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Mälardalen University Press Licentiate ThesesNo. 169
EXPECTATIONS IN THE INTERNATIONALIZATION PROCESS – THECASE OF TWO SWEDISH BANKS’ FOREIGN ACTIVITIES 1995-2010
Annoch Hadjikhani
2013
School of Business, Society and Engineering
Mälardalen University Press Licentiate ThesesNo. 169
EXPECTATIONS IN THE INTERNATIONALIZATION PROCESS – THECASE OF TWO SWEDISH BANKS’ FOREIGN ACTIVITIES 1995-2010
Annoch Hadjikhani
2013
School of Business, Society and Engineering
Copyright © Annoch Hadjikhani, 2013ISBN 978-91-7485-114-4ISSN 1651-9256Printed by Mälardalen University, Västerås, Sweden
Mälardalen University Press Licentiate Theses No. 169
Expectations in the internationalization process – The case of two Swedish banks’ foreign activities 1995-2010
Annoch Hadjikhani
Akademisk avhandling
som för avläggande av filosofie licentiatexamen i industriell eko-nomi och organisation vid Akademin för ekonomi, samhälle och tek-
nik kommer att offentligen försvaras torsdagen den 11 juni 2013, 13.15 i Pi, Mälardalens Högskola, Västerås
Fakultetsopponent: Docent Steve Thompson, University of
Richmond
Akademin för ekonomi, samhälle och teknik
Mälardalen University Press Licentiate Theses No. 169
Expectations in the internationalization process – The case of two Swedish banks’ foreign activities 1995-2010
Annoch Hadjikhani
Akademisk avhandling
som för avläggande av filosofie licentiatexamen i industriell eko-nomi och organisation vid Akademin för ekonomi, samhälle och tek-
nik kommer att offentligen försvaras torsdagen den 11 juni 2013, 13.15 i Pi, Mälardalens Högskola, Västerås
Fakultetsopponent: Docent Steve Thompson, University of
Richmond
Akademin för ekonomi, samhälle och teknik
Abstract
Studies of banks’ internationalization are few, particularly of Swedish banks’ and studies holding a process view of internationalization. This is surprising considering the fact that banks’ have an incredibly important role in our societies. Furthermore, the Swedish banks have until recently been restricted from internationalizing. However today the four largest Swedish banks have all become multinational. The purpose of this thesis is to describe and analyze the two Swedish banks Handelsbanken and Swedbank’s inter-nationalization process between the years 1995-2010. This achieved by covering all relevant foreign markets that the banks are active in during their internationalization process in a longitudinal cross-case study based on archival sources (i.e. newspaper articles, press releases and annual reports). The analytical framework is constructed from behavioral theories and follows a process view of firms’ internationalization by applying the concepts of market commitment, market knowledge and expectation. Latterly firms’ expectation is included to take the future dimension into account in understanding firms’ internationalization behavior. Conclusions made in this thesis show that the banks internationalization process has some semblances but otherwise they show completely different internationalization behaviors. The study shows that firms’ internationalization process is bound to what the firm will expect of the future and that this expectation is very different based on what knowledge the firm has and its experience. Furthermore the study evidences through empirical findings that the internationalization process of firms’ is also strongly related to the state of the market, i.e. stable or unstable. ISBN 978-91-7485-114-4 ISSN 1651-9256
Dedicated to my patient family, supervisors and friends.
This work could not have been done without you.
Abstract
Studies of banks’ internationalization are few, particularly of Swedish banks’ and studies holding a process view of internationalization. This is surprising considering the fact that banks’ have an incredibly important role in our societies. Furthermore, the Swedish banks have until recently been restricted from internationalizing. However today the four largest Swedish banks have all become multinational. The purpose of this thesis is to describe and analyze the two Swedish banks Handelsbanken and Swedbank’s inter-nationalization process between the years 1995-2010. This achieved by covering all relevant foreign markets that the banks are active in during their internationalization process in a longitudinal cross-case study based on archival sources (i.e. newspaper articles, press releases and annual reports). The analytical framework is constructed from behavioral theories and follows a process view of firms’ internationalization by applying the concepts of market commitment, market knowledge and expectation. Latterly firms’ expectation is included to take the future dimension into account in understanding firms’ internationalization behavior. Conclusions made in this thesis show that the banks internationalization process has some semblances but otherwise they show completely different internationalization behaviors. The study shows that firms’ internationalization process is bound to what the firm will expect of the future and that this expectation is very different based on what knowledge the firm has and its experience. Furthermore the study evidences through empirical findings that the internationalization process of firms’ is also strongly related to the state of the market, i.e. stable or unstable. ISBN 978-91-7485-114-4 ISSN 1651-9256
Dedicated to my patient family, supervisors and friends.
This work could not have been done without you.
Acknowledgments
This process is far from over and I still have a long way to go, but so far I have learned a great deal and have many to thank for their help and inspira-tion. My supervisors Peter Thilenius, the great philosopher, and Peter Ek-man, the real Happy Feet, have encouraged and challenged me continuously in my research and given me much more than I could ever ask for. Beside my supervisors there are many, many colleagues and other researchers that have helped me directly or through their own work. I will not give a full list of names since they are too numerous, but I want to thank three people espe-cially for so many reasons, my wonderful colleagues and friends Cecilia Lindh, Andreas Pajuvirta, and Aswo Safari, who has inspired and helped me very much. I sincerely hope that at least some of the rest I will not be able to mention know who they are. Beyond these contributions are the loving sup-port of Emma Wåhlström, my family, and friends Sebastian Björkelid, Nils Lerin, Andreas Mattsson, Olof Nilsson, and Martin Runfors. Yet my main source of inspiration in this process has been my father, both as a scholar in my field and as my wonderful father. He is a very special man, as everyone who has met him knows, and I am grateful to have the opportunity to work alongside him. However, this goes for my mother and sister too: I would not be here today if it were not for them. I also want to thank Eva Maaninen-Olsson whose work as a critic at my ad-vanced seminar significantly affected this thesis, and my thoughts, for the better. Further, I want to thank Handelsbankens forskningsstiftelser for fund-ing; this road would have been very short otherwise. In this aspect I also want to thank the Swedish Research School of Management and Information Technology (MIT) for funding and contributions. This of course goes with-out saying for Mälardalen University as well. Thank you everyone: hopeful-ly I can give something back in the future. On a final note I want to thank Juventus, for being the finest of the finest and especially Buffon, Conte, and Del Piero for bringing glory back to Turin once again.
Acknowledgments
This process is far from over and I still have a long way to go, but so far I have learned a great deal and have many to thank for their help and inspira-tion. My supervisors Peter Thilenius, the great philosopher, and Peter Ek-man, the real Happy Feet, have encouraged and challenged me continuously in my research and given me much more than I could ever ask for. Beside my supervisors there are many, many colleagues and other researchers that have helped me directly or through their own work. I will not give a full list of names since they are too numerous, but I want to thank three people espe-cially for so many reasons, my wonderful colleagues and friends Cecilia Lindh, Andreas Pajuvirta, and Aswo Safari, who has inspired and helped me very much. I sincerely hope that at least some of the rest I will not be able to mention know who they are. Beyond these contributions are the loving sup-port of Emma Wåhlström, my family, and friends Sebastian Björkelid, Nils Lerin, Andreas Mattsson, Olof Nilsson, and Martin Runfors. Yet my main source of inspiration in this process has been my father, both as a scholar in my field and as my wonderful father. He is a very special man, as everyone who has met him knows, and I am grateful to have the opportunity to work alongside him. However, this goes for my mother and sister too: I would not be here today if it were not for them. I also want to thank Eva Maaninen-Olsson whose work as a critic at my ad-vanced seminar significantly affected this thesis, and my thoughts, for the better. Further, I want to thank Handelsbankens forskningsstiftelser for fund-ing; this road would have been very short otherwise. In this aspect I also want to thank the Swedish Research School of Management and Information Technology (MIT) for funding and contributions. This of course goes with-out saying for Mälardalen University as well. Thank you everyone: hopeful-ly I can give something back in the future. On a final note I want to thank Juventus, for being the finest of the finest and especially Buffon, Conte, and Del Piero for bringing glory back to Turin once again.
Abstract
Studies of banks’ internationalization are few, particularly of Swedish banks’ and studies holding a process view of internationalization. This is surprising considering the fact that banks’ have an incredibly important role in our societies. Furthermore, the Swedish banks have until recently been restricted from internationalizing. However today the four largest Swedish banks have all become multinational. The purpose of this thesis is to de-scribe and analyze the two Swedish banks Handelsbanken and Swedbank’s internationalization process between the years 1995-2010. This achieved by covering all relevant foreign markets that the banks are active in during their internationalization process in a longitudinal cross-case study based on ar-chival sources (i.e. newspaper articles, press releases and annual reports). The analytical framework is constructed from behavioral theories and fol-lows a process view of firms’ internationalization by applying the concepts of market commitment, market knowledge and expectation. Latterly firms’ expectation is included to take the future dimension into account in under-standing firms’ internationalization behavior. Conclusions made in this thesis show that the banks internationalization process has some semblances but otherwise they show completely different internationalization behaviors. The study shows that firms’ internationaliza-tion process is bound to what the firm will expect of the future and that this expectation is very different based on what knowledge the firm has and its experience. Furthermore the study evidences through empirical findings that the internationalization process of firms’ is also strongly related to the state of the market, i.e. stable or unstable.
Abstract
Studies of banks’ internationalization are few, particularly of Swedish banks’ and studies holding a process view of internationalization. This is surprising considering the fact that banks’ have an incredibly important role in our societies. Furthermore, the Swedish banks have until recently been restricted from internationalizing. However today the four largest Swedish banks have all become multinational. The purpose of this thesis is to de-scribe and analyze the two Swedish banks Handelsbanken and Swedbank’s internationalization process between the years 1995-2010. This achieved by covering all relevant foreign markets that the banks are active in during their internationalization process in a longitudinal cross-case study based on ar-chival sources (i.e. newspaper articles, press releases and annual reports). The analytical framework is constructed from behavioral theories and fol-lows a process view of firms’ internationalization by applying the concepts of market commitment, market knowledge and expectation. Latterly firms’ expectation is included to take the future dimension into account in under-standing firms’ internationalization behavior. Conclusions made in this thesis show that the banks internationalization process has some semblances but otherwise they show completely different internationalization behaviors. The study shows that firms’ internationaliza-tion process is bound to what the firm will expect of the future and that this expectation is very different based on what knowledge the firm has and its experience. Furthermore the study evidences through empirical findings that the internationalization process of firms’ is also strongly related to the state of the market, i.e. stable or unstable.
Sammanfattning
Studier av bankers internationalisering är relativt få i sitt omfång, särskilt om svenska banker och studier med en teoretisk process vy över international-isering. Det här är ganska överraskande med tanke på hur viktiga bankerna är i vårt samhälle. Samtidigt var det inte särskilt länge sedan som bankerna var reglerade från att internationalisera medan de idag fyra stora svenska bankerna samtliga har blivit multinationella. Därför är syftet med denna avhandling är att beskriva och analysera de två svenska bankerna Handels-banken och Swedbanks internationaliserings process mellan åren 1995 och 2010. Studien följer samtliga relevanta marknader som bankerna är aktiva i under deras internationalisering process genom två longitudinella fallstudier baserad på arkiv data (framför allt tidningsartiklar, pressmeddelanden och årsredovisningar). Det analytiska ramverket är grundat på beteendeteorier och följer bankernas internationalisering ur en process vy med koncepten marknadsåtagande, marknadskunskap och förväntningar. Den senare är in-kluderat i syfte att fånga in den framtida dimensionen påverkan på företags internationaliserings beteende. Slutsatser som görs i avhandlingen är t.ex. att bankernas international-iseringsprocess har sina likheter i vissa aspekter men är ändå helt olika i deras internationaliseringsbeteende. Studien visar att företags international-iseringsprocess är bunden till vad företagen förväntar sig av framtiden och att denna förväntning kan se väldigt olika ut beroende på vilka kunskaper och erfarenheter som företaget besitter. Därutöver gör studien den empiriska upptäckten att företags internationaliserings process är starkt beroende på marknadstillståndet, d.v.s. om det är stabilt eller instabilt.
Sammanfattning
Studier av bankers internationalisering är relativt få i sitt omfång, särskilt om svenska banker och studier med en teoretisk process vy över international-isering. Det här är ganska överraskande med tanke på hur viktiga bankerna är i vårt samhälle. Samtidigt var det inte särskilt länge sedan som bankerna var reglerade från att internationalisera medan de idag fyra stora svenska bankerna samtliga har blivit multinationella. Därför är syftet med denna avhandling är att beskriva och analysera de två svenska bankerna Handels-banken och Swedbanks internationaliserings process mellan åren 1995 och 2010. Studien följer samtliga relevanta marknader som bankerna är aktiva i under deras internationalisering process genom två longitudinella fallstudier baserad på arkiv data (framför allt tidningsartiklar, pressmeddelanden och årsredovisningar). Det analytiska ramverket är grundat på beteendeteorier och följer bankernas internationalisering ur en process vy med koncepten marknadsåtagande, marknadskunskap och förväntningar. Den senare är in-kluderat i syfte att fånga in den framtida dimensionen påverkan på företags internationaliserings beteende. Slutsatser som görs i avhandlingen är t.ex. att bankernas international-iseringsprocess har sina likheter i vissa aspekter men är ändå helt olika i deras internationaliseringsbeteende. Studien visar att företags international-iseringsprocess är bunden till vad företagen förväntar sig av framtiden och att denna förväntning kan se väldigt olika ut beroende på vilka kunskaper och erfarenheter som företaget besitter. Därutöver gör studien den empiriska upptäckten att företags internationaliserings process är starkt beroende på marknadstillståndet, d.v.s. om det är stabilt eller instabilt.
Contents
1! Introduction ............................................................................................... 1!
2! Internationalization studies ....................................................................... 7!2.1! Studies on banks ................................................................................ 7!2.2! The internationalization process ...................................................... 11!
2.2.1! Market commitment ................................................................ 13!2.2.2! Market knowledge ................................................................... 16!2.2.3! Expectation .............................................................................. 18!
2.3! Analytical framework ...................................................................... 20!
3! Research approach .................................................................................. 23!3.1! A longitudinal case study ................................................................ 23!3.2! Data collection and application ....................................................... 28!3.3! Assessing the two banks’ internationalization ................................ 33!3.4! Tables and case presentation ........................................................... 34!
4! Case 1: Handelsbanken ........................................................................... 37!4.1! Background ..................................................................................... 37!4.2! 1995-2000, Slowly moves abroad ................................................... 39!4.3! 2001-2007 Picks up the expansion pace ......................................... 49!4.4! 2008-2010 Turbulent times ............................................................. 67!4.5! A brief summary .............................................................................. 77!
5! Case 2: Swedbank ................................................................................... 81!5.1! Background ..................................................................................... 81!5.2! 1995-2000 Slowly expands abroad ................................................. 83!5.3! 2001-2007 Increases expansion in the Baltic region ....................... 94!5.4! 2008-2010 Contracting internationalization .................................. 112!5.5! A brief summary ............................................................................ 122!
6! Analytical discussion ............................................................................ 127!6.1! General observations ..................................................................... 127!6.2! Overall dynamics of the process ................................................... 129!
6.2.1! The internationalization process under stable conditions ...... 132!6.2.2! Reacting to crises ................................................................... 138!
6.3! Empirical findings ......................................................................... 141!
7! Conclusion ............................................................................................ 143!
Contents
1! Introduction ............................................................................................... 1!
2! Internationalization studies ....................................................................... 7!2.1! Studies on banks ................................................................................ 7!2.2! The internationalization process ...................................................... 11!
2.2.1! Market commitment ................................................................ 13!2.2.2! Market knowledge ................................................................... 16!2.2.3! Expectation .............................................................................. 18!
2.3! Analytical framework ...................................................................... 20!
3! Research approach .................................................................................. 23!3.1! A longitudinal case study ................................................................ 23!3.2! Data collection and application ....................................................... 28!3.3! Assessing the two banks’ internationalization ................................ 33!3.4! Tables and case presentation ........................................................... 34!
4! Case 1: Handelsbanken ........................................................................... 37!4.1! Background ..................................................................................... 37!4.2! 1995-2000, Slowly moves abroad ................................................... 39!4.3! 2001-2007 Picks up the expansion pace ......................................... 49!4.4! 2008-2010 Turbulent times ............................................................. 67!4.5! A brief summary .............................................................................. 77!
5! Case 2: Swedbank ................................................................................... 81!5.1! Background ..................................................................................... 81!5.2! 1995-2000 Slowly expands abroad ................................................. 83!5.3! 2001-2007 Increases expansion in the Baltic region ....................... 94!5.4! 2008-2010 Contracting internationalization .................................. 112!5.5! A brief summary ............................................................................ 122!
6! Analytical discussion ............................................................................ 127!6.1! General observations ..................................................................... 127!6.2! Overall dynamics of the process ................................................... 129!
6.2.1! The internationalization process under stable conditions ...... 132!6.2.2! Reacting to crises ................................................................... 138!
6.3! Empirical findings ......................................................................... 141!
7! Conclusion ............................................................................................ 143!
7.1! The role of expectation .................................................................. 145!7.2! Future research .............................................................................. 148!
References ................................................................................................... 151!
Appendix 1 ................................................................................................. 167!
Index
Table 1. Extracted news items used in the two cases .................................... 29!Table 2. Handelsbanken expansion in the period 1995-2000 ....................... 40!Table 3. Handelsbanken expansion in period 2001-2007 ............................. 50!Table 4. Handelsbanken expansion in period 2008-2010 ............................. 67!Table 5. FöreningsSparbanken expansion in 1995-2000 .............................. 84!Table 6. FöreningsSparbanken’s expansion in 2001-2007 ........................... 94!Table 7. Swedbank’s expansion in 2008-2010 ............................................ 112! Figure 1. Number of offices abroad in the period 1995-2010 ......................... 1!Figure 2. Structure of the thesis ...................................................................... 6!Figure 3. The analytical framework of the thesis .......................................... 21!Figure 4. The study’s methodological approach ........................................... 26!Figure 5. Archival search for empirical evidence ......................................... 29!Figure 6. Hits of the search, headlines and synopsis ..................................... 30!Figure 7. A typical news item with exemplifying coding scheme ................ 31!Figure 8. Summary [timeline] of important events for Handelsbanken ........ 79!Figure 9. Summary [timeline] of important events for Swedbank .............. 124!
7.1! The role of expectation .................................................................. 145!7.2! Future research .............................................................................. 148!
References ................................................................................................... 151!
Appendix 1 ................................................................................................. 167!
Index
Table 1. Extracted news items used in the two cases .................................... 29!Table 2. Handelsbanken expansion in the period 1995-2000 ....................... 40!Table 3. Handelsbanken expansion in period 2001-2007 ............................. 50!Table 4. Handelsbanken expansion in period 2008-2010 ............................. 67!Table 5. FöreningsSparbanken expansion in 1995-2000 .............................. 84!Table 6. FöreningsSparbanken’s expansion in 2001-2007 ........................... 94!Table 7. Swedbank’s expansion in 2008-2010 ............................................ 112! Figure 1. Number of offices abroad in the period 1995-2010 ......................... 1!Figure 2. Structure of the thesis ...................................................................... 6!Figure 3. The analytical framework of the thesis .......................................... 21!Figure 4. The study’s methodological approach ........................................... 26!Figure 5. Archival search for empirical evidence ......................................... 29!Figure 6. Hits of the search, headlines and synopsis ..................................... 30!Figure 7. A typical news item with exemplifying coding scheme ................ 31!Figure 8. Summary [timeline] of important events for Handelsbanken ........ 79!Figure 9. Summary [timeline] of important events for Swedbank .............. 124!
1
1 Introduction
Twenty years ago the Swedish bank Swedbank had nine offices located out-side of Sweden compared to over 300 in 2010. Another large Swedish bank Handelsbanken had 24 offices located abroad back in 1990 but around 250 offices by 2010. During the past two decades these two banks have been transformed from being national to multinational. Considerable time has passed since then, and it is easy to forget how much. To illustrate some of the things that occurred around the world during these years, the World Wide Web was invented, the cold war ended, the USSR was dismantled and around ten years later Russia faced the ruble crisis, which was followed by the acts on 9/11, 2001. Thus a lot has occurred and, as Figure 1 below illus-trates, the number of offices abroad between year 1995 and 2010 has signifi-cantly increased. During year 1994 Handelsbanken’s income was around USD 1800 million (United States dollars) in comparison with USD 4600 million in 2010. Swedbank increased its income from around USD 2800 million in 1994 to USD 4600 million by the end of 2010. (Föreningsbanken Annual Report 1994; Handelsbanken Annual Report 1990; 1994; 2010; Sparbanken Annual Report 1990; Swedbank Annual Report 1994; 2010) Hence, in comparison with twenty years ago, both banks named have drasti-cally increased their foreign activities.
Figure 1. Number of offices abroad in the period 1995-2010
0
100
200
300
400
500
600
1995 2000 2005 2010
Swedbank
Handelsbanken
1
1 Introduction
Twenty years ago the Swedish bank Swedbank had nine offices located out-side of Sweden compared to over 300 in 2010. Another large Swedish bank Handelsbanken had 24 offices located abroad back in 1990 but around 250 offices by 2010. During the past two decades these two banks have been transformed from being national to multinational. Considerable time has passed since then, and it is easy to forget how much. To illustrate some of the things that occurred around the world during these years, the World Wide Web was invented, the cold war ended, the USSR was dismantled and around ten years later Russia faced the ruble crisis, which was followed by the acts on 9/11, 2001. Thus a lot has occurred and, as Figure 1 below illus-trates, the number of offices abroad between year 1995 and 2010 has signifi-cantly increased. During year 1994 Handelsbanken’s income was around USD 1800 million (United States dollars) in comparison with USD 4600 million in 2010. Swedbank increased its income from around USD 2800 million in 1994 to USD 4600 million by the end of 2010. (Föreningsbanken Annual Report 1994; Handelsbanken Annual Report 1990; 1994; 2010; Sparbanken Annual Report 1990; Swedbank Annual Report 1994; 2010) Hence, in comparison with twenty years ago, both banks named have drasti-cally increased their foreign activities.
