strategy is
echoed by Mossinger, who said of Handelsbanken: “We are really near
to the customer in ways that other banks are not.”

The bank is touting its new loan as an
extension of that process. The loan is aimed at customers who are
eager to take advantage of a new government tax credit allowing
them to deduct 50 percent of the cost of maintenance or extension
work done on their property, up to a maximum of SEK50,000 per

Others were more critical. “You can launch
that product if you want to create attention but I think it is more
fair for customers to have a fair pricing on your whole product –
not only for the first SEK100,000 you want to borrow,” said

Handelsbanken will withdraw the loan on 30
June, but there is a possibility that this will be extended if the
product maintains its current level of popularity, Mossinger

Questioned about the overall pricing of
Handelsbanken’s lending products, Mossinger maintained that the
bank was no different to its rivals. “We are similar to the other
banks in our pricing levels, even similar to [state-owned bank] SBAB,” he said. “We thought the initiative from the government was
very good. Houses can get tax deductions, and this can boost the
economy and help Sweden create jobs.”