Figure 1. Number of offices abroad in the period 1995-2010
0
100
200
300
400
500
600
1995 2000 2005 2010
Swedbank
Handelsbanken
2
But, Figure 1 above shows not only that the offices increased, but also indi-cates that the respective internationalization processes of the banks seem very different. One, Swedbank’s process, evinces strong variations of ups and downs, while the other bank, Handelsbanken’s, process shows a much more steady increase of internationalization. Today there are four banks with their origin in Sweden that can be considered multinational. These banks account for 66 percent of the Swedish banking market (Swedish Bankers’ Association, 2013), and in the recent years these banks have lent about USD 59 billion in the Baltic region alone (Svenska Dagbladet, 2009). Yet only two decades ago the Swedish banks were highly restricted by legislation, and their activities were largely limited to the domestic market. Since the deregu-lation of the Swedish banking market in the late 1980s Swedish banks have expanded abroad and become increasingly internationalized. Consequently this study will focus its attention on the internationalization process of two of the four large Swedish banks, namely Handelsbanken and Swedbank, which during the last two decades have increased investments in foreign markets. Of primary interest is how the two banks have internationalized in in the period 1995-2010 but also whether the future dimension, the two banks’ expectations, have affected the banks’ internationalization process, which is the focus of this study. The topic of internationalization of firms has captured the attention of many researchers during the last five decades. This trend has been intensified by globalization, and research on internationalization of small businesses (Coviello & Munro, 1995; 1997; Chetty & Blankenburg Holm, 2000; Bell, Crick & Young, 2004; Agndal & Chetty, 2007; Lindstrand, Sharma & Eriks-son, 2012), industrial firms (Johanson & Vahlne, 1977; 1990; 2009; Denis & Deplteau, 1985; Johanson & Mattsson, 1988; Gankema, Snuif & Zwart, 2000; Eren-Erdogmus, Cobanoglu, Yalcin & Ghauri, 2010) or service firms (Oviatt & McDougall, 1994; Bell, 1995; Knight & Cavusgil, 1996; Kathuria, Joshi & Dellande, 2008; Ball, Lindsay & Rose, 2008) has rapidly increased. There are a vast number of studies on how firms internationalize and their internationalization behavior, like incremental growth and rapid growth that has attracted growing interest by researchers. Interestingly, the international-ization of banks has engaged few researchers. In these contributions some employ economic theories (Kogut & Singh, 1988; Benito & Gripsrud, 1992; Hennart & Park, 1993; Barkema & Vermeulen, 1998; Brouthers & Brouth-ers, 2000; Cardone-Riportella & Cazorla-Papis, 2001; Cheng & Hu, 2002; Harzing, 2002; Sanchez-Peinado, 2003; Petrou, 2009) while others are en-gaged with views borrowed from management behavior theories and organi-zation theories (Thunman & Eriksson, 1990; Marquardt, 1994; Engwall & Wallenstål, 1988; Engwall, 1994; 1995ab; Kho & Stulz, 2000; Blomstermo, Eriksson & Sharma, 2002; Bae, Kang & Lim, 2002; Beltratti & Stulz, 2009).Rresearch on bank internationalization is particularly scarce in regard to studies on Swedish banks internationalization or process studies on bank
3
internationalization. These insufficiencies have been the driving force of this study, which has its primary focus on the internationalization process for Swedish banks. Since the study by Marquardt (1994) on Swedish banks’ foreign activities between the years 1900-1992, and the contributions of Engwall (1994; 1995ab; 1997), Engwall and Johanson (1990), Engwall and Wallenstål (1988), Furusten (2009), Gidegård and Thunman (1998), Thunman (1992; 1999), and Thunman and Eriksson (1990), the subject of Swedish banks’ internationalization has not attracted the attention of researchers. In these efforts some have put the emphasis on theoretical contributions while others have provided analytical views for their empirical studies. However, in both tracks, the main period in focus is before 2000. Further, in these contribu-tions most studies stem from organizational theory (Engwall, 1992; 1994; 1995ab; 1997; Engwall & Johanson, 1990; Engwall & Wallenstål, 1988; Thunman & Eriksson, 1990; Thunman, 1992; 1999; Gidhagen & Thunman, 1998) and are limited to international marketing or business. This can likely be explained by the fact that Swedish banks’ operations were largely domes-tic in the early 1990s and restricted by legislation. But as of then the activity of Swedish banks abroad has increased greatly. Over the past decades these banks have been active in the same geographical regions but in different degree, and also during different periods of time. For this thesis there are a number of encouraging reasons to justify the study of Swedish banks’ inter-nationalization process: 1) Banks are of interest because they play important roles in societies and markets (Thunman, 1992). For example in Sweden the ratio between the four largest banks’ assets to Sweden’s GNP is 4:1; thus they are four times the size of the entire Swedish economy and consequently play a significant role (Andersson, 2012; Andersson, 2013). All the more so in Sweden as the banking market is oligopolistic, consisting largely of four major players, namely Handelsbanken, Nordea, SEB, and Swedbank. Examining two of these will give a general idea of the internationalization process for Swedish banks. This will also provide insights into the heterogeneity of the banks and their activities abroad. 2) The two banks in the focus of this study have increased their international activities during the period covered in this thesis. All the more so as the banks in this study are considered to be service firms, since the service they provide is intangible, and their customers and suppliers can be the same. For this reason, this study may add new empirical insights into the international-ization process of service firms. 3) As the study by Hadjikhani, Pajuvirta and Thilenius (2012) of Swedish bank’s internationalization in Russia manifests, the internationalization pro-
2
But, Figure 1 above shows not only that the offices increased, but also indi-cates that the respective internationalization processes of the banks seem very different. One, Swedbank’s process, evinces strong variations of ups and downs, while the other bank, Handelsbanken’s, process shows a much more steady increase of internationalization. Today there are four banks with their origin in Sweden that can be considered multinational. These banks account for 66 percent of the Swedish banking market (Swedish Bankers’ Association, 2013), and in the recent years these banks have lent about USD 59 billion in the Baltic region alone (Svenska Dagbladet, 2009). Yet only two decades ago the Swedish banks were highly restricted by legislation, and their activities were largely limited to the domestic market. Since the deregu-lation of the Swedish banking market in the late 1980s Swedish banks have expanded abroad and become increasingly internationalized. Consequently this study will focus its attention on the internationalization process of two of the four large Swedish banks, namely Handelsbanken and Swedbank, which during the last two decades have increased investments in foreign markets. Of primary interest is how the two banks have internationalized in in the period 1995-2010 but also whether the future dimension, the two banks’ expectations, have affected the banks’ internationalization process, which is the focus of this study. The topic of internationalization of firms has captured the attention of many researchers during the last five decades. This trend has been intensified by globalization, and research on internationalization of small businesses (Coviello & Munro, 1995; 1997; Chetty & Blankenburg Holm, 2000; Bell, Crick & Young, 2004; Agndal & Chetty, 2007; Lindstrand, Sharma & Eriks-son, 2012), industrial firms (Johanson & Vahlne, 1977; 1990; 2009; Denis & Deplteau, 1985; Johanson & Mattsson, 1988; Gankema, Snuif & Zwart, 2000; Eren-Erdogmus, Cobanoglu, Yalcin & Ghauri, 2010) or service firms (Oviatt & McDougall, 1994; Bell, 1995; Knight & Cavusgil, 1996; Kathuria, Joshi & Dellande, 2008; Ball, Lindsay & Rose, 2008) has rapidly increased. There are a vast number of studies on how firms internationalize and their internationalization behavior, like incremental growth and rapid growth that has attracted growing interest by researchers. Interestingly, the international-ization of banks has engaged few researchers. In these contributions some employ economic theories (Kogut & Singh, 1988; Benito & Gripsrud, 1992; Hennart & Park, 1993; Barkema & Vermeulen, 1998; Brouthers & Brouth-ers, 2000; Cardone-Riportella & Cazorla-Papis, 2001; Cheng & Hu, 2002; Harzing, 2002; Sanchez-Peinado, 2003; Petrou, 2009) while others are en-gaged with views borrowed from management behavior theories and organi-zation theories (Thunman & Eriksson, 1990; Marquardt, 1994; Engwall & Wallenstål, 1988; Engwall, 1994; 1995ab; Kho & Stulz, 2000; Blomstermo, Eriksson & Sharma, 2002; Bae, Kang & Lim, 2002; Beltratti & Stulz, 2009).Rresearch on bank internationalization is particularly scarce in regard to studies on Swedish banks internationalization or process studies on bank
3
internationalization. These insufficiencies have been the driving force of this study, which has its primary focus on the internationalization process for Swedish banks. Since the study by Marquardt (1994) on Swedish banks’ foreign activities between the years 1900-1992, and the contributions of Engwall (1994; 1995ab; 1997), Engwall and Johanson (1990), Engwall and Wallenstål (1988), Furusten (2009), Gidegård and Thunman (1998), Thunman (1992; 1999), and Thunman and Eriksson (1990), the subject of Swedish banks’ internationalization has not attracted the attention of researchers. In these efforts some have put the emphasis on theoretical contributions while others have provided analytical views for their empirical studies. However, in both tracks, the main period in focus is before 2000. Further, in these contribu-tions most studies stem from organizational theory (Engwall, 1992; 1994; 1995ab; 1997; Engwall & Johanson, 1990; Engwall & Wallenstål, 1988; Thunman & Eriksson, 1990; Thunman, 1992; 1999; Gidhagen & Thunman, 1998) and are limited to international marketing or business. This can likely be explained by the fact that Swedish banks’ operations were largely domes-tic in the early 1990s and restricted by legislation. But as of then the activity of Swedish banks abroad has increased greatly. Over the past decades these banks have been active in the same geographical regions but in different degree, and also during different periods of time. For this thesis there are a number of encouraging reasons to justify the study of Swedish banks’ inter-nationalization process: 1) Banks are of interest because they play important roles in societies and markets (Thunman, 1992). For example in Sweden the ratio between the four largest banks’ assets to Sweden’s GNP is 4:1; thus they are four times the size of the entire Swedish economy and consequently play a significant role (Andersson, 2012; Andersson, 2013). All the more so in Sweden as the banking market is oligopolistic, consisting largely of four major players, namely Handelsbanken, Nordea, SEB, and Swedbank. Examining two of these will give a general idea of the internationalization process for Swedish banks. This will also provide insights into the heterogeneity of the banks and their activities abroad. 2) The two banks in the focus of this study have increased their international activities during the period covered in this thesis. All the more so as the banks in this study are considered to be service firms, since the service they provide is intangible, and their customers and suppliers can be the same. For this reason, this study may add new empirical insights into the international-ization process of service firms. 3) As the study by Hadjikhani, Pajuvirta and Thilenius (2012) of Swedish bank’s internationalization in Russia manifests, the internationalization pro-
4
cesses of these two banks are not similar. As the study shows, these two banks have employed completely different means to grow in foreign coun-tries. A comparison may aid a further understanding of the heterogeneity in their behavior and may yield further explanations for these differences. Beside the reasons above that motivate this thesis, there are other peculiar aspects that make the study of banks interesting. Unlike other firms, banks are, according to Engwall (1992, p. 171), “subject to special government treatment in the form of extensive supervision”, and “restrained particularly in risk taking and generally forbidden to undertake other activities than those defined by the charter.” This illuminates that banks, unlike other firms, run under different conditions and have more regulations to consider and adapt to. However during the recent decade Swedish banks have become active and invested in foreign markets, mainly because until 1987 Swedish banks were limited to only having representative offices abroad. New legislation and deregulation of the Swedish banking market in the 1980s, combined with Sweden’s entry in the European Union (EU) in 1995, created new pos-sibilities for Swedish banks (Engwall, 1992). At the same time the Swedish banking market had been mature and saturated for some time. Because of this it has been difficult to expand in it, and perhaps this has been one of the incentives for the banks to invest in foreign markets. Although the interna-tionalization of Swedish banks is a rather new phenomenon, few have ex-plained how they have internationalized. No one has followed up on Mar-quardt’s (1994) earlier study that shows Handelsbanken’s and Swedbank’s internationalization processes during the 1900s and their different back-grounds and approaches, which in turn make them interesting subjects to depict and compare. Hence this is also an attempt to continue where Mar-quardt left off, even though this study remains free-standing in the sense that is not intended to reflect back to or compare with Marquardt’s study. Study-ing how these banks have managed their internationalization process can contribute to our knowledge of how they have behaved and how similar or different they are. In the face of the scarcity of research on internationalization of banks, other studies on internationalization of firms may aid this thesis to structure its theoretical frame. For studying how firms internationalize, researchers from different fields have applied different tools to explain not only how firms behave but also how they ought to behave. Most contributions in the field of internationalization can be divided into two different streams. One evolved from more traditional economics focusing on market internationalization theories and market imperfections (Buckley & Casson, 1976; Rugman, 1981; Dunning, 1981) on the ground that the market is static (Pitelis, 1991). The other has its roots in behavioral science and is process oriented. With con-cepts from behavioral science the latter field embraces dynamics and time, in this case the process of internationalization, into its theoretical concepts to
5
explain firms’ behavior in foreign countries. These concepts, like commit-ment and knowledge introduce incrementality and growth for internationali-zation process in foreign markets (Penrose, 1959; Cyert & March, 1963; Carlson, 1974; Johanson & Wiedersheim-Paul, 1975; Johanson & Vahlne, 1977; Wiedersheim-Paul, Olson & Welch, 1978; Steen & Liesch, 2007). To understand firms’ internationalization behavior researchers have clearly used different theoretical tools. From these streams, this thesis stands in behavior theory and employs a theoretical view that permits an understanding of the process of internationalization for the Swedish banks. Beside the above-mentioned concepts of knowledge and commitment, in order to capture the future dimensions affect on the banks internationalization process, this study adds the concept of expectation. In line with the discussion above the research questions of this thesis is to provide a comprehensive view of the two Swedish bank’s internationaliza-tion processes over a period of time and therefore:
The purpose of this thesis is to describe and analyze the internationaliza-tion process of two Swedish banks, i.e. Handelsbanken and Swedbank, in the period 1995-2010.
Further questions seeking answers in this study are: (a) how have market changes affected the banks’ internationalization behavior; (b) what similari-ties and differences can be found in the banks’ internationalization behavior and; (c) can the banks’ expectations for future development help us under-stand the banks’ internationalization behavior? To answer the research questions a large amount of empirical facts have been gathered from archival sources, i.e. internal documents like annual reports and external mainly newspapers. The empirical facts in this study concern not only one of the banks’ foreign markets but cover the two banks’ internationalization efforts in all relevant foreign markets. The empirical facts have been analyzed and compiled into two longitudinal case studies. In other words, the cases will provide more ‘complete’ descriptions of the two banks’ internationalization processes in different foreign markets during the selected time period. The theoretical foundation for the study is based on the concepts of market knowledge, market commitment and expectation. This study will focus on the banks’ internationalization behavior over time; hence specific details on e.g. the banks’ customers or other counterparts are left aside in favor of a more comprehensive view. Still, the analytical framework developed in the study relies on the central concepts of market commitment, market knowledge and expectation to include a future dimension in the internation-alization process and the banks’ behavior. The focus of this study is the pro-cess of internationalization over a longer period of time with a broad per-
4
cesses of these two banks are not similar. As the study shows, these two banks have employed completely different means to grow in foreign coun-tries. A comparison may aid a further understanding of the heterogeneity in their behavior and may yield further explanations for these differences. Beside the reasons above that motivate this thesis, there are other peculiar aspects that make the study of banks interesting. Unlike other firms, banks are, according to Engwall (1992, p. 171), “subject to special government treatment in the form of extensive supervision”, and “restrained particularly in risk taking and generally forbidden to undertake other activities than those defined by the charter.” This illuminates that banks, unlike other firms, run under different conditions and have more regulations to consider and adapt to. However during the recent decade Swedish banks have become active and invested in foreign markets, mainly because until 1987 Swedish banks were limited to only having representative offices abroad. New legislation and deregulation of the Swedish banking market in the 1980s, combined with Sweden’s entry in the European Union (EU) in 1995, created new pos-sibilities for Swedish banks (Engwall, 1992). At the same time the Swedish banking market had been mature and saturated for some time. Because of this it has been difficult to expand in it, and perhaps this has been one of the incentives for the banks to invest in foreign markets. Although the interna-tionalization of Swedish banks is a rather new phenomenon, few have ex-plained how they have internationalized. No one has followed up on Mar-quardt’s (1994) earlier study that shows Handelsbanken’s and Swedbank’s internationalization processes during the 1900s and their different back-grounds and approaches, which in turn make them interesting subjects to depict and compare. Hence this is also an attempt to continue where Mar-quardt left off, even though this study remains free-standing in the sense that is not intended to reflect back to or compare with Marquardt’s study. Study-ing how these banks have managed their internationalization process can contribute to our knowledge of how they have behaved and how similar or different they are. In the face of the scarcity of research on internationalization of banks, other studies on internationalization of firms may aid this thesis to structure its theoretical frame. For studying how firms internationalize, researchers from different fields have applied different tools to explain not only how firms behave but also how they ought to behave. Most contributions in the field of internationalization can be divided into two different streams. One evolved from more traditional economics focusing on market internationalization theories and market imperfections (Buckley & Casson, 1976; Rugman, 1981; Dunning, 1981) on the ground that the market is static (Pitelis, 1991). The other has its roots in behavioral science and is process oriented. With con-cepts from behavioral science the latter field embraces dynamics and time, in this case the process of internationalization, into its theoretical concepts to
5
explain firms’ behavior in foreign countries. These concepts, like commit-ment and knowledge introduce incrementality and growth for internationali-zation process in foreign markets (Penrose, 1959; Cyert & March, 1963; Carlson, 1974; Johanson & Wiedersheim-Paul, 1975; Johanson & Vahlne, 1977; Wiedersheim-Paul, Olson & Welch, 1978; Steen & Liesch, 2007). To understand firms’ internationalization behavior researchers have clearly used different theoretical tools. From these streams, this thesis stands in behavior theory and employs a theoretical view that permits an understanding of the process of internationalization for the Swedish banks. Beside the above-mentioned concepts of knowledge and commitment, in order to capture the future dimensions affect on the banks internationalization process, this study adds the concept of expectation. In line with the discussion above the research questions of this thesis is to provide a comprehensive view of the two Swedish bank’s internationaliza-tion processes over a period of time and therefore:
The purpose of this thesis is to describe and analyze the internationaliza-tion process of two Swedish banks, i.e. Handelsbanken and Swedbank, in the period 1995-2010.
Further questions seeking answers in this study are: (a) how have market changes affected the banks’ internationalization behavior; (b) what similari-ties and differences can be found in the banks’ internationalization behavior and; (c) can the banks’ expectations for future development help us under-stand the banks’ internationalization behavior? To answer the research questions a large amount of empirical facts have been gathered from archival sources, i.e. internal documents like annual reports and external mainly newspapers. The empirical facts in this study concern not only one of the banks’ foreign markets but cover the two banks’ internationalization efforts in all relevant foreign markets. The empirical facts have been analyzed and compiled into two longitudinal case studies. In other words, the cases will provide more ‘complete’ descriptions of the two banks’ internationalization processes in different foreign markets during the selected time period. The theoretical foundation for the study is based on the concepts of market knowledge, market commitment and expectation. This study will focus on the banks’ internationalization behavior over time; hence specific details on e.g. the banks’ customers or other counterparts are left aside in favor of a more comprehensive view. Still, the analytical framework developed in the study relies on the central concepts of market commitment, market knowledge and expectation to include a future dimension in the internation-alization process and the banks’ behavior. The focus of this study is the pro-cess of internationalization over a longer period of time with a broad per-
6
spective. This is in order to provide not only an account of a single event, like a specific market entry in one country, but also some understanding of the dwindling routes the internationalization of firms can take in diverse countries, under varying conditions and at different points in time.
Figure 2. Structure of the thesis
As Figure 2 above illustrates, the structure of this thesis is as follows: After these concluding words in the introduction (chapter 1) the thesis will present chapter 2, which is devoted to the analytical framework. After a discussion on methodology in chapter 3 the study will then continue with an empirical presentation in chapters 4 and 5, containing the two cases which are divided into three subchapters for Handelsbanken and Swedbank, respectively, with a summary of each case. Each bank’s chapter will be introduced by a short background of the bank, followed by the case, and will end with a short summary. The respective subchapters of the cases represent a different phase in the bank’s internationalization process. The first part of the respective case will mainly deal with the banks’ first steps abroad; the second part is where the banks invest to establish themselves in foreign markets; and in the final part the banks deal with a worldwide financial crisis that affects their internationalization process. Once the two cases have been presented, an analytical discussion in chapter 6 regarding the banks’ internationalization process will take place. The analytical discussion will end up with some final comments and conclusions in which suggestions for further research will be given in chapter 7.
Chapter 1. Introduction
Chapter 2. Establishing theoretical framework
Chapter 3. Research design
Chapter 4-5. Case presentation
Chapter 6. Analytical discussion
Chapter 7. Conclusion and future research
Chapter 4-5. Case presentation
7
2 Internationalization studies
The research question in chapter 1 is connected to of the field of banks, in-ternationalization, and internationalization process. Consequently, this chap-ter, beside a review of the above research fields, aims to provide the theoret-ical framework for the analysis of the empirical study. To reach this the study will initially present previous studies on Swedish banks and interna-tionalization of banks, which will be followed by a presentation of the earlier contributions in internationalization theory and internationalization process studies. Both will be briefly described with the key concepts of market commitment, market knowledge and expectation that constitute the frame-work of this thesis. When discussing the earlier research on internationaliza-tion the study will pinpoint two streams of thoughts. One concerns research-ers’ contributions employing foreign direct investment (FDI) theories. An-other stream focuses on the firm’s internationalization behavior tied to man-agement behavior and organization theory. Both streams are interesting and will be discussed in more detail further. However, the chapter follows re-search in the behavior theory to ground its theoretical framework, which has been developed for this internationalization process study. The model will then be used in chapter 6 to analyze the empirical facts presented in the case studies in chapters 4-5.
2.1 Studies on banks Most studies on Swedish banks were conducted in the late 1990s and focus on the organization of the banks, such as Engwall’s studies (1994; 1995ab; 1997; Engwall & Wallenstål, 1988) on banks organizational dynamics. Fol-lowing the organizational aspect, Marquardt (1994) connects previous stud-ies to Swedish banks’ internationalization during the entire 1900s. Further, Furusten’s (2009) study shows how the financial crisis in the 1990s affected Swedish banks. Others that have contributed to bank studies are inter alia Kho and Stulz (2000), and Bae et al. (2002) along with Beltratti and Stulz (2009) who studied the impact of crisis on banks. Cardone-Riportella and Cazorla-Papis (2001) show that Spanish banks’ entry into Latin America was stepwise, but the more experienced the bank became, the more oppor-tunistic it became. Interestingly, they also reveal that the internationalization process of service and goods firms had no differences (ibid.). Studies on
6
spective. This is in order to provide not only an account of a single event, like a specific market entry in one country, but also some understanding of the dwindling routes the internationalization of firms can take in diverse countries, under varying conditions and at different points in time.
Figure 2. Structure of the thesis
As Figure 2 above illustrates, the structure of this thesis is as follows: After these concluding words in the introduction (chapter 1) the thesis will present chapter 2, which is devoted to the analytical framework. After a discussion on methodology in chapter 3 the study will then continue with an empirical presentation in chapters 4 and 5, containing the two cases which are divided into three subchapters for Handelsbanken and Swedbank, respectively, with a summary of each case. Each bank’s chapter will be introduced by a short background of the bank, followed by the case, and will end with a short summary. The respective subchapters of the cases represent a different phase in the bank’s internationalization process. The first part of the respective case will mainly deal with the banks’ first steps abroad; the second part is where the banks invest to establish themselves in foreign markets; and in the final part the banks deal with a worldwide financial crisis that affects their internationalization process. Once the two cases have been presented, an analytical discussion in chapter 6 regarding the banks’ internationalization process will take place. The analytical discussion will end up with some final comments and conclusions in which suggestions for further research will be given in chapter 7.
Chapter 1. Introduction
Chapter 2. Establishing theoretical framework
Chapter 3. Research design
Chapter 4-5. Case presentation
Chapter 6. Analytical discussion
Chapter 7. Conclusion and future research
Chapter 4-5. Case presentation
7
2 Internationalization studies
The research question in chapter 1 is connected to of the field of banks, in-ternationalization, and internationalization process. Consequently, this chap-ter, beside a review of the above research fields, aims to provide the theoret-ical framework for the analysis of the empirical study. To reach this the study will initially present previous studies on Swedish banks and interna-tionalization of banks, which will be followed by a presentation of the earlier contributions in internationalization theory and internationalization process studies. Both will be briefly described with the key concepts of market commitment, market knowledge and expectation that constitute the frame-work of this thesis. When discussing the earlier research on internationaliza-tion the study will pinpoint two streams of thoughts. One concerns research-ers’ contributions employing foreign direct investment (FDI) theories. An-other stream focuses on the firm’s internationalization behavior tied to man-agement behavior and organization theory. Both streams are interesting and will be discussed in more detail further. However, the chapter follows re-search in the behavior theory to ground its theoretical framework, which has been developed for this internationalization process study. The model will then be used in chapter 6 to analyze the empirical facts presented in the case studies in chapters 4-5.
2.1 Studies on banks Most studies on Swedish banks were conducted in the late 1990s and focus on the organization of the banks, such as Engwall’s studies (1994; 1995ab; 1997; Engwall & Wallenstål, 1988) on banks organizational dynamics. Fol-lowing the organizational aspect, Marquardt (1994) connects previous stud-ies to Swedish banks’ internationalization during the entire 1900s. Further, Furusten’s (2009) study shows how the financial crisis in the 1990s affected Swedish banks. Others that have contributed to bank studies are inter alia Kho and Stulz (2000), and Bae et al. (2002) along with Beltratti and Stulz (2009) who studied the impact of crisis on banks. Cardone-Riportella and Cazorla-Papis (2001) show that Spanish banks’ entry into Latin America was stepwise, but the more experienced the bank became, the more oppor-tunistic it became. Interestingly, they also reveal that the internationalization process of service and goods firms had no differences (ibid.). Studies on
8
banks range from crisis impact on the local market (Engwall, 1994), the in-ternationalization of Sweden’s four largest banks (Marquardt, 1994; Thun-man & Eriksson, 1990), to how uncertainty and perceived knowledge is challenged by incremental bank strategies (Blomstermo, Eriksson & Sharma, 2002). The focus of the first-mentioned studies is to describe the banks’ be-havior before, during, and after the financial crisis in the 1990s – how banks expand on the domestic market and under what assumptions. Before the financial crisis in the 1990s Swedish banks were decentralized and operated under conditions where mergers and deregulations followed one another, resulting in a less controllable situation for the banking business (Engwall, 1994). Some researchers connect internationalization to changes in the political rules. As Engwall (1994) discusses, reduced control com-bined with bounded rationality created conditions where government deregu-lations for the purpose of benefiting the market led to market turbulence. Banks’ uncertain conditions meant that the banks started imitating each oth-er’s behavior and followed one another to the same countries without criti-cally analyzing the consequences (mimetic behavior). When the tide of the financial crisis turned, earlier decentralized decision-making became central-ized (Engwall, 1994; Engwall & Wallenstål, 1988; Hortlund, 2003). Former bank research, however, has largely been based on economic, political and organizational factors (Engwall, 1995a). Furusten’s (2009) comprehensive study manifests how different Swedish business relationships changed dur-ing the crisis period and how this change was different for different banks. But since the study had its focus on Swedish banks’ domestic development, the behavior of the banks in the international market has not been addressed. As mentioned, Engwall (1995a) and Furusten (2009) state that most research on banks originates from traditional economic (non-behavioral) theories, with little research stemming from behavioral theories. Most of these studies are connected to FDI theories. They have inter alia dealt with different types of expansion such as acquisition, fusion and so forth (Hennart & Park, 1993; Barkema & Vermeulen, 1998; Harzing, 2002; Cheng & Hu, 2002), and what kinds of elements affect the choice of expansion (Kogut & Singh, 1988; Benito & Gripsrud, 1992; Barkema & Vermeulen, 1998; Brouthers & Brouthers, 2000; Cardone-Riportella & Cazorla-Papis, 2001; Harzing, 2002; Sanchez-Peinado, 2003). Researchers like Petrou (2009) depict obstacles banks need to overcome to successfully internationalize. Others have exam-ined appropriate strategies for banks in their internationalization process (Tschoegl, 2002; Buch & Lipponer, 2007) or how changes in the interna-tional market affect banks’ internationalization (Turnbull, 1982). Studies on cross-border business are generally associated with a high level of uncertainty (Barkema, Bell & Pennings, 1996). Consequently the crucial issue stated by researchers is to reduce uncertainty in the firm’s pre- and
9
post-entry phase. This has been of interest to researchers in various ways for a long time, and different streams have developed a diverse understanding. Correspondingly, attention has been paid to what causes firms to venture into the unknown to begin with (Penrose, 1959; Cyert & March, 1963). Some of these studies can be connected to FDI theories. In FDI theories re-searchers have pinpointed different aspects and methods that firms use to leap from home ground onto new territories. A common model that is ap-plied is Dunning’s (1980; 1988) ‘eclectic paradigm,’ which specifies which type of firm best accommodates the advantages of which type of internation-alization strategy. As mentioned earlier, another stream focus on the firm’s internationalization behavior, which is tied to behavioral theory. Because firms have to deal with uncertainty, knowledge has become im-portant in internationalization process studies. Besides the FDI field, one finds the behavioral field. Where research of step-by-step models contrasts the more traditional rapid and more or less incremental models that are com-pared and pitted against each other (Turnbull, 1982; Johanson & Wie-dersheim-Paul, 1975). Bank internationalization has largely been seen from two different perspectives, one of which emphasizes competitive advantage (Dunning, 1971) and the other behavioral theories (Engwall & Johanson, 1990). Within the latter perspective there also has been some discussion regarding differences in the internationalization of banks and industries, and whether they are driven by suppliers or customers (Engwall, 1992). Others have been concerned with how banks should internationalize (ul-Haq & Howcraft, 2007), and the strategic choice between joint venture and strategic alliances has been expressed as more suitable for bank internationalization and not industrial firms (Kathuria, Maheshkumar, Joshi & Dellande, 2008). Earlier studies have also shown that industrial firms’ internationalization often begins with markets that have a similar culture, in order to gradually increase and develop their business (Hörnell, Vahlne & Wiedersheim-Paul, 1972; Johanson & Wiedersheim-Paul, 1975; Johanson & Vahlne, 1977; Nordström, 1991; Davidson, 1993). Swedish banks have shown a tendency to follow this pattern but are not ruled by cultural distance (Engwall & Wal-lenstål, 1988). Engwall and Wallenstål’s study in 1988 showed that Swedish bank internationalization was similar to that of the service industry and es-tablished where there was capital to be gained. Although there has been crit-icism of the explanatory power of internationalization process models re-garding firms in the service industry (inter alia Sharma & Johanson, 1987), Tschoegl’s study from 1982 showed that banks’ entries into Japan and Cali-fornia were made stepwise. During the recent decades the globalization of markets has increased interna-tionalization of not only industrial firms but also banks. On the one hand globalization has made it easier for transnational corporations to establish in foreign markets (Oviatt & McDougall, 1995; 2005; ul-Haq & Howcroft,
8
banks range from crisis impact on the local market (Engwall, 1994), the in-ternationalization of Sweden’s four largest banks (Marquardt, 1994; Thun-man & Eriksson, 1990), to how uncertainty and perceived knowledge is challenged by incremental bank strategies (Blomstermo, Eriksson & Sharma, 2002). The focus of the first-mentioned studies is to describe the banks’ be-havior before, during, and after the financial crisis in the 1990s – how banks expand on the domestic market and under what assumptions. Before the financial crisis in the 1990s Swedish banks were decentralized and operated under conditions where mergers and deregulations followed one another, resulting in a less controllable situation for the banking business (Engwall, 1994). Some researchers connect internationalization to changes in the political rules. As Engwall (1994) discusses, reduced control com-bined with bounded rationality created conditions where government deregu-lations for the purpose of benefiting the market led to market turbulence. Banks’ uncertain conditions meant that the banks started imitating each oth-er’s behavior and followed one another to the same countries without criti-cally analyzing the consequences (mimetic behavior). When the tide of the financial crisis turned, earlier decentralized decision-making became central-ized (Engwall, 1994; Engwall & Wallenstål, 1988; Hortlund, 2003). Former bank research, however, has largely been based on economic, political and organizational factors (Engwall, 1995a). Furusten’s (2009) comprehensive study manifests how different Swedish business relationships changed dur-ing the crisis period and how this change was different for different banks. But since the study had its focus on Swedish banks’ domestic development, the behavior of the banks in the international market has not been addressed. As mentioned, Engwall (1995a) and Furusten (2009) state that most research on banks originates from traditional economic (non-behavioral) theories, with little research stemming from behavioral theories. Most of these studies are connected to FDI theories. They have inter alia dealt with different types of expansion such as acquisition, fusion and so forth (Hennart & Park, 1993; Barkema & Vermeulen, 1998; Harzing, 2002; Cheng & Hu, 2002), and what kinds of elements affect the choice of expansion (Kogut & Singh, 1988; Benito & Gripsrud, 1992; Barkema & Vermeulen, 1998; Brouthers & Brouthers, 2000; Cardone-Riportella & Cazorla-Papis, 2001; Harzing, 2002; Sanchez-Peinado, 2003). Researchers like Petrou (2009) depict obstacles banks need to overcome to successfully internationalize. Others have exam-ined appropriate strategies for banks in their internationalization process (Tschoegl, 2002; Buch & Lipponer, 2007) or how changes in the interna-tional market affect banks’ internationalization (Turnbull, 1982). Studies on cross-border business are generally associated with a high level of uncertainty (Barkema, Bell & Pennings, 1996). Consequently the crucial issue stated by researchers is to reduce uncertainty in the firm’s pre- and
9
post-entry phase. This has been of interest to researchers in various ways for a long time, and different streams have developed a diverse understanding. Correspondingly, attention has been paid to what causes firms to venture into the unknown to begin with (Penrose, 1959; Cyert & March, 1963). Some of these studies can be connected to FDI theories. In FDI theories re-searchers have pinpointed different aspects and methods that firms use to leap from home ground onto new territories. A common model that is ap-plied is Dunning’s (1980; 1988) ‘eclectic paradigm,’ which specifies which type of firm best accommodates the advantages of which type of internation-alization strategy. As mentioned earlier, another stream focus on the firm’s internationalization behavior, which is tied to behavioral theory. Because firms have to deal with uncertainty, knowledge has become im-portant in internationalization process studies. Besides the FDI field, one finds the behavioral field. Where research of step-by-step models contrasts the more traditional rapid and more or less incremental models that are com-pared and pitted against each other (Turnbull, 1982; Johanson & Wie-dersheim-Paul, 1975). Bank internationalization has largely been seen from two different perspectives, one of which emphasizes competitive advantage (Dunning, 1971) and the other behavioral theories (Engwall & Johanson, 1990). Within the latter perspective there also has been some discussion regarding differences in the internationalization of banks and industries, and whether they are driven by suppliers or customers (Engwall, 1992). Others have been concerned with how banks should internationalize (ul-Haq & Howcraft, 2007), and the strategic choice between joint venture and strategic alliances has been expressed as more suitable for bank internationalization and not industrial firms (Kathuria, Maheshkumar, Joshi & Dellande, 2008). Earlier studies have also shown that industrial firms’ internationalization often begins with markets that have a similar culture, in order to gradually increase and develop their business (Hörnell, Vahlne & Wiedersheim-Paul, 1972; Johanson & Wiedersheim-Paul, 1975; Johanson & Vahlne, 1977; Nordström, 1991; Davidson, 1993). Swedish banks have shown a tendency to follow this pattern but are not ruled by cultural distance (Engwall & Wal-lenstål, 1988). Engwall and Wallenstål’s study in 1988 showed that Swedish bank internationalization was similar to that of the service industry and es-tablished where there was capital to be gained. Although there has been crit-icism of the explanatory power of internationalization process models re-garding firms in the service industry (inter alia Sharma & Johanson, 1987), Tschoegl’s study from 1982 showed that banks’ entries into Japan and Cali-fornia were made stepwise. During the recent decades the globalization of markets has increased interna-tionalization of not only industrial firms but also banks. On the one hand globalization has made it easier for transnational corporations to establish in foreign markets (Oviatt & McDougall, 1995; 2005; ul-Haq & Howcroft,
10
2007; Bygrave & Zacharakis, 2010, p. 76). On the other hand companies have become very vulnerable to different types of crisis. Moreover the effect of globalization has made turbulence spread more easily and with higher impact (Claessens, Dombusch & Chul Park, 2001, pp. 19-22; Bae, Kang & Lim, 2002; Campello, Graham & Harvey, 2010). Since the 1960s, research-ers have studied positive developments in internationalization and developed extensive and versatile models of why and how firms internationalize. There are some studies that elaborate the discussion on market changes as a gradu-al development. In these contributions researchers’ main consideration of market changes is one of positive development both in the market and in the firms’ internationalization process. Yet surprisingly little research has fo-cused on negative developments from internationalization. Nevertheless, there is some research on market changes that deal with international crises and their impacts. While some regard market changes in terms of interna-tional crises and survival rate (Pangarkar, 2007), or crisis management and survival (Smith, 2005), some have studied political crises and firms’ behav-ior (Hadjikhani & Johanson, 1999; 2001; Euh & Rhee, 2007). Further, there are studies that have paid in-depth attention to banks’ managerial knowledge and adaptations to financial cycles (Kroszner, Laeven & Klingebiel, 2007; Hoffman, 2010; Hoffman & Schnabl, 2011). Considering the implications of possible future developments there have been studies on banks’ risk man-agement (Laeven & Levine, 2009) that have helped to develop an under-standing of the issue of crises and international business situations. But few of these studies are connected to internationalization of banks and how pos-sible future scenarios, such as possible losses and not only gains, aid the banks internationalization process. While focusing on changes beyond incrementality, Engwall, Marquardt, Pedersen, and Tschoegl (2001) study Nordic banks’ internationalization and show that foreign banks focus on ‘less credit-worthy clients’ in the estab-lishment phase. But those banks can gain market share through acquisitions. Unlike the above studies there is other research that elevates environmental factors affecting internationalization. The study by Jain and Nigh (1989) reveals that banks’ international lending behavior was affected by political relations between the governments in the bank’s home and foreign countries. The study manifests that both political and economic factors affect banks’ decisions. On the same topic Darity and Horn (1988) and Guttantag and Herrin (1986) argue that banks’ lending behavior has been poorly handled by banks, as they have taken large risks and lent money without proper judg-ment. This has also been an interesting issue for a number of previous stud-ies that has examined banks’ lending behavior in their internationalization. In these studies it is argued that a bank’s lending decisions in different coun-tries should be adapted to its specific market in accordance with the coun-try’s political situation e.g. policies (Gisselquist, 1981; Spindler, 1984; Kahler, 1985; Wellons, 1985). Cohen’s study (1985) further explains that
11
governments use various policy measures to influence bank lending affect banks’ internationalization patterns.
2.2 The internationalization process Prior to the discussion about firms’ internationalization behavior it is neces-sary to provide a short discussion of views elaborated by researchers on FDI. Far removed from the internationalization process and firm behavior, a con-siderable amount of research in internationalization studies has been based on FDI theories that focus on expanding through start-ups, acquisitions, and fusions (Hennart & Park, 1993; Barkema & Vermeulen, 1998; Cheng & Hu, 2002). Topics of interest can for example be differences in methods of estab-lishment (Barkema & Vermeulen, 1998; Harzing, 2002) and which factors influence the choice between them (Kogut & Singh, 1988, Brouthers & Brouthers, 2000; Zahra, Ireland & Hitt, 2000). Some studies have chosen to explore appropriate internationalization strategies for e.g. banks (Tschoegl, 2002; Buch & Lipponer, 2007) and how international markets have changed and their impact on e.g. bank internationalization (Turnbull, 1982). There have also been several studies that show that the choice of establishment method is affected by the firm’s uncertainty towards targeted countries’ characteristics (Kogut & Singh, 1988). But most of these studies are based on a market’s present state and how a firm can enter it most rationally and efficiently (Whitelock, 2002). Most of the FDI research done on internation-alization of banks has therefore been on the basis of market selection and market advantage in an opportunistic manner (Petrou, 2009; Qian & Delios, 2008; Andersen, 1997). To a large extent these studies have had a rational strategic decision approach in the firm’s market selection (Dunning, 1988). But neither of the FDI theories is process oriented and explains how the firm internationalizes in a long-term perspective, while internationalization pro-cess studies, such as Johanson and Vahlne (1977; 2009), do. Aside from FDI theories and internationalization process studies there have been other inter-esting studies of firms internationalization, e.g. studies of born globals (Knight & Cavusgil, 1996; Chetty & Campbell-Hunt, 1994; 2005; Sharma & Blomstermo, 2003), but even though research on born globals has increased, its theoretical support is still in need of development, while internationaliza-tion process studies are broadly supported (Luostarinen, 1979; Marquardt, 1994; Pedersen, 2000; Sharma & Blomstermo, 2003; Gabrielsson & Kir-palani, 2004; Amdam, 2009). Unlike other internationalization theories, and in particular the static in na-ture FDI theories there are internationalization process studies. Developed by Luostarinen (1970; 1979), Johanson and Wiedersheim-Paul (1975), and Johanson and Vahlne (1977; 1990; 2009) internationalization process studies have the potential strength of being able to study processes over time and
10
2007; Bygrave & Zacharakis, 2010, p. 76). On the other hand companies have become very vulnerable to different types of crisis. Moreover the effect of globalization has made turbulence spread more easily and with higher impact (Claessens, Dombusch & Chul Park, 2001, pp. 19-22; Bae, Kang & Lim, 2002; Campello, Graham & Harvey, 2010). Since the 1960s, research-ers have studied positive developments in internationalization and developed extensive and versatile models of why and how firms internationalize. There are some studies that elaborate the discussion on market changes as a gradu-al development. In these contributions researchers’ main consideration of market changes is one of positive development both in the market and in the firms’ internationalization process. Yet surprisingly little research has fo-cused on negative developments from internationalization. Nevertheless, there is some research on market changes that deal with international crises and their impacts. While some regard market changes in terms of interna-tional crises and survival rate (Pangarkar, 2007), or crisis management and survival (Smith, 2005), some have studied political crises and firms’ behav-ior (Hadjikhani & Johanson, 1999; 2001; Euh & Rhee, 2007). Further, there are studies that have paid in-depth attention to banks’ managerial knowledge and adaptations to financial cycles (Kroszner, Laeven & Klingebiel, 2007; Hoffman, 2010; Hoffman & Schnabl, 2011). Considering the implications of possible future developments there have been studies on banks’ risk man-agement (Laeven & Levine, 2009) that have helped to develop an under-standing of the issue of crises and international business situations. But few of these studies are connected to internationalization of banks and how pos-sible future scenarios, such as possible losses and not only gains, aid the banks internationalization process. While focusing on changes beyond incrementality, Engwall, Marquardt, Pedersen, and Tschoegl (2001) study Nordic banks’ internationalization and show that foreign banks focus on ‘less credit-worthy clients’ in the estab-lishment phase. But those banks can gain market share through acquisitions. Unlike the above studies there is other research that elevates environmental factors affecting internationalization. The study by Jain and Nigh (1989) reveals that banks’ international lending behavior was affected by political relations between the governments in the bank’s home and foreign countries. The study manifests that both political and economic factors affect banks’ decisions. On the same topic Darity and Horn (1988) and Guttantag and Herrin (1986) argue that banks’ lending behavior has been poorly handled by banks, as they have taken large risks and lent money without proper judg-ment. This has also been an interesting issue for a number of previous stud-ies that has examined banks’ lending behavior in their internationalization. In these studies it is argued that a bank’s lending decisions in different coun-tries should be adapted to its specific market in accordance with the coun-try’s political situation e.g. policies (Gisselquist, 1981; Spindler, 1984; Kahler, 1985; Wellons, 1985). Cohen’s study (1985) further explains that
11
governments use various policy measures to influence bank lending affect banks’ internationalization patterns.
2.2 The internationalization process Prior to the discussion about firms’ internationalization behavior it is neces-sary to provide a short discussion of views elaborated by researchers on FDI. Far removed from the internationalization process and firm behavior, a con-siderable amount of research in internationalization studies has been based on FDI theories that focus on expanding through start-ups, acquisitions, and fusions (Hennart & Park, 1993; Barkema & Vermeulen, 1998; Cheng & Hu, 2002). Topics of interest can for example be differences in methods of estab-lishment (Barkema & Vermeulen, 1998; Harzing, 2002) and which factors influence the choice between them (Kogut & Singh, 1988, Brouthers & Brouthers, 2000; Zahra, Ireland & Hitt, 2000). Some studies have chosen to explore appropriate internationalization strategies for e.g. banks (Tschoegl, 2002; Buch & Lipponer, 2007) and how international markets have changed and their impact on e.g. bank internationalization (Turnbull, 1982). There have also been several studies that show that the choice of establishment method is affected by the firm’s uncertainty towards targeted countries’ characteristics (Kogut & Singh, 1988). But most of these studies are based on a market’s present state and how a firm can enter it most rationally and efficiently (Whitelock, 2002). Most of the FDI research done on internation-alization of banks has therefore been on the basis of market selection and market advantage in an opportunistic manner (Petrou, 2009; Qian & Delios, 2008; Andersen, 1997). To a large extent these studies have had a rational strategic decision approach in the firm’s market selection (Dunning, 1988). But neither of the FDI theories is process oriented and explains how the firm internationalizes in a long-term perspective, while internationalization pro-cess studies, such as Johanson and Vahlne (1977; 2009), do. Aside from FDI theories and internationalization process studies there have been other inter-esting studies of firms internationalization, e.g. studies of born globals (Knight & Cavusgil, 1996; Chetty & Campbell-Hunt, 1994; 2005; Sharma & Blomstermo, 2003), but even though research on born globals has increased, its theoretical support is still in need of development, while internationaliza-tion process studies are broadly supported (Luostarinen, 1979; Marquardt, 1994; Pedersen, 2000; Sharma & Blomstermo, 2003; Gabrielsson & Kir-palani, 2004; Amdam, 2009). Unlike other internationalization theories, and in particular the static in na-ture FDI theories there are internationalization process studies. Developed by Luostarinen (1970; 1979), Johanson and Wiedersheim-Paul (1975), and Johanson and Vahlne (1977; 1990; 2009) internationalization process studies have the potential strength of being able to study processes over time and
12
involving different parties (Hunt, 1991). As a consequence process studies can respond to changes over time and in firm behavior accordingly, both inwardly and outwardly (Welch & Luostarinen, 1988). Internationalization process studies are few, and most of them stem from behavioral theories (Penrose, 1959; Cyert & March, 1963; Carlson, 1966; 1975), many of the studies’ theoretical framework can be described as path dependent, consist-ing of two interacting dimensions, namely market knowledge and market commitment (Johanson & Vahlne, 1977). The leading work in international-ization process studies has long been Johanson and Vahlne’s internationali-zation process model (1977; 1990; 2009). Knowledge in this theoretical framework is based on experience (intangible) and information (tangible), where intangible knowledge is regarded as the critical kind (Johanson & Vahlne, 1977). Because experiential (intangible) knowledge is difficult to acquire, unlike information, and, since the firm will not have any in the be-ginning, it must be added sequentially (Johanson & Vahlne, 1977). This has however faced some criticism as it fails to describe the beginning of the pro-cess (Andersen, 1993; Lamb & Liesch, 2002) and might be understood as problematic. Nevertheless learning over time plays an integral role in inter-nationalization process studies (Barkema & Vermeulen, 1998, p. 7; Porter, 1991) as the fundamental assumption is that the firm will be ‘learning by doing’ (Lindblom, 1959; Quinn, 1980; Johnson, 1988) in an incremental-like process (Johanson & Vahlne, 1977; Luostarinen, 1979). Luostarinen (1979) suggest that the firm’s internationalization will be gradual in a learning pro-cess based on product, operations and market strategies, commonly referred to as POM. Studies such as Luostarinen’s (1979) could be of value for this study as the POM model is process oriented concerning how to sell a product in a particular market and following the demands on the organization. Unlike the POM-model, the stage model and Johanson and Vahlne’s (1977) internationalization process (Uppsala) model has been applied to banks pre-viously (Marquardt, 1994; Qian & Delios, 2008). Internationalization of a firm can be considered an ongoing process and not only descriptive of dif-ferent stages. Studies that are process oriented are therefore more likely to indicate firms’ different internationalization patterns and why they differ (Andersen, 1997). Both the Uppsala model and the stage model are regarded as traditional incremental process-oriented models explaining a firm’s ex-pansion behavior over time (Chetty & Campbell-Hunt, 2004). In comparison to other internationalization theories many of the internationalization process theories have incorporated long-term perspectives. With the long-term per-spective assimilated in the process, the studies generate the possibility to recognize firms’ behavior and processes over time. What is more, interna-tionalization process studies, e.g. Johanson and Vahlne’s (1977), present an explanation for how firms act in response to uncertainty in pre- and post-entry into new markets. The stage model (Johanson & Wiedersheim-Paul, 1975) that Johanson and Vahlne (1977) based their model on is also path-
13
dependent and refers to different degrees of risk-taking (commitment de-grees). Like both of these models, Marquardt’s (1994) study of the Swedish banks’ internationalization activities during the 1900s revealed an incremen-tal-like increase of activities and offices abroad. Since the introduction of the Uppsala model by Johanson and Vahlne it has been revised to include network theory among other things (Johanson & Vahlne, 1990; 2009). In the revised version, commitment and knowledge are defined as in the original Uppsala model (Johanson & Vahlne, 1977; 1990; 2009). Commitment is described as the size of investments over time and knowledge as market experience that influences decisions about the level of commitment and activities (ibid.). Although Johanson and Vahlne’s Uppsala model has received criticism that will be discussed in the forthcoming sub-chapter, their model and internationalization process studies have become well established and supported by many such as Li (1995), Barkema, Bell & Pennings, (1996), Hadjikhani (1997), Luo & Peng (1999), Delios & Beamish (2001), Owusu, Sandhu & Kock (2007), Sakarya, Eckman & Hyllegard (2007), Amdam (2009), Malhotra & Hinings (2010), and Baffour Awuah, Abraha Gebrekidan & Osarenkhoe (2011). In general the above-mentioned criticism of the original Uppsala model con-cerns incrementality in firms’ internationalization behavior. Therefore Calof and Beamish (1995) propose a definition of internationalization as the pro-cess of adapting firms’ operations to international environments, in order to induce variations in internationalization patterns, e.g. de-investment. Mal-hotra and Hinings (2010) advocate leaving previous discussions of whether the internationalization process is incremental or not and focusing instead on the different approaches observed and resource commitment in the foreign market over time. In line with these thoughts this study will propose an ana-lytical framework consisting of market commitment, market knowledge and expectation in an effort to address not only incremental approaches but also rapid or less incremental and decreased commitments. To get closer to the theoretical view deployed in this study, the next section is devoted to a presentation of the concepts of market commitment, market knowledge and expectation that this study’s theoretical framework is based on.
2.2.1 Market commitment As mentioned, banks differ from industrial firms in some respects that need to be recognized, even if the internationalization of banks and industrial firms in general are affected and undertaken by similar processes (Cardone-Riportella & Cazorla-Papis, 2001). Mainly since most of banks’ operations are not tangible, it can be easier for banks than industrial firms to exit a mar-ket. The study by Engwall and Wallenstål (1988) show that banks’ interna-tionalization process is provider-driven and not customer-driven. Further,
12
involving different parties (Hunt, 1991). As a consequence process studies can respond to changes over time and in firm behavior accordingly, both inwardly and outwardly (Welch & Luostarinen, 1988). Internationalization process studies are few, and most of them stem from behavioral theories (Penrose, 1959; Cyert & March, 1963; Carlson, 1966; 1975), many of the studies’ theoretical framework can be described as path dependent, consist-ing of two interacting dimensions, namely market knowledge and market commitment (Johanson & Vahlne, 1977). The leading work in international-ization process studies has long been Johanson and Vahlne’s internationali-zation process model (1977; 1990; 2009). Knowledge in this theoretical framework is based on experience (intangible) and information (tangible), where intangible knowledge is regarded as the critical kind (Johanson & Vahlne, 1977). Because experiential (intangible) knowledge is difficult to acquire, unlike information, and, since the firm will not have any in the be-ginning, it must be added sequentially (Johanson & Vahlne, 1977). This has however faced some criticism as it fails to describe the beginning of the pro-cess (Andersen, 1993; Lamb & Liesch, 2002) and might be understood as problematic. Nevertheless learning over time plays an integral role in inter-nationalization process studies (Barkema & Vermeulen, 1998, p. 7; Porter, 1991) as the fundamental assumption is that the firm will be ‘learning by doing’ (Lindblom, 1959; Quinn, 1980; Johnson, 1988) in an incremental-like process (Johanson & Vahlne, 1977; Luostarinen, 1979). Luostarinen (1979) suggest that the firm’s internationalization will be gradual in a learning pro-cess based on product, operations and market strategies, commonly referred to as POM. Studies such as Luostarinen’s (1979) could be of value for this study as the POM model is process oriented concerning how to sell a product in a particular market and following the demands on the organization. Unlike the POM-model, the stage model and Johanson and Vahlne’s (1977) internationalization process (Uppsala) model has been applied to banks pre-viously (Marquardt, 1994; Qian & Delios, 2008). Internationalization of a firm can be considered an ongoing process and not only descriptive of dif-ferent stages. Studies that are process oriented are therefore more likely to indicate firms’ different internationalization patterns and why they differ (Andersen, 1997). Both the Uppsala model and the stage model are regarded as traditional incremental process-oriented models explaining a firm’s ex-pansion behavior over time (Chetty & Campbell-Hunt, 2004). In comparison to other internationalization theories many of the internationalization process theories have incorporated long-term perspectives. With the long-term per-spective assimilated in the process, the studies generate the possibility to recognize firms’ behavior and processes over time. What is more, interna-tionalization process studies, e.g. Johanson and Vahlne’s (1977), present an explanation for how firms act in response to uncertainty in pre- and post-entry into new markets. The stage model (Johanson & Wiedersheim-Paul, 1975) that Johanson and Vahlne (1977) based their model on is also path-
13
dependent and refers to different degrees of risk-taking (commitment de-grees). Like both of these models, Marquardt’s (1994) study of the Swedish banks’ internationalization activities during the 1900s revealed an incremen-tal-like increase of activities and offices abroad. Since the introduction of the Uppsala model by Johanson and Vahlne it has been revised to include network theory among other things (Johanson & Vahlne, 1990; 2009). In the revised version, commitment and knowledge are defined as in the original Uppsala model (Johanson & Vahlne, 1977; 1990; 2009). Commitment is described as the size of investments over time and knowledge as market experience that influences decisions about the level of commitment and activities (ibid.). Although Johanson and Vahlne’s Uppsala model has received criticism that will be discussed in the forthcoming sub-chapter, their model and internationalization process studies have become well established and supported by many such as Li (1995), Barkema, Bell & Pennings, (1996), Hadjikhani (1997), Luo & Peng (1999), Delios & Beamish (2001), Owusu, Sandhu & Kock (2007), Sakarya, Eckman & Hyllegard (2007), Amdam (2009), Malhotra & Hinings (2010), and Baffour Awuah, Abraha Gebrekidan & Osarenkhoe (2011). In general the above-mentioned criticism of the original Uppsala model con-cerns incrementality in firms’ internationalization behavior. Therefore Calof and Beamish (1995) propose a definition of internationalization as the pro-cess of adapting firms’ operations to international environments, in order to induce variations in internationalization patterns, e.g. de-investment. Mal-hotra and Hinings (2010) advocate leaving previous discussions of whether the internationalization process is incremental or not and focusing instead on the different approaches observed and resource commitment in the foreign market over time. In line with these thoughts this study will propose an ana-lytical framework consisting of market commitment, market knowledge and expectation in an effort to address not only incremental approaches but also rapid or less incremental and decreased commitments. To get closer to the theoretical view deployed in this study, the next section is devoted to a presentation of the concepts of market commitment, market knowledge and expectation that this study’s theoretical framework is based on.
2.2.1 Market commitment As mentioned, banks differ from industrial firms in some respects that need to be recognized, even if the internationalization of banks and industrial firms in general are affected and undertaken by similar processes (Cardone-Riportella & Cazorla-Papis, 2001). Mainly since most of banks’ operations are not tangible, it can be easier for banks than industrial firms to exit a mar-ket. The study by Engwall and Wallenstål (1988) show that banks’ interna-tionalization process is provider-driven and not customer-driven. Further,
14
studies suggest that an incremental internationalization process does not work when production and consumption are simultaneous as they are in ser-vice firms (Enderwick, 1989). By contrast, the industrial firm has more tan-gible commitments that might be difficult to reallocate or sell. In fact, a bank might not even need a physical presence in a market (ibid.). Consequently resources allocated to a market can differ greatly between an industrial firm and a bank, where the latter’s degree of market commitment can be based on e.g. type of office, if it is representational or for example a branch. Yet even if the banks differ and do always need a local presence Engwall et al. (2001) and Marquardt (1994) study show that banks start with a low degree of commitment by taking on less credit-worthy clients to increase market commitment over time. In this theoretical standing, market commitment consists partly of the degree of difficulty in finding alternative uses for the resources allocated to a specif-ic market, and partly by the amount of resources available to the market. A basic assumption in some internationalization process studies is that a firm will strive to increase its long-term profit and therefore attempt to keep its risk-taking low (Johanson & Vahlne, 2009). Studies show that many firms seek to enter new markets with greater psychic distance successively as the uncertainty and risk can be considered reduced the lower the psychic dis-tance is (Johanson & Wiedersheim-Paul, 1975; Andersen & Buvik, 2002). Hence firms also seek entry modes that allow them maximum control over their foreign operations (Stopford & Wells, 1972). Control is consequently related to the degree of resource commitment (Buckley & Ghauri, 1999, p. 186). The more resources that are integrated with other parts of the firm, the more the commitment becomes specialized to the market. As a consequence, the amount of resources in market commitment is strongly linked to the size of investments in which investment in human resources, organization, and marketing are included. The assumption is that the more the firm learns about the market, the more will the risk be reduced, effectively reducing uncertainty, increasing market predictability, and therefore increasing the value of the market commitment. Still the firm will only increase its invest-ment if the perceived risk is lower than the maximum tolerable risk. (Johan-son & Vahlne, 1977; Sharma & Johanson, 1987; Andersen, 1993; 1997) In relation to the above-mentioned perceived risk, Nordström’s study reveals that market potential and industry structure can promote market commit-ments beyond incrementality (1991, p. 181), thus showing a correlation be-tween perceived risk and potential benefits. Other researchers discuss the pace of the internationalization process as rapid or non-incremental, that in particular Johanson and Vahlne’s (1977) Uppsala model lacks explanatory power regarding firms’ market decommitments and exits (Hedlund & Kver-nelund, 1985; Forsgren, 1989; Nordström, 1991; Pedersen, 2000; Lamb & Liesch, 2002; McNaughton, 2003; Zahra, 2005; Bianchi & Ostale, 2006; Lin
15
& Chaney, 2007; Zhou, Wu & Lou, 2007) in particular for knowledge-intensive firms (Millington & Bayliss, 1990; Sullivan & Bauerschmidt, 1990; Bell, 1995; Calof & Beamish, 1995; Knight & Cavusgil, 1996; Bell & Young, 1998; Keeble et al., 1998; Forsgren & Hagström, 2001; Malhotra & Hinings, 2010). Since market commitment and market knowledge fuel or impede one anoth-er, the degree of knowledge is influenced by the commitment and vice versa (Johanson & Vahlne, 2009). The size of the commitment will in general incrementally increase as the firm gains more experience. But the degree of commitment can also decrease or freeze if the market uncertainty is too high and cannot be reduced with current set of experience (ibid.; Agndal & Chet-ty, 2007). Johanson and Johanson (2006) describe this in another way, where opportunity discoveries are expected to be drivers in internationalization and problem discoveries to be hindering. Nevertheless the firm will increase its market commitment in small steps unless: (1) they have very large resources and/or market conditions are stable and homogeneous, (2) or the firm has a great deal of experience on similar markets (Johanson & Vahlne, 1977). As previously discussed, market commitment refers to allocated resources that cannot be easily transferred from one market into a new market. Hence the more specialized activities are integrated and interactive with different parts of the firm to a specific market, the higher the market commitment will be. (Johanson & Wiedersheim-Paul, 1975; Johanson & Vahlne, 1977) More-over the more active the firm is over a long period of time, the more rooted it becomes in the market, which makes its propensity to leave lower and more difficult to materialize (Håkansson & Snehota, 1998; Andersson, Forsgren & Holm, 2002). Although banks unlike industrial firms are strongly regulated and face different challenges when entering new market such as obtaining banking licenses for operating in a particular market, the banks sometimes can more easily decrease their market commitment than industrial firms (Gisselquist, 1981; Spindler, 1984; Cohen, 1985; Kahler, 1985; Wellons, 1985). For the purpose of this study market commitment is defined accord-ingly after Johanson and Vahlne (2009) as: “the product of the size of in-vestment times its degree of inflexibility” in order to capture the difficulty of reallocating resources from one market to another and the size of the invest-ment. Some researchers maintain that the incremental-like explanation of the inter-nationalization process is too deterministic (Turnbull, 1987; Bell, 1995; Calof & Beamish, 1997; Forsgren, 2002). Other studies show that interna-tionalization process models such as Johanson and Vahlne’s (1977) have a low predictive movement from one state to another (Cavusgil, 1982; Ander-sen, 1993). Further, researchers show that the process lacks a beginning and is only partially applicable under certain conditions (Oviatt & McDougall,
14
studies suggest that an incremental internationalization process does not work when production and consumption are simultaneous as they are in ser-vice firms (Enderwick, 1989). By contrast, the industrial firm has more tan-gible commitments that might be difficult to reallocate or sell. In fact, a bank might not even need a physical presence in a market (ibid.). Consequently resources allocated to a market can differ greatly between an industrial firm and a bank, where the latter’s degree of market commitment can be based on e.g. type of office, if it is representational or for example a branch. Yet even if the banks differ and do always need a local presence Engwall et al. (2001) and Marquardt (1994) study show that banks start with a low degree of commitment by taking on less credit-worthy clients to increase market commitment over time. In this theoretical standing, market commitment consists partly of the degree of difficulty in finding alternative uses for the resources allocated to a specif-ic market, and partly by the amount of resources available to the market. A basic assumption in some internationalization process studies is that a firm will strive to increase its long-term profit and therefore attempt to keep its risk-taking low (Johanson & Vahlne, 2009). Studies show that many firms seek to enter new markets with greater psychic distance successively as the uncertainty and risk can be considered reduced the lower the psychic dis-tance is (Johanson & Wiedersheim-Paul, 1975; Andersen & Buvik, 2002). Hence firms also seek entry modes that allow them maximum control over their foreign operations (Stopford & Wells, 1972). Control is consequently related to the degree of resource commitment (Buckley & Ghauri, 1999, p. 186). The more resources that are integrated with other parts of the firm, the more the commitment becomes specialized to the market. As a consequence, the amount of resources in market commitment is strongly linked to the size of investments in which investment in human resources, organization, and marketing are included. The assumption is that the more the firm learns about the market, the more will the risk be reduced, effectively reducing uncertainty, increasing market predictability, and therefore increasing the value of the market commitment. Still the firm will only increase its invest-ment if the perceived risk is lower than the maximum tolerable risk. (Johan-son & Vahlne, 1977; Sharma & Johanson, 1987; Andersen, 1993; 1997) In relation to the above-mentioned perceived risk, Nordström’s study reveals that market potential and industry structure can promote market commit-ments beyond incrementality (1991, p. 181), thus showing a correlation be-tween perceived risk and potential benefits. Other researchers discuss the pace of the internationalization process as rapid or non-incremental, that in particular Johanson and Vahlne’s (1977) Uppsala model lacks explanatory power regarding firms’ market decommitments and exits (Hedlund & Kver-nelund, 1985; Forsgren, 1989; Nordström, 1991; Pedersen, 2000; Lamb & Liesch, 2002; McNaughton, 2003; Zahra, 2005; Bianchi & Ostale, 2006; Lin
15
& Chaney, 2007; Zhou, Wu & Lou, 2007) in particular for knowledge-intensive firms (Millington & Bayliss, 1990; Sullivan & Bauerschmidt, 1990; Bell, 1995; Calof & Beamish, 1995; Knight & Cavusgil, 1996; Bell & Young, 1998; Keeble et al., 1998; Forsgren & Hagström, 2001; Malhotra & Hinings, 2010). Since market commitment and market knowledge fuel or impede one anoth-er, the degree of knowledge is influenced by the commitment and vice versa (Johanson & Vahlne, 2009). The size of the commitment will in general incrementally increase as the firm gains more experience. But the degree of commitment can also decrease or freeze if the market uncertainty is too high and cannot be reduced with current set of experience (ibid.; Agndal & Chet-ty, 2007). Johanson and Johanson (2006) describe this in another way, where opportunity discoveries are expected to be drivers in internationalization and problem discoveries to be hindering. Nevertheless the firm will increase its market commitment in small steps unless: (1) they have very large resources and/or market conditions are stable and homogeneous, (2) or the firm has a great deal of experience on similar markets (Johanson & Vahlne, 1977). As previously discussed, market commitment refers to allocated resources that cannot be easily transferred from one market into a new market. Hence the more specialized activities are integrated and interactive with different parts of the firm to a specific market, the higher the market commitment will be. (Johanson & Wiedersheim-Paul, 1975; Johanson & Vahlne, 1977) More-over the more active the firm is over a long period of time, the more rooted it becomes in the market, which makes its propensity to leave lower and more difficult to materialize (Håkansson & Snehota, 1998; Andersson, Forsgren & Holm, 2002). Although banks unlike industrial firms are strongly regulated and face different challenges when entering new market such as obtaining banking licenses for operating in a particular market, the banks sometimes can more easily decrease their market commitment than industrial firms (Gisselquist, 1981; Spindler, 1984; Cohen, 1985; Kahler, 1985; Wellons, 1985). For the purpose of this study market commitment is defined accord-ingly after Johanson and Vahlne (2009) as: “the product of the size of in-vestment times its degree of inflexibility” in order to capture the difficulty of reallocating resources from one market to another and the size of the invest-ment. Some researchers maintain that the incremental-like explanation of the inter-nationalization process is too deterministic (Turnbull, 1987; Bell, 1995; Calof & Beamish, 1997; Forsgren, 2002). Other studies show that interna-tionalization process models such as Johanson and Vahlne’s (1977) have a low predictive movement from one state to another (Cavusgil, 1982; Ander-sen, 1993). Further, researchers show that the process lacks a beginning and is only partially applicable under certain conditions (Oviatt & McDougall,
16
1994; 2005; Hadjikhani, 1996; Steen & Liesch, 2007; Forsgren, 2002) e.g. these studies have a low degree of explanatory power regarding disruptive and irregular commitments (Pedersen & Petersen, 1998; Malhotra & Hin-ings, 2010). In light of this discussion and response to the criticism that in-ternationalization process studies lack a future dimension such as long-term expectations (Hadjikhani & Johanson, 1996; Hadjikhani & Johanson, 1999; Hadjikhani & Johanson, 2001), this study, as mentioned, proposes an analyt-ical framework consisting of the three interrelated concepts of market com-mitment, market knowledge and expectation. This is to facilitate the under-standing of both incremental and non-incremental market commitments.
2.2.2 Market knowledge The second concept in the analytical frame of this study is market knowledge. In the early stage of internationalization the firm will lack expe-riential knowledge, which will therefore be crucial to attain (Johanson & Vahlne, 1977; 2009; Hallén, 1982). In theory many researchers relate market knowledge to market-specific knowledge, which is linked to specific events and thus unique. Since market-specific knowledge relies on specific events it is based on experiential knowledge and is ultimately intangible. This creates a difficulty if an organization wants to partake of an individual’s experiential knowledge (Andersen, 1993; Madhok, 1997; Karlsen et al., 2003). In the abstract, intangible knowledge is divided into tacit and explicit knowledge. Generally knowledge is discussed as either transferable or difficult to trans-fer, and learning is often depicted at an organizational level, though some-times at an individual/cognitive level (Lam, 2000). Tacit knowledge is diffi-cult to transfer since it is difficult to formalize or communicate. Explicit knowledge, like tacit knowledge, can be intangible knowledge, but it can be formulated and transferred, e.g. a mathematical proposition. Knowledge that is easier to transfer is commonly described as general knowledge or tangible knowledge i.e. objective information, such as a textbook. But this type of knowledge is considered complementary to tacit knowledge that, as men-tioned, is experiential. However, as indicated tacit knowledge can be trans-ferred but requires, “close interaction and the build up of a shared under-standing and trust” (ibid.). Although this study will not focus on the banks’ networks, it acknowledges studies that show that firms can have imitative learning and can learn from relationships (Andersson, Johanson & Vahlne, 1997; Andersson & Forsgren, 2000; Chetty & Blankenburg-Holm, 2000; Forsgren, 2002). Consequently this study assumes that, over time, and at least to some extent, partners and the allocated resources in a market will generate market knowledge. However, transforming this knowledge is a complicated process, and even if accomplished it is still difficult to distribute in the firm (Szulanski, 1996; Maaninen-Olsson, Wismén & Carlsson, 2008).
17
To gain market-specific knowledge or in other words experiential knowledge firms seek out partners or local firms to acquire (Kathuria et al., 2008). Lack of knowledge will increase uncertainty and limit the firm’s opportunities and operations, thus its propensity to expand (Johanson & Vahlne, 1977). As discussed above, the presumption is that the firm will be learning by doing, therefore a crucial part becomes failures that trigger a search for knowledge (Barkema & Vermeulen, 1998). This is also supported by studies by Engwall (1994) and Kathuria et al. (2008). They refer to incremental changes and stable relationships to better manage uncertainties in bank internationaliza-tion. The firm will then gather as much information as possible in a pre-entry phase to reduce market uncertainty and learn about the new market (Johan-son & Vahlne, 1977; 1990; 2009). A factor preventing the flow of information to and from the firm is psychic distance, that is, the differences in culture, language, political and legal sys-tem, norms, and values (Johanson & Wiedersheim-Paul, 1975). However, firms can bridge psychic distance by increasing market commitment, i.e. hiring local staff that in turn will increase its market knowledge (Johanson & Wiedersheim-Paul, 1975; Johanson & Vahlne, 1977; Andersen, 1993; 1997). Knowledge is therefore usually considered a dimension of human resources, and the more knowledge of the market is available, the more valuable are the allocated resources, hence greater market commitment (Andersen, 1993). On the one hand the more resources the firm commits to the market, the more it will learn and thus reduce market uncertainty and consequently risk (Huber, 1991). But on the other hand the more market knowledge the firm has, the more willing it is to take higher risks (Katsikeas & Morgan, 1994; Agndal & Chetty, 2007). As discussed above, the firm will increase its market knowledge through experience which the firm will lack pre-entry (Johanson & Vahlne, 1977). But Eriksson et al. (1997) reveal that the accumulated internationalization experience is not related to a specific country but is firm-specific experience and thus relevant to all markets. Thus, the more markets the firm is active in, the more general internationalization knowledge it will have, and this can help the firm in market entry (Andersen, 1993; Barkema, Bell & Pennings, 1996; Li & Li, Dalgic, 2004). Further, when the firm is active in several markets it will generate internationalization knowledge over time that can be applicable to more than one market (Johanson & Vahlne, 1977). In the firm’s ongoing activities the final outcome of a completed activity cannot be identified immediately. There will be a delay between the time equivalent of the activity and timing of the event’s effect. Ongoing activities are the firm’s main assets as the firm acts as a generator of market knowledge and espe-cially intangible knowledge. The firm can consult experts from outside and get tangible knowledge, but it is a time-consuming effort. Hence, sometimes the quickest way to attain market knowledge is, as mentioned, to purchase
16
1994; 2005; Hadjikhani, 1996; Steen & Liesch, 2007; Forsgren, 2002) e.g. these studies have a low degree of explanatory power regarding disruptive and irregular commitments (Pedersen & Petersen, 1998; Malhotra & Hin-ings, 2010). In light of this discussion and response to the criticism that in-ternationalization process studies lack a future dimension such as long-term expectations (Hadjikhani & Johanson, 1996; Hadjikhani & Johanson, 1999; Hadjikhani & Johanson, 2001), this study, as mentioned, proposes an analyt-ical framework consisting of the three interrelated concepts of market com-mitment, market knowledge and expectation. This is to facilitate the under-standing of both incremental and non-incremental market commitments.
2.2.2 Market knowledge The second concept in the analytical frame of this study is market knowledge. In the early stage of internationalization the firm will lack expe-riential knowledge, which will therefore be crucial to attain (Johanson & Vahlne, 1977; 2009; Hallén, 1982). In theory many researchers relate market knowledge to market-specific knowledge, which is linked to specific events and thus unique. Since market-specific knowledge relies on specific events it is based on experiential knowledge and is ultimately intangible. This creates a difficulty if an organization wants to partake of an individual’s experiential knowledge (Andersen, 1993; Madhok, 1997; Karlsen et al., 2003). In the abstract, intangible knowledge is divided into tacit and explicit knowledge. Generally knowledge is discussed as either transferable or difficult to trans-fer, and learning is often depicted at an organizational level, though some-times at an individual/cognitive level (Lam, 2000). Tacit knowledge is diffi-cult to transfer since it is difficult to formalize or communicate. Explicit knowledge, like tacit knowledge, can be intangible knowledge, but it can be formulated and transferred, e.g. a mathematical proposition. Knowledge that is easier to transfer is commonly described as general knowledge or tangible knowledge i.e. objective information, such as a textbook. But this type of knowledge is considered complementary to tacit knowledge that, as men-tioned, is experiential. However, as indicated tacit knowledge can be trans-ferred but requires, “close interaction and the build up of a shared under-standing and trust” (ibid.). Although this study will not focus on the banks’ networks, it acknowledges studies that show that firms can have imitative learning and can learn from relationships (Andersson, Johanson & Vahlne, 1997; Andersson & Forsgren, 2000; Chetty & Blankenburg-Holm, 2000; Forsgren, 2002). Consequently this study assumes that, over time, and at least to some extent, partners and the allocated resources in a market will generate market knowledge. However, transforming this knowledge is a complicated process, and even if accomplished it is still difficult to distribute in the firm (Szulanski, 1996; Maaninen-Olsson, Wismén & Carlsson, 2008).
17
To gain market-specific knowledge or in other words experiential knowledge firms seek out partners or local firms to acquire (Kathuria et al., 2008). Lack of knowledge will increase uncertainty and limit the firm’s opportunities and operations, thus its propensity to expand (Johanson & Vahlne, 1977). As discussed above, the presumption is that the firm will be learning by doing, therefore a crucial part becomes failures that trigger a search for knowledge (Barkema & Vermeulen, 1998). This is also supported by studies by Engwall (1994) and Kathuria et al. (2008). They refer to incremental changes and stable relationships to better manage uncertainties in bank internationaliza-tion. The firm will then gather as much information as possible in a pre-entry phase to reduce market uncertainty and learn about the new market (Johan-son & Vahlne, 1977; 1990; 2009). A factor preventing the flow of information to and from the firm is psychic distance, that is, the differences in culture, language, political and legal sys-tem, norms, and values (Johanson & Wiedersheim-Paul, 1975). However, firms can bridge psychic distance by increasing market commitment, i.e. hiring local staff that in turn will increase its market knowledge (Johanson & Wiedersheim-Paul, 1975; Johanson & Vahlne, 1977; Andersen, 1993; 1997). Knowledge is therefore usually considered a dimension of human resources, and the more knowledge of the market is available, the more valuable are the allocated resources, hence greater market commitment (Andersen, 1993). On the one hand the more resources the firm commits to the market, the more it will learn and thus reduce market uncertainty and consequently risk (Huber, 1991). But on the other hand the more market knowledge the firm has, the more willing it is to take higher risks (Katsikeas & Morgan, 1994; Agndal & Chetty, 2007). As discussed above, the firm will increase its market knowledge through experience which the firm will lack pre-entry (Johanson & Vahlne, 1977). But Eriksson et al. (1997) reveal that the accumulated internationalization experience is not related to a specific country but is firm-specific experience and thus relevant to all markets. Thus, the more markets the firm is active in, the more general internationalization knowledge it will have, and this can help the firm in market entry (Andersen, 1993; Barkema, Bell & Pennings, 1996; Li & Li, Dalgic, 2004). Further, when the firm is active in several markets it will generate internationalization knowledge over time that can be applicable to more than one market (Johanson & Vahlne, 1977). In the firm’s ongoing activities the final outcome of a completed activity cannot be identified immediately. There will be a delay between the time equivalent of the activity and timing of the event’s effect. Ongoing activities are the firm’s main assets as the firm acts as a generator of market knowledge and espe-cially intangible knowledge. The firm can consult experts from outside and get tangible knowledge, but it is a time-consuming effort. Hence, sometimes the quickest way to attain market knowledge is, as mentioned, to purchase
18
parts of or full ownership of a firm in the targeted market. Another solution is to recruit individuals with explicit and tacit knowledge i.e. individuals with experience from the market. It is then assumed that over time some of the tacit and experiential knowledge will be codified into organizational routines and norms. (Johanson & Vahlne, 1977; 1990; 2009) The intangible knowledge that the firm seeks will not always be available at the firm’s entry but must be acquired over time. This is all the more so be-cause, as discussed above, the codifying and transferring of tacit knowledge is a difficult process. This may take a long time and explain the sometimes slow pace of the internationalization process. (Johanson & Vahlne, 1977; 1990) In summary, market knowledge is mainly divided into two dimen-sions, one that is intangible and difficult to transfer or store and one that is tangible and easier to transfer and store. These two dimensions can then be split into two further dimensions, market-specific knowledge and general internationalization or general knowledge. The latter is more connected to tangible knowledge and might also implicitly indicate that the firm should have enough experience to have coded some of its tacit knowledge. If it as-sumed that the internationalization knowledge in this case is generated from several kinds of market knowledge. Market-specific knowledge of the two dimensions is more connected to tacit knowledge that the firm can gain through its own activities but its explicit and tangible knowledge can derive from e.g. partners, investments, or staff. But the essential part of learning will spring from own activities.
2.2.3 Expectation The third concept in the theoretical frame is expectation. Beamish, Morrison & Rosenzweig (1997, p. 3) define internationalization as “the process by which firms increase their awareness of the influence of international activi-ties on their future, and establish and conduct transactions with firms from other countries.” Hence it might be argued that Beamish et al. suggest that the degree of internationalization depends on the degree of uncertainty in the firm’s international activities. The degree of uncertainty derives from possi-ble future outcomes and depends on what the firm expects. Beamish et al.’s definition depicts two things of special interest: (1) that the future dimension has an effect on firms’ international activities and (2) the more the firm learns, the more expectations will be generated. Since the firm will have increased its market knowledge the expectations generated will also be more likely to be occur as well. Getting back to the criticism of internationaliza-tion process, one of the more interesting critiques is Hadjikhani and Johan-son’s (1999; 2001) regarding the lack of a future dimension, what the firm expects of the future, and the impact of expectation on market knowledge and market commitment.
19
Hadjikhani and Johanson (1999) define expectation as: “the judgment of the foreign firm’s future position with respect to what it knows and its commit-ment in the market.” Here expectation is acknowledged as the driving force in the firm’s entry or exit and the missing link in order to understand a firm’s behavior based on future outcomes. This is particularly evident when a firm lacks experiential knowledge or when the market is turbulent and the firm’s knowledge is no longer of value. The firm will then have to rely on its ex-pectation of the future in its market activities. The firm will also behave ac-cording to its expectation during stable periods, though when the market is stable what the firm think will happen is more likely to occur than when it is unstable. Because the market is more predictable, the explanatory power of expectation regarding the firm’s internationalization behavior will be less than the concept of knowledge (ibid.). Nevertheless the firm will not commit resources unless it expects this to be useful, regardless of market conditions. The assumption is that market commitment and knowledge is linked to the past and present but does not take into account the future dimension. Thus market commitments and knowledge is not linked to the future and what the firm thinks, knows or believes about it. In order to capture the future dimen-sion the concept of expectation is applied and combined with the Uppsala model’s existing framework for understanding firms’ internationalization behavior. By doing so, a firm’s heterogeneous behavior can be revealed as certain behaviors might stem from what the firm expects of the future and not from past and present market commitments or market knowledge. It is presumed by Hadjikhani and Johanson (1999; 2001) that the firm’s driving force will be the firm’s future expectations; therefore the firm’s commit-ments are driven by knowledge and also its expectation. Cyert and March (1963) explain expectation as what the firm knows and what it wishes to happen in the future. However, applying such a definition may exclude nega-tive aspects of the future, for example if the firm lacks knowledge but guess-es that something negative will occur in the future. Cyert and March’s ex-planation is based on bounded rationality, which knowledge is closely linked to. Indicating that the degree of knowledge affects predictability and conse-quently expectation (Hunt, 1991; Oliver, 1980). So in order to explore firms’ internationalization process the concepts of expectation, knowledge, and commitment must also be considered together, because they are intertwined. Therefore this study follows Hadjikhani and Johanson (1999) defined expec-tation, as presented above. A high level of market knowledge generates a specific and high probability expectation while a low degree of market knowledge generates a vague expectation. However, the latter can be in-creased by additional market commitment. Though the firm can have a low degree of knowledge it can still have an expectation that it itself holds valid and believe strong enough in to act upon.
18
parts of or full ownership of a firm in the targeted market. Another solution is to recruit individuals with explicit and tacit knowledge i.e. individuals with experience from the market. It is then assumed that over time some of the tacit and experiential knowledge will be codified into organizational routines and norms. (Johanson & Vahlne, 1977; 1990; 2009) The intangible knowledge that the firm seeks will not always be available at the firm’s entry but must be acquired over time. This is all the more so be-cause, as discussed above, the codifying and transferring of tacit knowledge is a difficult process. This may take a long time and explain the sometimes slow pace of the internationalization process. (Johanson & Vahlne, 1977; 1990) In summary, market knowledge is mainly divided into two dimen-sions, one that is intangible and difficult to transfer or store and one that is tangible and easier to transfer and store. These two dimensions can then be split into two further dimensions, market-specific knowledge and general internationalization or general knowledge. The latter is more connected to tangible knowledge and might also implicitly indicate that the firm should have enough experience to have coded some of its tacit knowledge. If it as-sumed that the internationalization knowledge in this case is generated from several kinds of market knowledge. Market-specific knowledge of the two dimensions is more connected to tacit knowledge that the firm can gain through its own activities but its explicit and tangible knowledge can derive from e.g. partners, investments, or staff. But the essential part of learning will spring from own activities.
2.2.3 Expectation The third concept in the theoretical frame is expectation. Beamish, Morrison & Rosenzweig (1997, p. 3) define internationalization as “the process by which firms increase their awareness of the influence of international activi-ties on their future, and establish and conduct transactions with firms from other countries.” Hence it might be argued that Beamish et al. suggest that the degree of internationalization depends on the degree of uncertainty in the firm’s international activities. The degree of uncertainty derives from possi-ble future outcomes and depends on what the firm expects. Beamish et al.’s definition depicts two things of special interest: (1) that the future dimension has an effect on firms’ international activities and (2) the more the firm learns, the more expectations will be generated. Since the firm will have increased its market knowledge the expectations generated will also be more likely to be occur as well. Getting back to the criticism of internationaliza-tion process, one of the more interesting critiques is Hadjikhani and Johan-son’s (1999; 2001) regarding the lack of a future dimension, what the firm expects of the future, and the impact of expectation on market knowledge and market commitment.
19
Hadjikhani and Johanson (1999) define expectation as: “the judgment of the foreign firm’s future position with respect to what it knows and its commit-ment in the market.” Here expectation is acknowledged as the driving force in the firm’s entry or exit and the missing link in order to understand a firm’s behavior based on future outcomes. This is particularly evident when a firm lacks experiential knowledge or when the market is turbulent and the firm’s knowledge is no longer of value. The firm will then have to rely on its ex-pectation of the future in its market activities. The firm will also behave ac-cording to its expectation during stable periods, though when the market is stable what the firm think will happen is more likely to occur than when it is unstable. Because the market is more predictable, the explanatory power of expectation regarding the firm’s internationalization behavior will be less than the concept of knowledge (ibid.). Nevertheless the firm will not commit resources unless it expects this to be useful, regardless of market conditions. The assumption is that market commitment and knowledge is linked to the past and present but does not take into account the future dimension. Thus market commitments and knowledge is not linked to the future and what the firm thinks, knows or believes about it. In order to capture the future dimen-sion the concept of expectation is applied and combined with the Uppsala model’s existing framework for understanding firms’ internationalization behavior. By doing so, a firm’s heterogeneous behavior can be revealed as certain behaviors might stem from what the firm expects of the future and not from past and present market commitments or market knowledge. It is presumed by Hadjikhani and Johanson (1999; 2001) that the firm’s driving force will be the firm’s future expectations; therefore the firm’s commit-ments are driven by knowledge and also its expectation. Cyert and March (1963) explain expectation as what the firm knows and what it wishes to happen in the future. However, applying such a definition may exclude nega-tive aspects of the future, for example if the firm lacks knowledge but guess-es that something negative will occur in the future. Cyert and March’s ex-planation is based on bounded rationality, which knowledge is closely linked to. Indicating that the degree of knowledge affects predictability and conse-quently expectation (Hunt, 1991; Oliver, 1980). So in order to explore firms’ internationalization process the concepts of expectation, knowledge, and commitment must also be considered together, because they are intertwined. Therefore this study follows Hadjikhani and Johanson (1999) defined expec-tation, as presented above. A high level of market knowledge generates a specific and high probability expectation while a low degree of market knowledge generates a vague expectation. However, the latter can be in-creased by additional market commitment. Though the firm can have a low degree of knowledge it can still have an expectation that it itself holds valid and believe strong enough in to act upon.
20
Regardless of a high or low degree of knowledge the firm will act upon its future expectation. With increased knowledge the expectation will change since expectation is based on knowledge (Hadjikhani & Johanson, 1999) but it will always be future oriented. Johanson and Vahlne (2009) assume that increased market commitments influence, and will likely increase, market knowledge and vice versa. In line with these thoughts this means that with increased expectation, market commitments will also likely increase. Fur-ther, the more the firm learns, the higher is the probability that the expected outcome will actually occur (Hadjikhani & Johanson, 1999). As the firm increases its knowledge, the more explicit its expectation becomes (ibid.). But if the market is in turbulence or unstable, the firm’s market knowledge will be reduced since it will lack sufficient knowledge, and the firm will therefore be forced to act upon its general belief of the future development of the market (ibid.). Expectations are always of the future, once the present comes about, the expectation becomes part of knowledge. This means that expectations will aid commitments e.g. investments or deinvestments, but since it is always a part of the future, it cannot be part of the firm’s knowledge. The following section is devoted to a presentation of the study’s analytical framework.
2.3 Analytical framework Given that the purpose of this study is to study how two Swedish banks have internationalized, the study’s analytical framework for analysis of the two banks’ behavior will be based on the previously presented concepts of mar-ket commitment, market knowledge and expectation. This study will not study the decision-making process in-depth but will focus instead on the organizational internationalization behavior. In this analytical framework it is assumed that expectation will always be ‘in the future’ and not part of the past or present. Even if the future dimension, expectation, can help under-stand certain behaviors linked to the past or present, it is always future ori-ented. Therefore the use of expectation as an explanatory tool in this theoret-ical framework is added for a fuller understanding the banks’ behavior (see below in Figure 3). The concept of expectation has a supplementary role to enable a better un-derstanding of firm’s internationalization behavior and the dynamics of mar-ket commitment and market knowledge. Hadjikhani & Johanson (1999) sug-gest that the concept of expectation has so far been a silent participant in Johanson and Vahlne’s Uppsala model despite the fact that it is one of the basics in the internationalization of firms. By adding expectation, the ex-planatory power and relationship between knowledge and commitment might increase the understanding of a firm’s internationalization behavior. This study will primarily describe the outcomes of the two banks’ interna-
21
tionalization behavior but not in-depth the process of how it was done. How-ever, by complementing market knowledge and market commitment with the concept of expectation, certain market commitments can be explained e.g. when the firm lacks market knowledge but still believes, based on possible future outcomes, that the increased or decreased market commitment might be more beneficial for the firm.
Figure 3. The analytical framework of the thesis
This thesis analytical framework as shown in Figure 3 is based on an as-sumption that commitments are made, increased, decreased or exited be-cause something is expected. This expectation is molded by past and present knowledge and commitments. Even not doing anything can be based on an expectation and its connection to the firm’s knowledge. If the firm invests, sells, or remain idle in a market, this is based on expectations that the deci-sion is likely beneficial then or in the long term, or sometimes even a neces-sity. As illustrated in Figure 3 expectation is always future oriented but de-rives from current knowledge and experiences, and current and prior com-mitments. Particularly when the market is stable and the firm’s knowledge can be applied to a greater extent because the market is more predictable. Expectation will then be a part of the firm’s behavior although since the market is predictable knowledge will have a greater impact on the firm’s behavior than expectation. But when the market is unstable the firm’s set of knowledge will no longer be applicable because uncertainty is too great, and there will be an imbalance between the firm’s market knowledge and market commitment. The firm will then have to rely on expectation, since the knowledge is not reliable (Hadjikhani & Johanson, 1999; 2001). As discussed, the idea of this analytical framework is that a firm’s interna-tionalization behavior can be explained by three concepts: (1) market com-mitment, (2) market knowledge, and (3) expectation. While the former two are connected to the past and present, expectation is related to the future aspect. However, a firm’s behavior can be defined by these interrelated con-
t1 t2
Market knowledge
Expectation
Market commitment
Time
Market knowledge
Market commitment
Expectation
20
Regardless of a high or low degree of knowledge the firm will act upon its future expectation. With increased knowledge the expectation will change since expectation is based on knowledge (Hadjikhani & Johanson, 1999) but it will always be future oriented. Johanson and Vahlne (2009) assume that increased market commitments influence, and will likely increase, market knowledge and vice versa. In line with these thoughts this means that with increased expectation, market commitments will also likely increase. Fur-ther, the more the firm learns, the higher is the probability that the expected outcome will actually occur (Hadjikhani & Johanson, 1999). As the firm increases its knowledge, the more explicit its expectation becomes (ibid.). But if the market is in turbulence or unstable, the firm’s market knowledge will be reduced since it will lack sufficient knowledge, and the firm will therefore be forced to act upon its general belief of the future development of the market (ibid.). Expectations are always of the future, once the present comes about, the expectation becomes part of knowledge. This means that expectations will aid commitments e.g. investments or deinvestments, but since it is always a part of the future, it cannot be part of the firm’s knowledge. The following section is devoted to a presentation of the study’s analytical framework.
2.3 Analytical framework Given that the purpose of this study is to study how two Swedish banks have internationalized, the study’s analytical framework for analysis of the two banks’ behavior will be based on the previously presented concepts of mar-ket commitment, market knowledge and expectation. This study will not study the decision-making process in-depth but will focus instead on the organizational internationalization behavior. In this analytical framework it is assumed that expectation will always be ‘in the future’ and not part of the past or present. Even if the future dimension, expectation, can help under-stand certain behaviors linked to the past or present, it is always future ori-ented. Therefore the use of expectation as an explanatory tool in this theoret-ical framework is added for a fuller understanding the banks’ behavior (see below in Figure 3). The concept of expectation has a supplementary role to enable a better un-derstanding of firm’s internationalization behavior and the dynamics of mar-ket commitment and market knowledge. Hadjikhani & Johanson (1999) sug-gest that the concept of expectation has so far been a silent participant in Johanson and Vahlne’s Uppsala model despite the fact that it is one of the basics in the internationalization of firms. By adding expectation, the ex-planatory power and relationship between knowledge and commitment might increase the understanding of a firm’s internationalization behavior. This study will primarily describe the outcomes of the two banks’ interna-
21
tionalization behavior but not in-depth the process of how it was done. How-ever, by complementing market knowledge and market commitment with the concept of expectation, certain market commitments can be explained e.g. when the firm lacks market knowledge but still believes, based on possible future outcomes, that the increased or decreased market commitment might be more beneficial for the firm.
Figure 3. The analytical framework of the thesis
This thesis analytical framework as shown in Figure 3 is based on an as-sumption that commitments are made, increased, decreased or exited be-cause something is expected. This expectation is molded by past and present knowledge and commitments. Even not doing anything can be based on an expectation and its connection to the firm’s knowledge. If the firm invests, sells, or remain idle in a market, this is based on expectations that the deci-sion is likely beneficial then or in the long term, or sometimes even a neces-sity. As illustrated in Figure 3 expectation is always future oriented but de-rives from current knowledge and experiences, and current and prior com-mitments. Particularly when the market is stable and the firm’s knowledge can be applied to a greater extent because the market is more predictable. Expectation will then be a part of the firm’s behavior although since the market is predictable knowledge will have a greater impact on the firm’s behavior than expectation. But when the market is unstable the firm’s set of knowledge will no longer be applicable because uncertainty is too great, and there will be an imbalance between the firm’s market knowledge and market commitment. The firm will then have to rely on expectation, since the knowledge is not reliable (Hadjikhani & Johanson, 1999; 2001). As discussed, the idea of this analytical framework is that a firm’s interna-tionalization behavior can be explained by three concepts: (1) market com-mitment, (2) market knowledge, and (3) expectation. While the former two are connected to the past and present, expectation is related to the future aspect. However, a firm’s behavior can be defined by these interrelated con-
t1 t2
Market knowledge
Expectation
Market commitment
Time
Market knowledge
Market commitment
Expectation
22
cepts. If the firm for example perceives a market opportunity, it is on the basis of its (a) knowledge and experience, (b) former and current commit-ments and (c) what the firm will expect. The firm will then invest, and as it invests it will gradually increase its market knowledge. In turn this will gen-erate a new set of expectations (Hadjikhani & Johanson, 1999). Increasing or decreasing commitment will be made on the basis of the firm’s expectation deriving from its knowledge and commitment. The difference is that expec-tation is future oriented while knowledge and commitment is past and pre-sent oriented. Since expectation is future oriented it needs to be recognized as the third dimension, and not as a part of the other two concepts. Expecta-tion is the driving or hindering engine in the firm’s internationalization pro-cess. When the firm lacks market knowledge, the firm’s behavior will rest on its expectation. As a driving or hindering force in the firm’s market com-mitments, the expectation dimension can be helpful in explaining the firm’s market entry or exit that is made on a certain set of beliefs regarding future gains or losses. When an entry has been made, the firm will incrementally increase its mar-ket knowledge and generate a new expectation. But this rationale can in a sense also be ‘broken’ if the firm increases its market commitment on the basis of its expectation, which in this instance is not linked to its market knowledge. A firm may for example commit to an opportunity without ap-plying its market knowledge and instead act on the expectation largely driv-en by opportunistic thinking. Firms’ are heterogeneous and will therefore behave differently, their set of knowledge and commitments differ, and their management of knowledge and commitment differs as well. Different commitments have generated different sets of knowledge and different expectations. One way of under-standing why or how management increases or decreases investments can be to interpret their knowledge and commitment, but the actions taken must also be interpreted in terms of their expectation in order to understand what kind of knowledge that was applied and what the management expected from the outcome. Different managements will generate different expecta-tions as their knowledge and commitment will vary but also generate differ-ent expectations, and therefore they act differently, even if two different managements have the same set of knowledge and commitments under simi-lar conditions.
23
3 Research approach
In this chapter the study’s methodological approach is described. The presentation has been divided into 4 subchapters that will begin by (3.1) explaining why this study consists of two case studies and argues for its le-gitimacy and approach. Afterwards the study’s (3.2) data collection and ap-plication will be discussed, followed by (3.3) the study’s operationalization and (3.4) brief explanations of the case presentation.
3.1 A longitudinal case study Following the purpose of this thesis, a longitudinal process view makes it possible to study context and outcomes of the banks’ activities over time and also how and why they occurred (see also Johanson, 2001, p. 41). Most in-ternationalization process studies according to Karlsen et al. (2003) have a macro (country) or a meso (corporation) approach. The effort in this study employs a meso (micro) approach, i.e. understanding the behavior at the firm level. This study will not follow the two bank’s internal processes, but it will have a micro approach and study some of the banks’ internal processes and how the banks perceive their internal processes as well as external processes. The empirical study follows the two Swedish banks’, Handelsbanken’s and Swedbank’s, internationalization process from 1995 to 2010 in multiple markets. The empirical evidence will also enable the study of the possible effects of internal processes on external processes and vice versa, i.e. how market knowledge affects market commitment and how expectations affect market commitment. Case studies are commonly criticized for lacking methodological rigidity (Flyvbjerg, 2006; Eisenhardt & Graebner, 2007; Gibbert, Ruigrok & Wicki, 2008; Yin, 2009; Blazejewski, 2011), yet adapting a longitudinal case study research approach could highlight patterns and behaviors, provide possible interpretations, and be descriptive of stages or phases of development (Blazejewski, 2011; Maxwell, 1997; Sinkovics, Penz & Ghauri, 2005). This contribution would benefit the understanding of actual behaviors in multiple-level contexts (Blazejewski, 2011) such as banks internationalizing in this study over a long timespan in dynamic contexts and different markets.
22
cepts. If the firm for example perceives a market opportunity, it is on the basis of its (a) knowledge and experience, (b) former and current commit-ments and (c) what the firm will expect. The firm will then invest, and as it invests it will gradually increase its market knowledge. In turn this will gen-erate a new set of expectations (Hadjikhani & Johanson, 1999). Increasing or decreasing commitment will be made on the basis of the firm’s expectation deriving from its knowledge and commitment. The difference is that expec-tation is future oriented while knowledge and commitment is past and pre-sent oriented. Since expectation is future oriented it needs to be recognized as the third dimension, and not as a part of the other two concepts. Expecta-tion is the driving or hindering engine in the firm’s internationalization pro-cess. When the firm lacks market knowledge, the firm’s behavior will rest on its expectation. As a driving or hindering force in the firm’s market com-mitments, the expectation dimension can be helpful in explaining the firm’s market entry or exit that is made on a certain set of beliefs regarding future gains or losses. When an entry has been made, the firm will incrementally increase its mar-ket knowledge and generate a new expectation. But this rationale can in a sense also be ‘broken’ if the firm increases its market commitment on the basis of its expectation, which in this instance is not linked to its market knowledge. A firm may for example commit to an opportunity without ap-plying its market knowledge and instead act on the expectation largely driv-en by opportunistic thinking. Firms’ are heterogeneous and will therefore behave differently, their set of knowledge and commitments differ, and their management of knowledge and commitment differs as well. Different commitments have generated different sets of knowledge and different expectations. One way of under-standing why or how management increases or decreases investments can be to interpret their knowledge and commitment, but the actions taken must also be interpreted in terms of their expectation in order to understand what kind of knowledge that was applied and what the management expected from the outcome. Different managements will generate different expecta-tions as their knowledge and commitment will vary but also generate differ-ent expectations, and therefore they act differently, even if two different managements have the same set of knowledge and commitments under simi-lar conditions.
23
3 Research approach
In this chapter the study’s methodological approach is described. The presentation has been divided into 4 subchapters that will begin by (3.1) explaining why this study consists of two case studies and argues for its le-gitimacy and approach. Afterwards the study’s (3.2) data collection and ap-plication will be discussed, followed by (3.3) the study’s operationalization and (3.4) brief explanations of the case presentation.
3.1 A longitudinal case study Following the purpose of this thesis, a longitudinal process view makes it possible to study context and outcomes of the banks’ activities over time and also how and why they occurred (see also Johanson, 2001, p. 41). Most in-ternationalization process studies according to Karlsen et al. (2003) have a macro (country) or a meso (corporation) approach. The effort in this study employs a meso (micro) approach, i.e. understanding the behavior at the firm level. This study will not follow the two bank’s internal processes, but it will have a micro approach and study some of the banks’ internal processes and how the banks perceive their internal processes as well as external processes. The empirical study follows the two Swedish banks’, Handelsbanken’s and Swedbank’s, internationalization process from 1995 to 2010 in multiple markets. The empirical evidence will also enable the study of the possible effects of internal processes on external processes and vice versa, i.e. how market knowledge affects market commitment and how expectations affect market commitment. Case studies are commonly criticized for lacking methodological rigidity (Flyvbjerg, 2006; Eisenhardt & Graebner, 2007; Gibbert, Ruigrok & Wicki, 2008; Yin, 2009; Blazejewski, 2011), yet adapting a longitudinal case study research approach could highlight patterns and behaviors, provide possible interpretations, and be descriptive of stages or phases of development (Blazejewski, 2011; Maxwell, 1997; Sinkovics, Penz & Ghauri, 2005). This contribution would benefit the understanding of actual behaviors in multiple-level contexts (Blazejewski, 2011) such as banks internationalizing in this study over a long timespan in dynamic contexts and different markets.
24
According to Amdam (2009; see also Blazejewski, 2011; Birkinshaw, Bran-nen & Tung, 2011) despite the fact that some issues are not addressable un-less studied longitudinally, researchers employing this approach are few. Historical studies can therefore help to understand processes over time (Blazejewski, 2011; Voss, Tsikriktsis & Frohlich, 2002; Birkinshaw et al., 2011) and thus contribute to an understanding of how the two Swedish banks in this study have internationalized over a long period of time. Only studying single events or sequences and not acknowledging time will not uncover processes (Pettigrew et al, 2001, p. 697). A longitudinal study can provide a strong evaluation of a theoretical framework’s (as in this study) explanatory power since it assesses processes over time (Miller & Friesen, 1982; Gibbert et al., 2008). Some researchers even go so far as to say that “[…] the expla-nation of quantitative findings and the construction of theory based on those findings will ultimately have to be based on qualitative understanding” (Meredith, 1998). Thus qualitative studies and case research have strong relevance in the field of international business, particularly in process studies since it can be prob-lematic to quantify internationalization processes as the hard facts are diffi-cult to expose (see Van Maanen, 1979; Meredith, 1998; Birkinshaw et al., 2011), or as Birkinshaw et al. (2011) discuss: “[…] qualitative methods can […] play a critical role to interpret and understand the complex plurality of contexts […] and firms that transact business across international bounda-ries” (Birkinshaw et al., 2011). Further, qualitative studies have traditionally had a large impact on interna-tionalization studies because they have a greater ability than quantitative studies to generate an understanding of complex and a plurality of contexts and processes (Dul & Hak, 2008, p. 24; Birkinshaw et al., 2011; Lervik, 2011; Piekkari & Welch, 2011) like the case of internationalization in multi-ple markets and changing environments. A qualitative study with a longitu-dinal approach can for example (1) expose temporal patterns (Monge, 1995); (2) contribute to the development of dynamic theories (Blazejewski, 2011) like an internationalization process model; (3) provide a deeper understand-ing of regular and irregular settings (Ping, 1997; Eriksson & Hadjikhani, 2000; Ghauri & Firth, 2009); and (4) “unpack” a phenomenon and “provide a deeper and richer understanding of the issues under investigation” (Van Maanen, 1979, p. 520; Birkinshaw et al., 2011; Yin, 2009, p. 19-20; Aharo-ni, 2011). For the aim of this thesis, the employment of longitudinal method-ological approach seemed appropriate in accordance with the above argu-ments. While Marquardt’s (1994) longitudinal study of Swedish banks concerns the period 1900-1992 this study focuses on the internationalization of Swedish banks in the period 1995-2010. The purpose is not to compare with or reflect
25
back on Marquardt’s study but instead to study how the banks have interna-tionalized in the period after Marquardt’s study. Thus ‘how’ is the most ap-parent question this study needs to answer. Such a question is well suited to be studied in a qualitative case study (Bryman & Burgess, 1999; Voss et al., 2002; Ghauri, 2004; Ghauri & Grønhaug, 2005; Yin, 2009; Birkinshaw et al., 2011), which is appropriate when one wishes to understand the big pic-ture of a research object (Walsham, 1993, p. 14). Thus the method also fol-lows researchers like Johanson and Vahlne (1977), who used a case study when they presented the Uppsala model. Furthermore a case study is suitable in order to gain a holistic view that can help understand the ‘how’ (Aharoni, 2011), generate generalizations and contribute to testing and theory building (Voss et al., 2002; Flyvbjerg, 2006). In this respect banks have changed dur-ing the past couple of decades by introducing new services into their portfo-lios, e.g. insurance. Today the four largest banks in Sweden offer the same set of services. For this study’s purpose the focus is on the banks’ interna-tionalization behavior as a unit. Therefore the type of service that the banks are providing is of less significance in service of the aim of generating a broader view of the banks’ internationalization behavior. As mentioned, this study applies its own analytical framework based on the key concepts of market commitment, market knowledge and expectation. The secondary data collected provide a broad view of the two banks’ internationalization behav-ior, which is the focus of this study. Though this study will not focus on specific details such as the banks’ customers, it will offer empirical evidence of the banks’ behavior in multiple markets in different periods of time and under changing conditions. Constructing a study of two banks’ internationalization could have been done in a number of ways. In the early days this study faced the dilemma of whether or not to conduct interviews, since that would allow more in-depth empirical data that would allow for example an in-depth network picture of the banks. It could also reveal empirical evidence that archival data might exclude. Primary data are often difficult to obtain, however, and might also be confidential (Marshall & Rossman, 2011, p. 145; Tan & Nojonen, 2011); this study considers periods that hold a number of critical crises that hinder interviews with managers due to their reluctance to release information (Dye, 1985). The empirical facts in this study cover more than 16 years. This presents a number of problems in gathering information through interview. First, as Dye (1985) points out, managers are reluctant to release negative information. Second, the period embraces a large number of managers in different periods of time in each bank. This leads to the access problem. Furthermore longitudinal studies applying interviews also face the challenge that participants may not recall important events or their recollection might be biased by post-rationalization, in that the respondents might justify their decisions with arguments based on knowledge that was unavailable at the time the decisions were made. (Golden, 1992; Voss et al., 2002) But there
24
According to Amdam (2009; see also Blazejewski, 2011; Birkinshaw, Bran-nen & Tung, 2011) despite the fact that some issues are not addressable un-less studied longitudinally, researchers employing this approach are few. Historical studies can therefore help to understand processes over time (Blazejewski, 2011; Voss, Tsikriktsis & Frohlich, 2002; Birkinshaw et al., 2011) and thus contribute to an understanding of how the two Swedish banks in this study have internationalized over a long period of time. Only studying single events or sequences and not acknowledging time will not uncover processes (Pettigrew et al, 2001, p. 697). A longitudinal study can provide a strong evaluation of a theoretical framework’s (as in this study) explanatory power since it assesses processes over time (Miller & Friesen, 1982; Gibbert et al., 2008). Some researchers even go so far as to say that “[…] the expla-nation of quantitative findings and the construction of theory based on those findings will ultimately have to be based on qualitative understanding” (Meredith, 1998). Thus qualitative studies and case research have strong relevance in the field of international business, particularly in process studies since it can be prob-lematic to quantify internationalization processes as the hard facts are diffi-cult to expose (see Van Maanen, 1979; Meredith, 1998; Birkinshaw et al., 2011), or as Birkinshaw et al. (2011) discuss: “[…] qualitative methods can […] play a critical role to interpret and understand the complex plurality of contexts […] and firms that transact business across international bounda-ries” (Birkinshaw et al., 2011). Further, qualitative studies have traditionally had a large impact on interna-tionalization studies because they have a greater ability than quantitative studies to generate an understanding of complex and a plurality of contexts and processes (Dul & Hak, 2008, p. 24; Birkinshaw et al., 2011; Lervik, 2011; Piekkari & Welch, 2011) like the case of internationalization in multi-ple markets and changing environments. A qualitative study with a longitu-dinal approach can for example (1) expose temporal patterns (Monge, 1995); (2) contribute to the development of dynamic theories (Blazejewski, 2011) like an internationalization process model; (3) provide a deeper understand-ing of regular and irregular settings (Ping, 1997; Eriksson & Hadjikhani, 2000; Ghauri & Firth, 2009); and (4) “unpack” a phenomenon and “provide a deeper and richer understanding of the issues under investigation” (Van Maanen, 1979, p. 520; Birkinshaw et al., 2011; Yin, 2009, p. 19-20; Aharo-ni, 2011). For the aim of this thesis, the employment of longitudinal method-ological approach seemed appropriate in accordance with the above argu-ments. While Marquardt’s (1994) longitudinal study of Swedish banks concerns the period 1900-1992 this study focuses on the internationalization of Swedish banks in the period 1995-2010. The purpose is not to compare with or reflect
25
back on Marquardt’s study but instead to study how the banks have interna-tionalized in the period after Marquardt’s study. Thus ‘how’ is the most ap-parent question this study needs to answer. Such a question is well suited to be studied in a qualitative case study (Bryman & Burgess, 1999; Voss et al., 2002; Ghauri, 2004; Ghauri & Grønhaug, 2005; Yin, 2009; Birkinshaw et al., 2011), which is appropriate when one wishes to understand the big pic-ture of a research object (Walsham, 1993, p. 14). Thus the method also fol-lows researchers like Johanson and Vahlne (1977), who used a case study when they presented the Uppsala model. Furthermore a case study is suitable in order to gain a holistic view that can help understand the ‘how’ (Aharoni, 2011), generate generalizations and contribute to testing and theory building (Voss et al., 2002; Flyvbjerg, 2006). In this respect banks have changed dur-ing the past couple of decades by introducing new services into their portfo-lios, e.g. insurance. Today the four largest banks in Sweden offer the same set of services. For this study’s purpose the focus is on the banks’ interna-tionalization behavior as a unit. Therefore the type of service that the banks are providing is of less significance in service of the aim of generating a broader view of the banks’ internationalization behavior. As mentioned, this study applies its own analytical framework based on the key concepts of market commitment, market knowledge and expectation. The secondary data collected provide a broad view of the two banks’ internationalization behav-ior, which is the focus of this study. Though this study will not focus on specific details such as the banks’ customers, it will offer empirical evidence of the banks’ behavior in multiple markets in different periods of time and under changing conditions. Constructing a study of two banks’ internationalization could have been done in a number of ways. In the early days this study faced the dilemma of whether or not to conduct interviews, since that would allow more in-depth empirical data that would allow for example an in-depth network picture of the banks. It could also reveal empirical evidence that archival data might exclude. Primary data are often difficult to obtain, however, and might also be confidential (Marshall & Rossman, 2011, p. 145; Tan & Nojonen, 2011); this study considers periods that hold a number of critical crises that hinder interviews with managers due to their reluctance to release information (Dye, 1985). The empirical facts in this study cover more than 16 years. This presents a number of problems in gathering information through interview. First, as Dye (1985) points out, managers are reluctant to release negative information. Second, the period embraces a large number of managers in different periods of time in each bank. This leads to the access problem. Furthermore longitudinal studies applying interviews also face the challenge that participants may not recall important events or their recollection might be biased by post-rationalization, in that the respondents might justify their decisions with arguments based on knowledge that was unavailable at the time the decisions were made. (Golden, 1992; Voss et al., 2002) But there
26
are also cultural differences that it would be necessary to adjust to and take into consideration when interpreting the findings of primary data (Lervik, 2011), particularly in this case as the two banks have internationalized in different countries in both Eastern and Western Europe. In comparison, us-ing secondary data can often reduce costs, save time and minimize wasteful data (Sørensen, Sabroe & Olsen, 1996). Using survey data entails the prob-lem of probability, unless the response rate is high or the sample is suffi-ciently representative (Miles & Huberman, 1994, p. 34; Baruch & Holtom, 2008) and the intention was to remain open and focus on the banks’ behav-ior. Due to practical challenges such as time and cost of finding and gaining access to enough relevant managers, and current and prior staff to speak to (Lervik, 2011), interviewing was set aside for future research. Longitudinal studies such as this cross-case study covering 16 years of two banks’ internationalization provide the opportunity to study sequential rela-tionships of events (see also Welch & Luostarinen, 1993; Voss et al., 2002; Amdam, 2009). The empirical evidence contains archival data that has been collected and analyzed retrospectively, a common approach in economic history research since it generates a contemporary picture, shows facts and is not biased by post rationalizations or forgetfulness (see for example Golden, 1992; Voss et al., 2002; Gerring, 2007, p. 20; Yin, 2009, p. 49). Secondary data can also be biased in for example news reports or idealized statements by firms (Marshall & Rossman, 2011, p. 186), and to ascertain validity this study resorted to multiple secondary sources of evidence that were collected to enable cross-referencing that would increase the study’s reliability and in turn validity (see Yin, 1994, p. 13; Voss et al., 2002). Since this study’s em-pirical evidence and analysis is based on archival data, it is dependent on textual interpretation (Welch, 2002). In this respect the study has relied on the theoretical framework presented in the previous chapter in reducing, coding and analyzing empirical evidence. Also, since the study applies sec-ondary sources and the data has been gathered retrospectively and is availa-ble for anyone with access the study facilitate a high degree of replicability (Gibbert et al., 2008). On the basis of the above explanations, this study re-lies on archival data that facilitated ex post analysis to increase reliability (Blazejewski, 2011; Yin, 2009).
Figure 4. The study’s methodological approach
As stated, the empirical study is composed of a longitudinal cross-case study of two Swedish banks’ internationalization from 1995 to 2010. Naturally a time span of that length will contain a great deal of data that will have to be
Analysing data
Validating data
Coding & organizing
data
Finding & reducing
data
Determining research approach
27
organized, scrutinized and validated, and finally analyzed. Though Figure 4 above illustrates a rather straightforward and static approach, naturally the study was continuously affected during the gathering, coding, validating, and analyzing of the empirical data. In the sense that for example, when analyz-ing the data, if interesting evidence was found a more elaborate search was undertaken for more evidence to confirm findings and to find further evi-dence. Figure 4 is only a schematic presentation to simplify the understand-ing of different activities. In reality the process was closer to a circle con-taining interwoven and recursive activities and the work proceeded by con-necting and revisiting all phases. The choice of studying banks’ internationalization is interesting since few researchers have studied banks’ internationalization processes and in particu-lar Swedish banks. They are, moreover, within the service sector, while most internationalization process studies have been carried out in a product-centric setting. Banks in Sweden also have an interesting history because of market deregulations (Furusten, 2009) that have affected bank internationali-zation. The banking market was deregulated in the late 1980s, and the four large Swedish banks have invested considerable resources in internationaliz-ing since then. This means that the period soon after deregulation was of interest for a retrospective longitudinal study. Marquardt’s (1994) study stretches to 1992, and because the banks were largely inactive in 1993-1994, this study is set from 1995 until 2010, as the empirical evidence was collect-ed in 2011. The division of the cases into three periods (1) 1995-2000, (2) 2001-2007, (3) 2008-2010, in the empirical chapters is based on the degree of market changes and stability as well as the banks’ degree of international-ization. This sectioning was done in an effort to find coherence and sequenc-es as well as break-off points and sections in an otherwise rather fuzzy reali-ty that needed structuring. Both banks start with a low degree of internation-al activities in period 1 to increase foreign activities over time, principally in period 2. In period 3 both banks were affected by the worldwide financial crisis. The decision to pursue not one but two case studies was made in response to a major criticism leveled against case studies concerning the generalizability of examining a single case (Yin, 2009, p. 15). The selection of Handelsbank-en and Swedbank was based on size, age, and the circumstance that both were highly active internationally. Previous studies show that the two chosen banks in comparison are heterogeneous (Marquardt, 1994; Hadjikhani, Paju-virta & Thilenius, 2012), which could facilitate interesting comparisons and increase generalizability (see also Eisenhardt, 1989; Miles & Huberman, 1994, p. 34; Voss et al., 2002; Flyvbjerg, 2006; Lervik, 2011). They were therefore also interesting subjects to test the explanatory power of this study’s theoretical framework. Because the two banks chosen make up a large share of the Swedish banking market, the study also enables possible
26
are also cultural differences that it would be necessary to adjust to and take into consideration when interpreting the findings of primary data (Lervik, 2011), particularly in this case as the two banks have internationalized in different countries in both Eastern and Western Europe. In comparison, us-ing secondary data can often reduce costs, save time and minimize wasteful data (Sørensen, Sabroe & Olsen, 1996). Using survey data entails the prob-lem of probability, unless the response rate is high or the sample is suffi-ciently representative (Miles & Huberman, 1994, p. 34; Baruch & Holtom, 2008) and the intention was to remain open and focus on the banks’ behav-ior. Due to practical challenges such as time and cost of finding and gaining access to enough relevant managers, and current and prior staff to speak to (Lervik, 2011), interviewing was set aside for future research. Longitudinal studies such as this cross-case study covering 16 years of two banks’ internationalization provide the opportunity to study sequential rela-tionships of events (see also Welch & Luostarinen, 1993; Voss et al., 2002; Amdam, 2009). The empirical evidence contains archival data that has been collected and analyzed retrospectively, a common approach in economic history research since it generates a contemporary picture, shows facts and is not biased by post rationalizations or forgetfulness (see for example Golden, 1992; Voss et al., 2002; Gerring, 2007, p. 20; Yin, 2009, p. 49). Secondary data can also be biased in for example news reports or idealized statements by firms (Marshall & Rossman, 2011, p. 186), and to ascertain validity this study resorted to multiple secondary sources of evidence that were collected to enable cross-referencing that would increase the study’s reliability and in turn validity (see Yin, 1994, p. 13; Voss et al., 2002). Since this study’s em-pirical evidence and analysis is based on archival data, it is dependent on textual interpretation (Welch, 2002). In this respect the study has relied on the theoretical framework presented in the previous chapter in reducing, coding and analyzing empirical evidence. Also, since the study applies sec-ondary sources and the data has been gathered retrospectively and is availa-ble for anyone with access the study facilitate a high degree of replicability (Gibbert et al., 2008). On the basis of the above explanations, this study re-lies on archival data that facilitated ex post analysis to increase reliability (Blazejewski, 2011; Yin, 2009).
Figure 4. The study’s methodological approach
As stated, the empirical study is composed of a longitudinal cross-case study of two Swedish banks’ internationalization from 1995 to 2010. Naturally a time span of that length will contain a great deal of data that will have to be
Analysing data
Validating data
Coding & organizing
data
Finding & reducing
data
Determining research approach
27
organized, scrutinized and validated, and finally analyzed. Though Figure 4 above illustrates a rather straightforward and static approach, naturally the study was continuously affected during the gathering, coding, validating, and analyzing of the empirical data. In the sense that for example, when analyz-ing the data, if interesting evidence was found a more elaborate search was undertaken for more evidence to confirm findings and to find further evi-dence. Figure 4 is only a schematic presentation to simplify the understand-ing of different activities. In reality the process was closer to a circle con-taining interwoven and recursive activities and the work proceeded by con-necting and revisiting all phases. The choice of studying banks’ internationalization is interesting since few researchers have studied banks’ internationalization processes and in particu-lar Swedish banks. They are, moreover, within the service sector, while most internationalization process studies have been carried out in a product-centric setting. Banks in Sweden also have an interesting history because of market deregulations (Furusten, 2009) that have affected bank internationali-zation. The banking market was deregulated in the late 1980s, and the four large Swedish banks have invested considerable resources in internationaliz-ing since then. This means that the period soon after deregulation was of interest for a retrospective longitudinal study. Marquardt’s (1994) study stretches to 1992, and because the banks were largely inactive in 1993-1994, this study is set from 1995 until 2010, as the empirical evidence was collect-ed in 2011. The division of the cases into three periods (1) 1995-2000, (2) 2001-2007, (3) 2008-2010, in the empirical chapters is based on the degree of market changes and stability as well as the banks’ degree of international-ization. This sectioning was done in an effort to find coherence and sequenc-es as well as break-off points and sections in an otherwise rather fuzzy reali-ty that needed structuring. Both banks start with a low degree of internation-al activities in period 1 to increase foreign activities over time, principally in period 2. In period 3 both banks were affected by the worldwide financial crisis. The decision to pursue not one but two case studies was made in response to a major criticism leveled against case studies concerning the generalizability of examining a single case (Yin, 2009, p. 15). The selection of Handelsbank-en and Swedbank was based on size, age, and the circumstance that both were highly active internationally. Previous studies show that the two chosen banks in comparison are heterogeneous (Marquardt, 1994; Hadjikhani, Paju-virta & Thilenius, 2012), which could facilitate interesting comparisons and increase generalizability (see also Eisenhardt, 1989; Miles & Huberman, 1994, p. 34; Voss et al., 2002; Flyvbjerg, 2006; Lervik, 2011). They were therefore also interesting subjects to test the explanatory power of this study’s theoretical framework. Because the two banks chosen make up a large share of the Swedish banking market, the study also enables possible
28
generalizations of Nordic banks’ internationalization processes (see for ex-ample Flyvbjerg, 2006; Yin, 2009, p. 15; Gibbert et al., 2008). In the two cases, both qualitative and quantitative data are applied, using the qualitative data’s embedded description to explain the behavior of the two banks (see Yin, 2009, p. 133; Eisenhardt, 1989) alongside quantitative data, such as size of investments, number of offices and staff members. Others that have used a similar approach are inter alia Marquardt (1994), Uusitalo (2004), Sakarya, Eckman and Hyllegard (2007), Amdam (2009), and Delios, Beamish and Zhao (2009). Since the criteria for interpreting the data are one of the essen-tial components in a case study, the way this was done will be elaborated on in the two forthcoming subchapters (see Voss et al., 2002; Flyvbjerg, 2006; Yin, 2009; Fletcher & Plakoyiannaki, 2011).
3.2 Data collection and application As the aim of the study is to produce a broad view of the banks’ internation-alization process, a study of sequences or particular customers was left aside for the wider view of this effort, which covers a long timespan and a large number of markets. This study contains multiple collections of clusters of information comprehending the banks international activities in the 1995-2010 period in Europe, the US, and several other countries. The presentation, the gathering and the organizing of the empirical evidence from Affärsdata (Business data) have been done chronologically. Affärsdata records and stores most printed and digital newspaper articles from Scandinavia and to some extent English-language papers. The keywords Handelsbanken, Fören-ingsbank, Sparbank, and Swedbank were applied separately and restricted to a particular year for two reasons: in order to reduce search times, as the hits took time to load and because, although it was known which markets the banks were active in today, the process was uncertain in terms of them get-ting there and which markets they had been in and to what degree they were active in which markets over time. Searching year by year and not focusing on particular markets would illuminate aspects that otherwise might have been missed. Finding differences in internationalization patterns could have been difficult if the study had included only included one or a few markets. Further, it could reveal managers that played important roles in the banks over time. These managers would be of particular interest in future research, i.e. in collecting primary data. But in the search the volume of hits was far too great to deal with, particularly since the searches were intended to find any article that used the keyword in any way somewhere throughout the whole text. Therefore exclusions were applied (see Appendix 1) that over time helped narrow down the results, save time, and enhance relevance.
29
Figure 5. Archival search for empirical evidence
But even with limitations the hits were still in the thousands and had to be manually excluded based on interpretation of relevance to this study. Despite efforts to exclude redundant data from different newspapers validating the same report (such as local newspapers replicating reports in major newspa-pers), such redundant data was vast and had to be read and confirmed as either being of use or not. However, the redundant data was also helpful, as it frequently confirmed what other newspapers had already reported and therefore increased the reliability of the evidence. The number of extracted news items and source that have been applied in this study is depicted in Table 1. Since many of the hits were not related to the purpose of this study, headlines and synopses of the articles were read and interpreted to determine whether they were relevant or not, i.e. a common irrelevant headline was local office robbed or how to save money. If one was relevant it was opened, copied and saved without further interpretation. Items of relevance were mainly those with citations or stories that described events that had taken, were taking, were about to (potentially) take place that were related to the banks in combination with an international locale or firm. Events such as organizational changes and changes in management were also considered as significant to the study and therefore included.
Source # extracted items Source # extracted
items Dagens Industri 215 Dagens Nyheter 41 Nyhetsbyrån Direkt 177 TT 38 Swedbank Annual Reports 80 Swedbank press releases 31 Svenska Dagbladet 67 Fond & Bank 22 Affärsvärlden 53 Veckans Affärer 22 Nyhetsbyrån Ticker 53 Nyhetsbyrån SIX 19 FinansTidningen 47 Others combined 133
Total 998
Table 1. Extracted news items used in the two cases
28
generalizations of Nordic banks’ internationalization processes (see for ex-ample Flyvbjerg, 2006; Yin, 2009, p. 15; Gibbert et al., 2008). In the two cases, both qualitative and quantitative data are applied, using the qualitative data’s embedded description to explain the behavior of the two banks (see Yin, 2009, p. 133; Eisenhardt, 1989) alongside quantitative data, such as size of investments, number of offices and staff members. Others that have used a similar approach are inter alia Marquardt (1994), Uusitalo (2004), Sakarya, Eckman and Hyllegard (2007), Amdam (2009), and Delios, Beamish and Zhao (2009). Since the criteria for interpreting the data are one of the essen-tial components in a case study, the way this was done will be elaborated on in the two forthcoming subchapters (see Voss et al., 2002; Flyvbjerg, 2006; Yin, 2009; Fletcher & Plakoyiannaki, 2011).
3.2 Data collection and application As the aim of the study is to produce a broad view of the banks’ internation-alization process, a study of sequences or particular customers was left aside for the wider view of this effort, which covers a long timespan and a large number of markets. This study contains multiple collections of clusters of information comprehending the banks international activities in the 1995-2010 period in Europe, the US, and several other countries. The presentation, the gathering and the organizing of the empirical evidence from Affärsdata (Business data) have been done chronologically. Affärsdata records and stores most printed and digital newspaper articles from Scandinavia and to some extent English-language papers. The keywords Handelsbanken, Fören-ingsbank, Sparbank, and Swedbank were applied separately and restricted to a particular year for two reasons: in order to reduce search times, as the hits took time to load and because, although it was known which markets the banks were active in today, the process was uncertain in terms of them get-ting there and which markets they had been in and to what degree they were active in which markets over time. Searching year by year and not focusing on particular markets would illuminate aspects that otherwise might have been missed. Finding differences in internationalization patterns could have been difficult if the study had included only included one or a few markets. Further, it could reveal managers that played important roles in the banks over time. These managers would be of particular interest in future research, i.e. in collecting primary data. But in the search the volume of hits was far too great to deal with, particularly since the searches were intended to find any article that used the keyword in any way somewhere throughout the whole text. Therefore exclusions were applied (see Appendix 1) that over time helped narrow down the results, save time, and enhance relevance.
29
Figure 5. Archival search for empirical evidence
But even with limitations the hits were still in the thousands and had to be manually excluded based on interpretation of relevance to this study. Despite efforts to exclude redundant data from different newspapers validating the same report (such as local newspapers replicating reports in major newspa-pers), such redundant data was vast and had to be read and confirmed as either being of use or not. However, the redundant data was also helpful, as it frequently confirmed what other newspapers had already reported and therefore increased the reliability of the evidence. The number of extracted news items and source that have been applied in this study is depicted in Table 1. Since many of the hits were not related to the purpose of this study, headlines and synopses of the articles were read and interpreted to determine whether they were relevant or not, i.e. a common irrelevant headline was local office robbed or how to save money. If one was relevant it was opened, copied and saved without further interpretation. Items of relevance were mainly those with citations or stories that described events that had taken, were taking, were about to (potentially) take place that were related to the banks in combination with an international locale or firm. Events such as organizational changes and changes in management were also considered as significant to the study and therefore included.
Source # extracted items Source # extracted
items Dagens Industri 215 Dagens Nyheter 41 Nyhetsbyrån Direkt 177 TT 38 Swedbank Annual Reports 80 Swedbank press releases 31 Svenska Dagbladet 67 Fond & Bank 22 Affärsvärlden 53 Veckans Affärer 22 Nyhetsbyrån Ticker 53 Nyhetsbyrån SIX 19 FinansTidningen 47 Others combined 133
Total 998
Table 1. Extracted news items used in the two cases
30
These are commonly considered reliable newspapers in Sweden. The empir-ical data compiled was then analyzed and compared with other empirical evidence. Often annual reports were reviewed as a first draft to provide in-sights of significant events during the year. Though the emphasis was on newspaper articles, as they were considered to some extent to be less biased, these were cross-referenced to enhance validity. Generally a report, or usual-ly a short notification, was published by the Swedish news agency TT, the largest such agency in Scandinavia. The notification could for example be as short as Handelsbanken opens one office in Russia with other newspapers confirming and replicating the news or investigating it in greater depth in the following hours or day. The following days smaller and local newspapers replicated the news. Hence when a narrower search was made to add detailed information as well as to support any extracted information. The cross-referencing of reporting enhanced the validity and was helpful in establish-ing a credible case story.
Figure 6. Hits of the search, headlines and synopsis
When a headline of interest was found, the synopsis of the story was read to see if it could be useful, as Figure 6 exemplifies above. News items with quotes were of special interest since they could reveal more detailed infor-
31
mation in managers’ own words. Consequently headlines were not the only basis on which articles was saved during the first draft. Other items that were of interest were those that were directly related to the banks’ international activities i.e. a headline such as Handelsbanken opens three new offices in Norway. These items were stored for later interpretation while the search continued from published date into the following week(s) to see if there were other related stories. Once the first draft had been completed the collected data was opened for reading, interpreting and coding. Thus a great deal of this study is based on textual interpretation (see for example Carley, 1993; Arnold & Fischer, 1994; Fairclough, 2003) that was coded mainly after lo-cale, company, statement, service, customer, individual, event, staffing, and offices. Coding of the data was done manually and was not assisted by soft-ware because of the ambition to be guided to a great extent by the empirical evidence and hence less restricted in interpreting the empirical data (see Houman Andersen & Kragh, 2011; Yin, 2009, p. 127-160). To illustrate what a typical news item would look like, Figure 7 is provided below. It is a short news item from Swedish newspaper Nyhetsbyrån Direkt published 3 October in 2002. It reports that Handelsbanken wants to increase investments in Denmark. Different Danish sources speculate about possible Danish banks that Handelsbanken could invest in, Danish banks that were active in regions where Handelsbanken at the time had little activities in. Manager Anders Bouvin comments and confirms that the bank wants to expand in Denmark and that the Danish market suits the bank’s operation.
Figure 7. A typical news item with exemplifying coding scheme
When events occurred, such as an acquisition, a background search for Ber-gensbanken, for example, which Handelsbanken had acquired, was made to see what kind of bank it was and what had occurred before. Once the first
Nyhetsbyrån Direkt ! Source Tor 3 oktober 2002 ! Date SHB: Vill köpa fler banker i Danmark enl regionchef – tidn ! Headline Stockholm (Direkt) Handelsbanken vill göra ytterligare förvärv i Danmark efter köpet av Midtbank i fjol. ! Synopsis Det skriver tidningen Jyllands-Posten. "I Danmark håller sig kunder till lokala banker. Det passar väl med vår filosofi att växa här eftersom vi är en mycket decentraliserad och kundorienterad bank", säger bankens Danmarkschef Anders Bouvin till tidningen, skriver Bloomberg News. Roskilde Bank och Forstaedernes Bank kan vara tänkbara köpobjekt eftersom Handelsbanken har få kontor i de områden där dessa banker finns, enligt Jyllands-Posten./DD ! Story
Color-coding scheme
[ ]: Marking: Locale [ ]: Previous or current event [ ]: Citation [ ]: Setting [ ]: Future event [ ]: Company [ ]: Individual
30
These are commonly considered reliable newspapers in Sweden. The empir-ical data compiled was then analyzed and compared with other empirical evidence. Often annual reports were reviewed as a first draft to provide in-sights of significant events during the year. Though the emphasis was on newspaper articles, as they were considered to some extent to be less biased, these were cross-referenced to enhance validity. Generally a report, or usual-ly a short notification, was published by the Swedish news agency TT, the largest such agency in Scandinavia. The notification could for example be as short as Handelsbanken opens one office in Russia with other newspapers confirming and replicating the news or investigating it in greater depth in the following hours or day. The following days smaller and local newspapers replicated the news. Hence when a narrower search was made to add detailed information as well as to support any extracted information. The cross-referencing of reporting enhanced the validity and was helpful in establish-ing a credible case story.
Figure 6. Hits of the search, headlines and synopsis
When a headline of interest was found, the synopsis of the story was read to see if it could be useful, as Figure 6 exemplifies above. News items with quotes were of special interest since they could reveal more detailed infor-
31
mation in managers’ own words. Consequently headlines were not the only basis on which articles was saved during the first draft. Other items that were of interest were those that were directly related to the banks’ international activities i.e. a headline such as Handelsbanken opens three new offices in Norway. These items were stored for later interpretation while the search continued from published date into the following week(s) to see if there were other related stories. Once the first draft had been completed the collected data was opened for reading, interpreting and coding. Thus a great deal of this study is based on textual interpretation (see for example Carley, 1993; Arnold & Fischer, 1994; Fairclough, 2003) that was coded mainly after lo-cale, company, statement, service, customer, individual, event, staffing, and offices. Coding of the data was done manually and was not assisted by soft-ware because of the ambition to be guided to a great extent by the empirical evidence and hence less restricted in interpreting the empirical data (see Houman Andersen & Kragh, 2011; Yin, 2009, p. 127-160). To illustrate what a typical news item would look like, Figure 7 is provided below. It is a short news item from Swedish newspaper Nyhetsbyrån Direkt published 3 October in 2002. It reports that Handelsbanken wants to increase investments in Denmark. Different Danish sources speculate about possible Danish banks that Handelsbanken could invest in, Danish banks that were active in regions where Handelsbanken at the time had little activities in. Manager Anders Bouvin comments and confirms that the bank wants to expand in Denmark and that the Danish market suits the bank’s operation.
Figure 7. A typical news item with exemplifying coding scheme
When events occurred, such as an acquisition, a background search for Ber-gensbanken, for example, which Handelsbanken had acquired, was made to see what kind of bank it was and what had occurred before. Once the first
Nyhetsbyrån Direkt ! Source Tor 3 oktober 2002 ! Date SHB: Vill köpa fler banker i Danmark enl regionchef – tidn ! Headline Stockholm (Direkt) Handelsbanken vill göra ytterligare förvärv i Danmark efter köpet av Midtbank i fjol. ! Synopsis Det skriver tidningen Jyllands-Posten. "I Danmark håller sig kunder till lokala banker. Det passar väl med vår filosofi att växa här eftersom vi är en mycket decentraliserad och kundorienterad bank", säger bankens Danmarkschef Anders Bouvin till tidningen, skriver Bloomberg News. Roskilde Bank och Forstaedernes Bank kan vara tänkbara köpobjekt eftersom Handelsbanken har få kontor i de områden där dessa banker finns, enligt Jyllands-Posten./DD ! Story
Color-coding scheme
[ ]: Marking: Locale [ ]: Previous or current event [ ]: Citation [ ]: Setting [ ]: Future event [ ]: Company [ ]: Individual
32
draft of each year had been finalized the annual reports combined collected empirical evidence were interpreted and coded. The next step was to inter-pret whether the selected data were applicable and how they could be used, and those that were, were then searched for once again. In different ways the efforts of searching for more data was to add empirical evidence in order to increase probability and validity. When for example Handelsbanken invested in Bergensbanken a more defined search was conducted within the contem-porary timeframe where this event took place. Once all the empirical evidence had been coded the clusters of information (for example a collection of encodings of an acquisition) where assembled into ‘piles’ and organized chronologically. The cases were then rendered by linking sequences (piles) that were interpreted as significant for the banks’ internationalization process. This was a rather difficult process of recon-structing sequences of events, but by piling the sequences and trying to in-terconnect them the story could emerge, as well as sequences of events that could be analyzed. This in fact was a delicate and continuously recursive process ever since the beginning of my bachelor thesis in both finding rele-vant and missing data as well as reconstructing a ‘story.’ The bachelor thesis gave a rough chronological picture of the story, which was then developed over a long period of time. Writing articles later on also affected the devel-opment of the story in terms of finding interesting patterns and sequences to develop a story from. During this process of piling events some evidence was left aside as irrelevant to the purpose of this thesis while less significant events were in fact included e.g. small acquisitions of finance companies or operations in Germany. This process of reconstructing sequences of events was also challenged many times by missing data that took over a year and much energy to find. Analysis of the data was made by connecting the coded data to the analytical framework and analyzing the application of the con-cepts and comparisons in the organized data and between the banks. The concepts were scrutinized in accordance with the presented empirical evi-dence i.e. by analyzing whether the banks’ activities were based on wishes, beliefs or calculations induced by previous activities, e.g. if a bank invests in a market how does the investment reflect previous events in the market, the bank’s previous activities and the bank’s perception of future outcomes. Further, variations in activities and markets were followed in an effort to find any correlations and how they might be related to the bank’s percep-tions and activities. This would also find linear or contingency changes e.g. market variations, if and how they were expected, perceived and on what basis the banks acted upon it. When the respective banks had been analyzed, comparisons were made in an effort to find patterns and differences. This study has been made in an effort to keep a closed mind and add a thor-ough description in the case presentation but to allow contradicting descrip-tions to appear. The basis of these premises was to make the case presenta-
33
tion transparent, as well as reliable and valid enough to stand on its own. As Figure 7 illustrates, this empirical data could have been coded in other ways depending on the researcher’s interest and background, or data might have been discarded depending on the study’s purpose and method.
3.3 Assessing the two banks’ internationalization The concepts of knowledge, commitment, and expectation are connected to the secondary data collected in this study as follows: ¥ Knowledge: The bank’s level of knowledge can be studied with regard to
the firms’ past experience in the market, information on economic, growth possibilities, and current events. Managers’ and staffs’ tacit knowledge is difficult to show, but based on experience, in the following activities some tacit knowledge might be shown. Various statements from different people at different management levels will indicate what knowledge the bank might have possessed. The reasoning before and af-ter market commitments can also help to describe the bank’s market knowledge. Moreover, how market commitments are made in considera-tion of previous commitments can also suggest if the banks have learned anything from the previous commitments, and also whether the banks apply the same activities in all markets or whether they are market spe-cific can show if the banks are applying general internationalization knowledge or market-specific knowledge. What difficulties and solu-tions the banks acknowledge over time can also indicate a learning pro-cess. Although this study will not follow the banks’ networks, it follows the banks’ partners and resources allocated to different markets over time that generate market knowledge. However, the main interest lies in studying the banks managers’ own statements, and, further, whether there are managers involved more than others that have experience from internationalization or foreign markets.
¥ Commitment: Commitment is seen in the embedded description of the banks’ internationalization process, their number of offices and staff over time. Furthermore it is seen in the banks managers’ explicit state-ments as well as the size and sort of the investments that are made. The latter, sort of investment, refers to how the investments were made – if the banks were making direct investments, investing piece by piece, starting up on their own, and so on. More of interest is the sale of previ-ous investments, market exits, and market entries. However, the sort of office the bank opens needs to be considered, as it requires different lev-els of support from the parent. For example, if it is a representative of-fice, a subsidiary, or a branch. Representative offices can be regarded as a minor investment and are limited by legislations in their activities and
32
draft of each year had been finalized the annual reports combined collected empirical evidence were interpreted and coded. The next step was to inter-pret whether the selected data were applicable and how they could be used, and those that were, were then searched for once again. In different ways the efforts of searching for more data was to add empirical evidence in order to increase probability and validity. When for example Handelsbanken invested in Bergensbanken a more defined search was conducted within the contem-porary timeframe where this event took place. Once all the empirical evidence had been coded the clusters of information (for example a collection of encodings of an acquisition) where assembled into ‘piles’ and organized chronologically. The cases were then rendered by linking sequences (piles) that were interpreted as significant for the banks’ internationalization process. This was a rather difficult process of recon-structing sequences of events, but by piling the sequences and trying to in-terconnect them the story could emerge, as well as sequences of events that could be analyzed. This in fact was a delicate and continuously recursive process ever since the beginning of my bachelor thesis in both finding rele-vant and missing data as well as reconstructing a ‘story.’ The bachelor thesis gave a rough chronological picture of the story, which was then developed over a long period of time. Writing articles later on also affected the devel-opment of the story in terms of finding interesting patterns and sequences to develop a story from. During this process of piling events some evidence was left aside as irrelevant to the purpose of this thesis while less significant events were in fact included e.g. small acquisitions of finance companies or operations in Germany. This process of reconstructing sequences of events was also challenged many times by missing data that took over a year and much energy to find. Analysis of the data was made by connecting the coded data to the analytical framework and analyzing the application of the con-cepts and comparisons in the organized data and between the banks. The concepts were scrutinized in accordance with the presented empirical evi-dence i.e. by analyzing whether the banks’ activities were based on wishes, beliefs or calculations induced by previous activities, e.g. if a bank invests in a market how does the investment reflect previous events in the market, the bank’s previous activities and the bank’s perception of future outcomes. Further, variations in activities and markets were followed in an effort to find any correlations and how they might be related to the bank’s percep-tions and activities. This would also find linear or contingency changes e.g. market variations, if and how they were expected, perceived and on what basis the banks acted upon it. When the respective banks had been analyzed, comparisons were made in an effort to find patterns and differences. This study has been made in an effort to keep a closed mind and add a thor-ough description in the case presentation but to allow contradicting descrip-tions to appear. The basis of these premises was to make the case presenta-
33
tion transparent, as well as reliable and valid enough to stand on its own. As Figure 7 illustrates, this empirical data could have been coded in other ways depending on the researcher’s interest and background, or data might have been discarded depending on the study’s purpose and method.
3.3 Assessing the two banks’ internationalization The concepts of knowledge, commitment, and expectation are connected to the secondary data collected in this study as follows: ¥ Knowledge: The bank’s level of knowledge can be studied with regard to
the firms’ past experience in the market, information on economic, growth possibilities, and current events. Managers’ and staffs’ tacit knowledge is difficult to show, but based on experience, in the following activities some tacit knowledge might be shown. Various statements from different people at different management levels will indicate what knowledge the bank might have possessed. The reasoning before and af-ter market commitments can also help to describe the bank’s market knowledge. Moreover, how market commitments are made in considera-tion of previous commitments can also suggest if the banks have learned anything from the previous commitments, and also whether the banks apply the same activities in all markets or whether they are market spe-cific can show if the banks are applying general internationalization knowledge or market-specific knowledge. What difficulties and solu-tions the banks acknowledge over time can also indicate a learning pro-cess. Although this study will not follow the banks’ networks, it follows the banks’ partners and resources allocated to different markets over time that generate market knowledge. However, the main interest lies in studying the banks managers’ own statements, and, further, whether there are managers involved more than others that have experience from internationalization or foreign markets.
¥ Commitment: Commitment is seen in the embedded description of the banks’ internationalization process, their number of offices and staff over time. Furthermore it is seen in the banks managers’ explicit state-ments as well as the size and sort of the investments that are made. The latter, sort of investment, refers to how the investments were made – if the banks were making direct investments, investing piece by piece, starting up on their own, and so on. More of interest is the sale of previ-ous investments, market exits, and market entries. However, the sort of office the bank opens needs to be considered, as it requires different lev-els of support from the parent. For example, if it is a representative of-fice, a subsidiary, or a branch. Representative offices can be regarded as a minor investment and are limited by legislations in their activities and
34
can often only support domestic customers, whereas a subsidiary or a branch demands higher investments. A branch is usually less restricted, and the parent is responsible for its obligations, while a subsidiary is a separate unit that is more independent from its parent.
¥ Expectation: What the banks expect and anticipate is shown in various ways, distinctively by managers’ explicit statements on their visions of different foreign markets and their intentions and plans in market com-mitments. That includes calculative expectations of investments made as well. Increased or decreased market commitments validate the behavior of the banks following what they expect to gain or lose in each specific market. Managers’ proclamations of what they expect is simply connect-ed to the firms’ actual degree of commitment and knowledge. Hence the tie between the three concepts can be related to what the banks intend to do and what they later actually do.
The study of the banks internationalization process will be analyzed by the three concepts named above with the aim of understanding the banks’ inter-nationalization process from 1995 to 2010.
3.4 Tables and case presentation The quantitative data concerning allocated offices and staffs in the tables presented in the two cases are based upon the banks’ annual reports, but the numbers differ in different reports. An exact number is of no great im-portance however, since the tables are largely used to indicate internationali-zation patterns for the reader’s convenience. Further Swedbank counts its offices differently in different periods, which is why what is reported in the empirical description does not always match the tables. However the num-bers are valid enough to illustrate increased or decreased staffing and offices. In the case presentation of Swedbank, different countries or regions are in-cluded in the Tables depending on where the bank is most active. This is to indicate which country or region the bank is more interested in or expanding into. For example in Swedbank’s case the tables for the Nordic region is included only in the first table. Because the bank was more active in the Baltic region in the second and third period, the Nordic region was not in-corporated in the Tables. Moreover in the case presentation the number of footnotes and the total extracted items shown in Table 1 found in this chapter differ since a number of footnotes consist of multiple news item extractions. Moreover as a rule of thumb, this thesis allows only quotes longer than three lines to stand on their own, unless there is one that stands out from the ordi-nary. In the empirical presentation footnotes are used to show where data is retrieved, and in the rest of the thesis parenthetical referencing. This is mere-
35
ly to show where the data is retrieved from and not as a referential point to scientific articles as the parenthetical references. If someone aims to repli-cate this study, the footnotes can guide the researcher to where the empirical evidence was retrieved. Since almost all of the empirical data was in Swedish the currency was usu-ally in Swedish Kronor (SEK) or another Scandinavian currency. To help the international reader make sense of how much that was invested or sold the currency was converted into USD by going through historical records of the currencies. The currency was then converted to reflect its historical valuation at that time (without adjustment for inflation). This way the reader could become more familiar with the value of any investment or sale made in the case. As the currency was ‘translated’ so were all the citations. In the case presentation to maintain a tone and exemplify the word ‘organi-cally’ is applied on numerous occasions, especially in the presentation of Handelsbanken’s internationalization process. The words ‘organically’ or ‘organic growth’ refer to the banks’ own statements and their own use of the words. By organic growth or grow organically they mean opening offices on their own, and this study also will apply the words in its analysis and conclu-sion. Being honest with the empirical material is also the reason why throughout the case of Swedbank the bank is referred to its contemporary names (Föreningsbanken, Sparbanken, FöreningsSparbanken, and Swedbank) but to its current name Swedbank in the thesis, as that is its cur-rent name. The Baltic region in this study refers to the countries of Estonia, Latvia, and Lithuania.
34
can often only support domestic customers, whereas a subsidiary or a branch demands higher investments. A branch is usually less restricted, and the parent is responsible for its obligations, while a subsidiary is a separate unit that is more independent from its parent.
¥ Expectation: What the banks expect and anticipate is shown in various ways, distinctively by managers’ explicit statements on their visions of different foreign markets and their intentions and plans in market com-mitments. That includes calculative expectations of investments made as well. Increased or decreased market commitments validate the behavior of the banks following what they expect to gain or lose in each specific market. Managers’ proclamations of what they expect is simply connect-ed to the firms’ actual degree of commitment and knowledge. Hence the tie between the three concepts can be related to what the banks intend to do and what they later actually do.
The study of the banks internationalization process will be analyzed by the three concepts named above with the aim of understanding the banks’ inter-nationalization process from 1995 to 2010.
3.4 Tables and case presentation The quantitative data concerning allocated offices and staffs in the tables presented in the two cases are based upon the banks’ annual reports, but the numbers differ in different reports. An exact number is of no great im-portance however, since the tables are largely used to indicate internationali-zation patterns for the reader’s convenience. Further Swedbank counts its offices differently in different periods, which is why what is reported in the empirical description does not always match the tables. However the num-bers are valid enough to illustrate increased or decreased staffing and offices. In the case presentation of Swedbank, different countries or regions are in-cluded in the Tables depending on where the bank is most active. This is to indicate which country or region the bank is more interested in or expanding into. For example in Swedbank’s case the tables for the Nordic region is included only in the first table. Because the bank was more active in the Baltic region in the second and third period, the Nordic region was not in-corporated in the Tables. Moreover in the case presentation the number of footnotes and the total extracted items shown in Table 1 found in this chapter differ since a number of footnotes consist of multiple news item extractions. Moreover as a rule of thumb, this thesis allows only quotes longer than three lines to stand on their own, unless there is one that stands out from the ordi-nary. In the empirical presentation footnotes are used to show where data is retrieved, and in the rest of the thesis parenthetical referencing. This is mere-
35
ly to show where the data is retrieved from and not as a referential point to scientific articles as the parenthetical references. If someone aims to repli-cate this study, the footnotes can guide the researcher to where the empirical evidence was retrieved. Since almost all of the empirical data was in Swedish the currency was usu-ally in Swedish Kronor (SEK) or another Scandinavian currency. To help the international reader make sense of how much that was invested or sold the currency was converted into USD by going through historical records of the currencies. The currency was then converted to reflect its historical valuation at that time (without adjustment for inflation). This way the reader could become more familiar with the value of any investment or sale made in the case. As the currency was ‘translated’ so were all the citations. In the case presentation to maintain a tone and exemplify the word ‘organi-cally’ is applied on numerous occasions, especially in the presentation of Handelsbanken’s internationalization process. The words ‘organically’ or ‘organic growth’ refer to the banks’ own statements and their own use of the words. By organic growth or grow organically they mean opening offices on their own, and this study also will apply the words in its analysis and conclu-sion. Being honest with the empirical material is also the reason why throughout the case of Swedbank the bank is referred to its contemporary names (Föreningsbanken, Sparbanken, FöreningsSparbanken, and Swedbank) but to its current name Swedbank in the thesis, as that is its cur-rent name. The Baltic region in this study refers to the countries of Estonia, Latvia, and Lithuania.
36
37
4 Case 1: Handelsbanken
The study, as presented before, contains two empirical case studies. This chapter is devoted to the presentation of the first case, Handelsbanken’s for-eign market business. The empirical facts aim to cover the question of how this bank has acted in different countries in the period between years 1995-2010. The development is divided into three phases of a) 1995-2000, b) 2001-2007, and finally c) 2008-2010. The reason for such a structure in the presentation is mainly based on the periods’ stability and changes in the en-vironment surrounding the bank and also the bank’s foreign market behav-ior. The facts in the case cover aspects like when and how the bank entered, expanded or exited from different foreign markets and how the experience and different types of investments were interrelated to the above decisions. Dissimilar to some other studies, the case has the ambition to study not only one or two foreign markets; it will rather present facts about the bank’s for-eign businesses for the important markets. Before presenting facts about these periods, the study will provide background information. The infor-mation can help understand the behavior of the bank for the periods men-tioned above.
4.1 Background Founded in 1871, Handelsbanken has been known to be a traditional bank, more so than its Swedish competitors. Known through history for its local presence, the bank has predominantly been cooperating with business firms rather than private customers. In year 1970 Jan Wallander was appointed CEO and immediately faced a crisis in the bank, particularly due to previous foreign affairs1. Wallander is today known as the father of Handelsbanken’s decentralized organization and some of its core values2. As he was appointed the bank was struggling with financial problems that mainly derived from the bank’s investments abroad3. Wallander and Handelsbanken managed to solve the difficulties and since then the bank has followed a much decentral-
1 Almgren, J. (2010). Banklegendaren som vågade fråga. Svenska Dagbladet, 4 April 2 Handelsbanken homepage (2012). Handelsbankens historia (1970-talet). http://handelsbanken.se/shb/INeT/ICentSv.nsf/Default/q27D6164D37AA9851C125708900291631?Opendocument. Retrieved 8 February 3 Almgren, J. (2010). Banklegendaren som vågade fråga. Svenska Dagbladet, 4 April
36
37
4 Case 1: Handelsbanken
The study, as presented before, contains two empirical case studies. This chapter is devoted to the presentation of the first case, Handelsbanken’s for-eign market business. The empirical facts aim to cover the question of how this bank has acted in different countries in the period between years 1995-2010. The development is divided into three phases of a) 1995-2000, b) 2001-2007, and finally c) 2008-2010. The reason for such a structure in the presentation is mainly based on the periods’ stability and changes in the en-vironment surrounding the bank and also the bank’s foreign market behav-ior. The facts in the case cover aspects like when and how the bank entered, expanded or exited from different foreign markets and how the experience and different types of investments were interrelated to the above decisions. Dissimilar to some other studies, the case has the ambition to study not only one or two foreign markets; it will rather present facts about the bank’s for-eign businesses for the important markets. Before presenting facts about these periods, the study will provide background information. The infor-mation can help understand the behavior of the bank for the periods men-tioned above.
4.1 Background Founded in 1871, Handelsbanken has been known to be a traditional bank, more so than its Swedish competitors. Known through history for its local presence, the bank has predominantly been cooperating with business firms rather than private customers. In year 1970 Jan Wallander was appointed CEO and immediately faced a crisis in the bank, particularly due to previous foreign affairs1. Wallander is today known as the father of Handelsbanken’s decentralized organization and some of its core values2. As he was appointed the bank was struggling with financial problems that mainly derived from the bank’s investments abroad3. Wallander and Handelsbanken managed to solve the difficulties and since then the bank has followed a much decentral-
1 Almgren, J. (2010). Banklegendaren som vågade fråga. Svenska Dagbladet, 4 April 2 Handelsbanken homepage (2012). Handelsbankens historia (1970-talet). http://handelsbanken.se/shb/INeT/ICentSv.nsf/Default/q27D6164D37AA9851C125708900291631?Opendocument. Retrieved 8 February 3 Almgren, J. (2010). Banklegendaren som vågade fråga. Svenska Dagbladet, 4 April
38
ized organizational structure. Besides the decentralized structure Handels-banken is also known for its foundation of so called Oktagonen (the Octa-gon). Each year that the bank is able to show a higher profitability than the average comparable bank the bank sets aside a portion of its profit in an em-ployee profit-sharing foundation. Today Handelsbanken is prominent in the Nordic region and in Great Britain with a capital base of USD 15.6 billion.4 The bank’s foreign market investment started as early as the 1960s. In 1961 Handelsbanken arranged its first foreign establishment with a representative office in Sao Paulo. Three years later the bank acquired 60-percent owner-ship in Verwaltungsbank Zürich AG. During 1969 this ownership was re-duced to 40 percent and three years later once again the bank reduced its ownership to 10 percent. In 1968 20-percent ownership of a foreign bank in France was acquired. But this ownership did not work out as planned. Four years later the ownership was reduced to 10 percent, and in 1986 the bank completely sold its investment. Between 1961-1970 three more representa-tive offices where established in New York, Paris and Beirut.5 Further, with-in the period 1972-1983 representative offices were established in Tokyo, Frankfurt, Moscow, Sydney, Milano, Peking, and Bogota simultaneously as offices in Beirut and Madrid were closed.6 In year 1971 a consortium bank was started in London under the name of Nordic bank that in turn started representative offices in Singapore (year 1975) and Hong Kong (1977). Twelve years later in 1983 Nordic bank was sold and the offices in Singapore and Hong Kong were lost. Instead of Nor-dic bank Handelsbanken established a branch in New York to replace its earlier representative office. In 1978 a subsidiary was started in Luxem-bourg. One subsidiary in London was started that Lars Evander was appoint-ed to run, and he brought with him his colleagues from his previous office.7 The consortium in New York that opened about ten years earlier was sold and replaced by a branch. During 1987 a representative office was opened in London, with a branch in Hong Kong and Singapore as well.8 Between 1988 and 1991 the subsequent representative offices in Oslo (1988), Frankfurt (1989), Helsinki (1990), Sydney (1990) and Copenhagen (1991) were up-graded to branches. In 1991 another office, Oslo Handelsbank, was obtained in Oslo, and the same year Stavanger Bank was acquired as well as parts of the troubled Oslobanken. Representative offices were opened in Tokyo
4 Handelsbanken homepage (2012). www.handelsbanken.com, retrieved 2 November; Han-delsbanken Annual Report 2011, p. 6 5 Marquardt, R. (1994). Internationalisering av svenska banker – En process i fem faser. Upp-sala Papers in Financial History 6 Ibid. 7 Ibid. 8 Ibid.
39
(1985), Madrid (1989). But in 1992-1993 representative offices in Milano, Brussels and Paris were shut down. Before the office in Paris was closed, however, a subsidiary was established in Paris. Handelsbanken’s ambition remained being a Nordic bank rather than a national bank.9
4.2 1995-2000, Slowly moves abroad In the late 1980s and early 1990s several Swedish banks struggled with a severe financial crisis, and a number of Swedish banks had to reach out for help10. Several banks had reached the edge of bankruptcy, and the Swedish government was obliged to support them financially. Handelsbanken did notably well and became recognized as a stable ‘low risk’ bank11. For exam-ple, during the early 1990s shareholders equity in Handelsbanken’s capital was 30 percent lower than its highest point a few years earlier. But at the end of year 1996 it was 30 percent higher than any other bank in Sweden. Over the years Handelsbanken has been known for being ‘local’ with good ser-vices. Organizationally the bank is highly decentralized, therefore providing each office the opportunity to act upon its anticipations and customers’ needs. Each individual office is expressly considered the core of the firm12. According to Tom Hedelius (CEO between 1978-1991 and chairman of the board 1991-2001)13 the driving force for foreign mark expansion has been long-term investments. Earlier expansion of Handelsbanken beyond Swedish borders, and in 1995 one sixth of the balance sheet (total) came from in-vestments in Nordic countries (Denmark, Finland and Norway)14. Over time in this period Handelsbanken slowly increased its activities abroad as Table 2 shows below. After the above-mentioned financial crisis Swedish banks faced the chal-lenge of reducing their costs. About 7,000-8,000 jobs were estimated to be cut and approximately 700 offices (about 25 percent of the total number of offices in Sweden). Of these reductions, only 600 employees were estimated to be cut from Handelsbanken, while the bank kept almost every office.15 9 Ibid. 10 Furusten, K. (2009). Det förändrade kontraktet. Banker och företagskonkurser under 1990-talets finanskris. Uppsala: Universitetstryckeriet. p. 1-5 11 Affärsvärlden (1995). Företagsanalysen: Handelsbanken. Affärsvärlden, 13 December; Nachemson, S. (1995). Fortsatt bankkris för S-E-B. Dagens Nyheter, 26 April; Veckans Affä-rer (1995). Handelsbanken i topp. Veckans Affärer, 2 May; Affärsvärlden (1995). S-E-Bankens förtroendekris. Affärsvärlden, 4 May 12 Höglund, L. (1995). Storbanker slår tillbaka. Dagens Nyheter, 6 November 13 Lundström, B. (1995). Klipp inget för Handelsbankssfär. Svenska Dagbladet, 28 December 14 Affärsvärlden (1995). Företagsanalysen: Handelsbanken. Affärsvärlden, 13 December 15 Larsson, G. & Wäingelin, J. (1995). 8000 bankjobb bort fram till sekelskiftet. Dagens Industri, 18 December; Lundström, B. (1996). Minst tusen anställda skall bort under 1996. Svenska Dagbladet, 7 February; Augustsson, T. & TT (1996). Vart tredje bankjobb försvin-ner. TT, 16 February
38
ized organizational structure. Besides the decentralized structure Handels-banken is also known for its foundation of so called Oktagonen (the Octa-gon). Each year that the bank is able to show a higher profitability than the average comparable bank the bank sets aside a portion of its profit in an em-ployee profit-sharing foundation. Today Handelsbanken is prominent in the Nordic region and in Great Britain with a capital base of USD 15.6 billion.4 The bank’s foreign market investment started as early as the 1960s. In 1961 Handelsbanken arranged its first foreign establishment with a representative office in Sao Paulo. Three years later the bank acquired 60-percent owner-ship in Verwaltungsbank Zürich AG. During 1969 this ownership was re-duced to 40 percent and three years later once again the bank reduced its ownership to 10 percent. In 1968 20-percent ownership of a foreign bank in France was acquired. But this ownership did not work out as planned. Four years later the ownership was reduced to 10 percent, and in 1986 the bank completely sold its investment. Between 1961-1970 three more representa-tive offices where established in New York, Paris and Beirut.5 Further, with-in the period 1972-1983 representative offices were established in Tokyo, Frankfurt, Moscow, Sydney, Milano, Peking, and Bogota simultaneously as offices in Beirut and Madrid were closed.6 In year 1971 a consortium bank was started in London under the name of Nordic bank that in turn started representative offices in Singapore (year 1975) and Hong Kong (1977). Twelve years later in 1983 Nordic bank was sold and the offices in Singapore and Hong Kong were lost. Instead of Nor-dic bank Handelsbanken established a branch in New York to replace its earlier representative office. In 1978 a subsidiary was started in Luxem-bourg. One subsidiary in London was started that Lars Evander was appoint-ed to run, and he brought with him his colleagues from his previous office.7 The consortium in New York that opened about ten years earlier was sold and replaced by a branch. During 1987 a representative office was opened in London, with a branch in Hong Kong and Singapore as well.8 Between 1988 and 1991 the subsequent representative offices in Oslo (1988), Frankfurt (1989), Helsinki (1990), Sydney (1990) and Copenhagen (1991) were up-graded to branches. In 1991 another office, Oslo Handelsbank, was obtained in Oslo, and the same year Stavanger Bank was acquired as well as parts of the troubled Oslobanken. Representative offices were opened in Tokyo
4 Handelsbanken homepage (2012). www.handelsbanken.com, retrieved 2 November; Han-delsbanken Annual Report 2011, p. 6 5 Marquardt, R. (1994). Internationalisering av svenska banker – En process i fem faser. Upp-sala Papers in Financial History 6 Ibid. 7 Ibid. 8 Ibid.
39
(1985), Madrid (1989). But in 1992-1993 representative offices in Milano, Brussels and Paris were shut down. Before the office in Paris was closed, however, a subsidiary was established in Paris. Handelsbanken’s ambition remained being a Nordic bank rather than a national bank.9
4.2 1995-2000, Slowly moves abroad In the late 1980s and early 1990s several Swedish banks struggled with a severe financial crisis, and a number of Swedish banks had to reach out for help10. Several banks had reached the edge of bankruptcy, and the Swedish government was obliged to support them financially. Handelsbanken did notably well and became recognized as a stable ‘low risk’ bank11. For exam-ple, during the early 1990s shareholders equity in Handelsbanken’s capital was 30 percent lower than its highest point a few years earlier. But at the end of year 1996 it was 30 percent higher than any other bank in Sweden. Over the years Handelsbanken has been known for being ‘local’ with good ser-vices. Organizationally the bank is highly decentralized, therefore providing each office the opportunity to act upon its anticipations and customers’ needs. Each individual office is expressly considered the core of the firm12. According to Tom Hedelius (CEO between 1978-1991 and chairman of the board 1991-2001)13 the driving force for foreign mark expansion has been long-term investments. Earlier expansion of Handelsbanken beyond Swedish borders, and in 1995 one sixth of the balance sheet (total) came from in-vestments in Nordic countries (Denmark, Finland and Norway)14. Over time in this period Handelsbanken slowly increased its activities abroad as Table 2 shows below. After the above-mentioned financial crisis Swedish banks faced the chal-lenge of reducing their costs. About 7,000-8,000 jobs were estimated to be cut and approximately 700 offices (about 25 percent of the total number of offices in Sweden). Of these reductions, only 600 employees were estimated to be cut from Handelsbanken, while the bank kept almost every office.15 9 Ibid. 10 Furusten, K. (2009). Det förändrade kontraktet. Banker och företagskonkurser under 1990-talets finanskris. Uppsala: Universitetstryckeriet. p. 1-5 11 Affärsvärlden (1995). Företagsanalysen: Handelsbanken. Affärsvärlden, 13 December; Nachemson, S. (1995). Fortsatt bankkris för S-E-B. Dagens Nyheter, 26 April; Veckans Affä-rer (1995). Handelsbanken i topp. Veckans Affärer, 2 May; Affärsvärlden (1995). S-E-Bankens förtroendekris. Affärsvärlden, 4 May 12 Höglund, L. (1995). Storbanker slår tillbaka. Dagens Nyheter, 6 November 13 Lundström, B. (1995). Klipp inget för Handelsbankssfär. Svenska Dagbladet, 28 December 14 Affärsvärlden (1995). Företagsanalysen: Handelsbanken. Affärsvärlden, 13 December 15 Larsson, G. & Wäingelin, J. (1995). 8000 bankjobb bort fram till sekelskiftet. Dagens Industri, 18 December; Lundström, B. (1996). Minst tusen anställda skall bort under 1996. Svenska Dagbladet, 7 February; Augustsson, T. & TT (1996). Vart tredje bankjobb försvin-ner. TT, 16 February
40
The reductions were far less than the competitors mainly due to Handels-banken’s resistance to decreasing its pledges. Handelsbanken’s CEO, Arne Mårtensson, remarked that ten years from that point of time the number of staff in Handelsbanken would have decreased because of new communica-tion and technology. But, the number of offices would remain unchanged, as nothing could replace the quality and services that the offices provide.16 Handelsbanken slowly moves abroad
Year 1995 1996 1997 1998 1999 2000
Sweden 488 - 479 485 480 465 460
6 289 - 6 133 6 898 7 142 7 115 7 004
Denmark 1 - 1 3 3 5 7
95 - 116 131 159 144 150
Finland 7 - 10 12 15 16 20
197 - 341 345 402 422 465
Great Britain
3 - 3 3 3 3 4
251 - 225 209 214 203 145
Norway 12 - 13 15 15 23 25
243 - 254 279 295 320 504
Others combined
15 - 15 15 14 15 17
320 - 329 322 334 316 306
Bold = Offices, Italic = Staff
Table 2. Handelsbanken expansion in the period 1995-2000
At the same time as Handelsbanken increased its interest in its neighbor countries, Finland’s two biggest banks (Kansallis and Unitas) merged and became Merita Bank. This was in response to Swedish banks’ increased activities in Finland. When Merita Bank emerged, the Finnish market was unstable and generally scattered, and a financial crisis was knocking on the door17. But even so, Swedish firms’ investments in Finland boomed between 1995 and 1996. Since the market was unstable Handelsbanken saw a chance and increased investments in Finland through acquiring Finnish bank Skop-
16 Einar, B-M. (1995). Kontorsnätet förblir intakt trots ny konkurrensbild. FinansTidningen, 11 April 17 Wallén, M. (1995). Finland i ny bankkris. Dagens Industri, 13 September; Dagens Industri. Dansk bankoffensiv i hela Norden. Dagens Industri, 6 September; Ernestam, M. (1995). Handelsbanken: Ny tysk filial. Veckans Affärer, 14 August; Anderson, M. (1995). Finsk bankfusion svar på svensk konkurrens. FinansTidningen, 2 May; Affärsvärlden (1995). Ban-kerna blir nordiska. Affärsvärlden, 12 April
41
bank for USD 138.6 million.18 By this time Handelsbanken already had a state office in Finland since 1985 that in 1994 was turned into a branch19. Skopbank was on the verge of bankruptcy and had been saved earlier by the Finnish government. To avoid any further risks Handelsbanken enabled a coverage guarantee from the Finnish government until the end of the year 199620. Handelsbanken was able to make USD 9.2 million in profit on the investment in Skopbank the first year21. With Skopbank Handelsbanken in-creased its staff in Finland to around 200 and its offices from two to seven. Thus the Finnish market became Handelsbanken’s heavily most invested market abroad. CEO of Handelsbanken (Arne Mårtensson) as well as man-ager of Handelsbanken’s Finnish market investments (Carl-Axel Olsson) commented that the investment was as a long-term investment and that Han-delsbanken from that moment on would mainly expand organically in Fin-land with perhaps minor acquisitions in the future22. Furthermore, CEO Mårtensson argued that the guarantee from the Finnish government played a significant role in the decision to invest, since it was regarded as a long-term investment23. This type of big leap was out of the ordinary for Handelsbank-en, but the prospect was regarded as having high potential24. Swedish banks engaged in all neighbor countries while Danish, Finnish and Norwegian banks entered Sweden25. Handelsbanken established offices in Copenhagen (capital of Denmark) and a second branch in Germany (Hamburg)26. The latter was made in connection with increased investments by Swedish firms’ in Germany27. !
18 Lundberg, S. (1995). Svenska storköp i Finland. Dagens Nyheter, 6 November; Lavonius-Norén, H. (1995). Handelsbanken köper finländska Skopbank. FinansTidningen, 6 June; Lindén, C.-G. (1996). Sverige invaderar Finland. Veckans Affärer, 8 January 19 Handelsbanken Annual Report, 1995 20 Lavonius-Norén, H. (1995). Handelsbanken köper finländska Skopbank. FinansTidningen, 6 June; Dagens Industri (1995). Ledare: Nygammal affärsidé ger Handelsbanken försprång när bankerna åter tar sats. Dagens Industri, 3 June 21 Nyhetsbyrån Direkt (1995). Handelsbanken: Garantin i Finland en viktig sak – VD. Nyhets-byrån Direkt, 2 June; Lavonius-Norén, H. (1995). Handelsbanken köper finländska Skopbank. FinansTidningen, 6 June; Lindén, C-G. (1996). Norden: Sverige invaderar Finland. Veckans Affärer, 8 January 22 Lavonius-Norén, H. (1995). Handelsbanken köper finländska Skopbank. FinansTidningen, 6 June; Lundberg, S. (1995). SHB stort i Finland. Dagens Nyheter, 3 June 23 Nyhetsbyrån Direkt (1995). Handelsbanken: Garantin i Finland en viktig sak – VD. Nyhets-byrån Direkt, 2 June 24 Handelsbanken Annual Report, 1995 25 Dagens Industri (1995). Dansk bankoffensiv i hela Norden. Dagens Industri, 6 September; Anderson, M. (1995). Finsk bankfusion svar på svensk konkurrens. FinansTidningen, 2 May; Andersson, M. (1995). Nordens största bank blickar mot Sverige. FinansTidningen, 10 No-vember; Jonsson Didrikson, A. (1995). Svenska banker tar mark i Norge. Dagens Industri, 6 April 26 One branch was already established in Frankfurt, which then became the head branch in Germany. Ernestam, M. (1995). Handelsbanken: Ny tysk filial. Veckans Affärer, 14 August 27 Holmlund, H. (1996). Kundström får SHB att öppna filial i Hamburg. Dagens Industri, 6 February
40
The reductions were far less than the competitors mainly due to Handels-banken’s resistance to decreasing its pledges. Handelsbanken’s CEO, Arne Mårtensson, remarked that ten years from that point of time the number of staff in Handelsbanken would have decreased because of new communica-tion and technology. But, the number of offices would remain unchanged, as nothing could replace the quality and services that the offices provide.16 Handelsbanken slowly moves abroad
Year 1995 1996 1997 1998 1999 2000
Sweden 488 - 479 485 480 465 460
6 289 - 6 133 6 898 7 142 7 115 7 004
Denmark 1 - 1 3 3 5 7
95 - 116 131 159 144 150
Finland 7 - 10 12 15 16 20
197 - 341 345 402 422 465
Great Britain
3 - 3 3 3 3 4
251 - 225 209 214 203 145
Norway 12 - 13 15 15 23 25
243 - 254 279 295 320 504
Others combined
15 - 15 15 14 15 17
320 - 329 322 334 316 306
Bold = Offices, Italic = Staff
Table 2. Handelsbanken expansion in the period 1995-2000
At the same time as Handelsbanken increased its interest in its neighbor countries, Finland’s two biggest banks (Kansallis and Unitas) merged and became Merita Bank. This was in response to Swedish banks’ increased activities in Finland. When Merita Bank emerged, the Finnish market was unstable and generally scattered, and a financial crisis was knocking on the door17. But even so, Swedish firms’ investments in Finland boomed between 1995 and 1996. Since the market was unstable Handelsbanken saw a chance and increased investments in Finland through acquiring Finnish bank Skop-
16 Einar, B-M. (1995). Kontorsnätet förblir intakt trots ny konkurrensbild. FinansTidningen, 11 April 17 Wallén, M. (1995). Finland i ny bankkris. Dagens Industri, 13 September; Dagens Industri. Dansk bankoffensiv i hela Norden. Dagens Industri, 6 September; Ernestam, M. (1995). Handelsbanken: Ny tysk filial. Veckans Affärer, 14 August; Anderson, M. (1995). Finsk bankfusion svar på svensk konkurrens. FinansTidningen, 2 May; Affärsvärlden (1995). Ban-kerna blir nordiska. Affärsvärlden, 12 April
41
bank for USD 138.6 million.18 By this time Handelsbanken already had a state office in Finland since 1985 that in 1994 was turned into a branch19. Skopbank was on the verge of bankruptcy and had been saved earlier by the Finnish government. To avoid any further risks Handelsbanken enabled a coverage guarantee from the Finnish government until the end of the year 199620. Handelsbanken was able to make USD 9.2 million in profit on the investment in Skopbank the first year21. With Skopbank Handelsbanken in-creased its staff in Finland to around 200 and its offices from two to seven. Thus the Finnish market became Handelsbanken’s heavily most invested market abroad. CEO of Handelsbanken (Arne Mårtensson) as well as man-ager of Handelsbanken’s Finnish market investments (Carl-Axel Olsson) commented that the investment was as a long-term investment and that Han-delsbanken from that moment on would mainly expand organically in Fin-land with perhaps minor acquisitions in the future22. Furthermore, CEO Mårtensson argued that the guarantee from the Finnish government played a significant role in the decision to invest, since it was regarded as a long-term investment23. This type of big leap was out of the ordinary for Handelsbank-en, but the prospect was regarded as having high potential24. Swedish banks engaged in all neighbor countries while Danish, Finnish and Norwegian banks entered Sweden25. Handelsbanken established offices in Copenhagen (capital of Denmark) and a second branch in Germany (Hamburg)26. The latter was made in connection with increased investments by Swedish firms’ in Germany27. !
18 Lundberg, S. (1995). Svenska storköp i Finland. Dagens Nyheter, 6 November; Lavonius-Norén, H. (1995). Handelsbanken köper finländska Skopbank. FinansTidningen, 6 June; Lindén, C.-G. (1996). Sverige invaderar Finland. Veckans Affärer, 8 January 19 Handelsbanken Annual Report, 1995 20 Lavonius-Norén, H. (1995). Handelsbanken köper finländska Skopbank. FinansTidningen, 6 June; Dagens Industri (1995). Ledare: Nygammal affärsidé ger Handelsbanken försprång när bankerna åter tar sats. Dagens Industri, 3 June 21 Nyhetsbyrån Direkt (1995). Handelsbanken: Garantin i Finland en viktig sak – VD. Nyhets-byrån Direkt, 2 June; Lavonius-Norén, H. (1995). Handelsbanken köper finländska Skopbank. FinansTidningen, 6 June; Lindén, C-G. (1996). Norden: Sverige invaderar Finland. Veckans Affärer, 8 January 22 Lavonius-Norén, H. (1995). Handelsbanken köper finländska Skopbank. FinansTidningen, 6 June; Lundberg, S. (1995). SHB stort i Finland. Dagens Nyheter, 3 June 23 Nyhetsbyrån Direkt (1995). Handelsbanken: Garantin i Finland en viktig sak – VD. Nyhets-byrån Direkt, 2 June 24 Handelsbanken Annual Report, 1995 25 Dagens Industri (1995). Dansk bankoffensiv i hela Norden. Dagens Industri, 6 September; Anderson, M. (1995). Finsk bankfusion svar på svensk konkurrens. FinansTidningen, 2 May; Andersson, M. (1995). Nordens största bank blickar mot Sverige. FinansTidningen, 10 No-vember; Jonsson Didrikson, A. (1995). Svenska banker tar mark i Norge. Dagens Industri, 6 April 26 One branch was already established in Frankfurt, which then became the head branch in Germany. Ernestam, M. (1995). Handelsbanken: Ny tysk filial. Veckans Affärer, 14 August 27 Holmlund, H. (1996). Kundström får SHB att öppna filial i Hamburg. Dagens Industri, 6 February
42
Though a number of foreign banks were trying to enter Estonia28 Handels-banken was the only Swedish bank at the time with an office in Tallinn. Al-so, during 1996 Handelsbanken became the first Nordic bank to provide full service in every Nordic country, which brought the bank one step closer to its goal of becoming an international bank29. At the same time five new staff were recruited from Danish Unibank at a high cost to obtain staff that knew the environment and could boost the office in Denmark30. Offices in France (Paris) were projected to add new networks while South Africa became of interest in 1995-1996, and there were also plans to expand to India and Bur-ma, mainly due to the increased presence of Swedish companies in these countries.31 To supplement earlier investment in Oslo Handelsbank (in 1990) the bank in 1996 was rumored to be interested in the Norwegian Fokus Bank. The ru-mors turned out to be valid, but the bank stated that the investment would be too difficult to realize32 and the official strategy was to expand organically. Managers in the bank told that knowledge and experience gathered were to serve as grounds for decision on interesting prospects such as Fokus Bank33. One of the obstacles to the Fokus Bank affair was that the Norwegian gov-ernment did not want to sell it to a foreign company. It became an intensive political issue, and these circumstances made Handelsbanken cautious. Fokus Bank was supposed to be optioned by a number of Norwegian banks and so it was a few weeks later.34 Three years later from when the rumors begun Fokus Bank was once again up for grabs. It turned into a bidding
28 Berg, A. (1995). Svenska banker skyndar långsamt i Baltikum. FinansTidningen, 31 Octo-ber; Berg, A. (1995). Stora möjligheter men många osäkerhetsfaktorer. FinansTidningen, 31 October; Suneson, B. (1995). SHB blir pionjär i Baltikum. Svenska Dagbladet, 5 April 29 Andersson, L. (1996). Danskt privatkontor led i SHBs nordiska strategi. Dagens Industri, 3 October 30 Dagens Industri (1997). SHB bygger upp dansk obligationsavdelning. Dagens Industri, 30 April 31 Affärsvärlden (1998). Handelsbanken Bygga eget eller starta samarbete. Affärsvärlden, 2 September; Pettersson, C. L. (1995). Svenska banker dras till Sydafrika. Dagens Industri, 24 April; Dagens Industri (1996). Svenska banker vill expandera i Indien. Dagens Industri, 9 April; Dagens Industri (1996). Svenska banker spanar i Burma. Dagens Industri, 11 May 32 Lindahl, B. (1996). Norsk sparbank säljs ut. Svenska Dagbladet, 12 January; Sandbäck, M. (1997). Handelsbanken köper norska Fokus? Dagens Industri, 5 April 33 Nyhetsbyrån Direkt (1996). Handelsbanken satsar på att bli en av de tre största. Nyhetsby-rån Direkt, 22 October 34 Johansson, L. (1998). Handelsbanken: Bud på norsk bank ses som ovänligt. Dagens Nyhet-er, 1 November; TT (1998). Handelsbanken väcker norsk ilska. TT, 30 October; Belfrage, S. (1998). Norska banker står fast vid planerad fusion. FinansTidningen, 4 November; Belfrage, S. (1998). Norrmän välkomnar Handelsbanken. FinansTidningen, 5 November; Einar, B-M. (1998). Handelsbanken har gjort det igen. Veckans Affärer, 9 November; FinansTidningen (1998). SHB tror inte på andra bud på Fokus. FinansTidningen, 9 November; Belfrage, S. (1998). Norska posten kan avgöra bankfusionen. FinansTidningen, 10 November; TT (1998). Handelsbanken optimistisk efter norsk fusionskrasch. TT, 10 November; Johansson, L. (1998). Bankfusion: svenskt bankbud i Fokus. Dagens Nyheter, 11 November; Belfrage, S. (1998). Handelsbanken vinner första ronden. FinansTidningen, 11 November
43
competition between Handelsbanken and the Danish bank Den Danske Bank that the latter won35. There were also rumors about a possible merge between Handelsbanken and Danish bank Sydbank, but these rumors were rather soon denied by Sydbank and Handelsbanken, as the latter preferred to ex-pand on its own, office by office36. From the beginning of 1995 until 2000 Handelsbanken had high future antic-ipations for the Swedish market and the bank’s own development37. This was to be reached with a cautious and low risk approach as the bank believed in a stable yet rapid growth in Sweden and in the countries the bank had made investments in. Handelsbanken anticipated becoming one of the three largest banks in Denmark, Finland, and Norway but were doubtful about the Baltic region. One of Handelsbanken’s experts on the Baltic region, Bo Kragh, was in particular skeptical to investments in the Baltic region that he determined still had a long way to go.38 In fact, Eastern Europe in general was financially struggling at the time and therefore Handelsbanken considered the market too uncertain and unstable. Yet still Handelsbanken expressed cautious but positive anticipations about Poland and Russia, as these countries were try-ing to break loose from an ongoing financial struggle39. Both countries were anticipated to be far more important than the Baltic region according to Gunnar Tersman, an analyst with Handelsbanken40. The Nordic region also faced financial difficulties during the early 1990s but was stabilized after a few years, while the Baltic region continued to struggle.
35 Johansson, L. (1998). Fokus Bank: Styrelsen förordar danskar. Dagens Nyheter, 13 No-vember; Förenade Landsorts Tidningar (1999). SHB vill köpa norsk bank. Förenade Lands-orts Tidningar, 3 May; Haskel, A. (1998). Aggressivt och rätt. FinansTidningen, 2 November; TT (1998). Handelsbanken på efterkälken i kampen om Fokus bank. TT, 12 November; Leijonhufvud, S. (1998). Mårtensson om norsk dragkamp: ”Ologiskt att bjuda så mycket för Fokus”. Svenska Dagbladet, 14 November 36 Wrede, G. (1996). Handelsbanken sneglar på Danmark. Dagens Industri, 17 October; An-dersson, L. (1996). Danskt privatkontor led i SHBs nordiska strategi. Dagens Industri, 4 October 37 Sundling, M. (1995). Börs & Finans: Den goda cirkeln. Dagens Industri, 14 September; Nyhetsbyrån Direkt (1996). SHB: Svensk industrikonjunktur följer med uppåt. Nyhetsbyrån Direkt, 11 March; Affärsvärlden (1996). SHB: Bankåret blir bra. Affärsvärlden, 24 April; Persson, M. (1999). Ökad optimism om svenska ekonomin. Förenade Landsorts Tidningar, 25 February; Sekund, B. B. (2000). SHB: Ser stark global tillväxt, ytterligare euroförsvag-ning. Nyhetsbyrån Direkt, 11 May; Nyhetsbyrån Direkt (2000). SHB: Stark svensk tillväxt väntas i år och nästa år. Nyhetsbyrån Direkt, 11 September 38 Nyhetsbyrån Direkt (1996). Handelsbanken: Satsar på att bli en av de tre största. Nyhetsby-rån Direkt, 22 October; Hellblom, O. (1996). Baltikum har en lång väg till EU. Dagens Indu-stri, 27 March 39 Forsberg, H. (1997). Ryssland: Reformer ger lån på 1,2 miljarder dollar. Svenska Dagbla-det, 11 February; Myrsten, J. (1997). Handelsbanken: Försiktig optimistny östeuropachef. Svenska Dagbladet, 10 February; Steneberg, K. (1997). Ryssland blir allt starkare svensk handelspartner. FinansTidningen, 30 September; TT (1997). Handelsbanken: Tillväxt i Ryss-land nästa år. TT, 29 September 40 Hummel, C. (1997). “Baltikum intressant men osäkert”. Dagens Nyheter, 8 October
42
Though a number of foreign banks were trying to enter Estonia28 Handels-banken was the only Swedish bank at the time with an office in Tallinn. Al-so, during 1996 Handelsbanken became the first Nordic bank to provide full service in every Nordic country, which brought the bank one step closer to its goal of becoming an international bank29. At the same time five new staff were recruited from Danish Unibank at a high cost to obtain staff that knew the environment and could boost the office in Denmark30. Offices in France (Paris) were projected to add new networks while South Africa became of interest in 1995-1996, and there were also plans to expand to India and Bur-ma, mainly due to the increased presence of Swedish companies in these countries.31 To supplement earlier investment in Oslo Handelsbank (in 1990) the bank in 1996 was rumored to be interested in the Norwegian Fokus Bank. The ru-mors turned out to be valid, but the bank stated that the investment would be too difficult to realize32 and the official strategy was to expand organically. Managers in the bank told that knowledge and experience gathered were to serve as grounds for decision on interesting prospects such as Fokus Bank33. One of the obstacles to the Fokus Bank affair was that the Norwegian gov-ernment did not want to sell it to a foreign company. It became an intensive political issue, and these circumstances made Handelsbanken cautious. Fokus Bank was supposed to be optioned by a number of Norwegian banks and so it was a few weeks later.34 Three years later from when the rumors begun Fokus Bank was once again up for grabs. It turned into a bidding
28 Berg, A. (1995). Svenska banker skyndar långsamt i Baltikum. FinansTidningen, 31 Octo-ber; Berg, A. (1995). Stora möjligheter men många osäkerhetsfaktorer. FinansTidningen, 31 October; Suneson, B. (1995). SHB blir pionjär i Baltikum. Svenska Dagbladet, 5 April 29 Andersson, L. (1996). Danskt privatkontor led i SHBs nordiska strategi. Dagens Industri, 3 October 30 Dagens Industri (1997). SHB bygger upp dansk obligationsavdelning. Dagens Industri, 30 April 31 Affärsvärlden (1998). Handelsbanken Bygga eget eller starta samarbete. Affärsvärlden, 2 September; Pettersson, C. L. (1995). Svenska banker dras till Sydafrika. Dagens Industri, 24 April; Dagens Industri (1996). Svenska banker vill expandera i Indien. Dagens Industri, 9 April; Dagens Industri (1996). Svenska banker spanar i Burma. Dagens Industri, 11 May 32 Lindahl, B. (1996). Norsk sparbank säljs ut. Svenska Dagbladet, 12 January; Sandbäck, M. (1997). Handelsbanken köper norska Fokus? Dagens Industri, 5 April 33 Nyhetsbyrån Direkt (1996). Handelsbanken satsar på att bli en av de tre största. Nyhetsby-rån Direkt, 22 October 34 Johansson, L. (1998). Handelsbanken: Bud på norsk bank ses som ovänligt. Dagens Nyhet-er, 1 November; TT (1998). Handelsbanken väcker norsk ilska. TT, 30 October; Belfrage, S. (1998). Norska banker står fast vid planerad fusion. FinansTidningen, 4 November; Belfrage, S. (1998). Norrmän välkomnar Handelsbanken. FinansTidningen, 5 November; Einar, B-M. (1998). Handelsbanken har gjort det igen. Veckans Affärer, 9 November; FinansTidningen (1998). SHB tror inte på andra bud på Fokus. FinansTidningen, 9 November; Belfrage, S. (1998). Norska posten kan avgöra bankfusionen. FinansTidningen, 10 November; TT (1998). Handelsbanken optimistisk efter norsk fusionskrasch. TT, 10 November; Johansson, L. (1998). Bankfusion: svenskt bankbud i Fokus. Dagens Nyheter, 11 November; Belfrage, S. (1998). Handelsbanken vinner första ronden. FinansTidningen, 11 November
43
competition between Handelsbanken and the Danish bank Den Danske Bank that the latter won35. There were also rumors about a possible merge between Handelsbanken and Danish bank Sydbank, but these rumors were rather soon denied by Sydbank and Handelsbanken, as the latter preferred to ex-pand on its own, office by office36. From the beginning of 1995 until 2000 Handelsbanken had high future antic-ipations for the Swedish market and the bank’s own development37. This was to be reached with a cautious and low risk approach as the bank believed in a stable yet rapid growth in Sweden and in the countries the bank had made investments in. Handelsbanken anticipated becoming one of the three largest banks in Denmark, Finland, and Norway but were doubtful about the Baltic region. One of Handelsbanken’s experts on the Baltic region, Bo Kragh, was in particular skeptical to investments in the Baltic region that he determined still had a long way to go.38 In fact, Eastern Europe in general was financially struggling at the time and therefore Handelsbanken considered the market too uncertain and unstable. Yet still Handelsbanken expressed cautious but positive anticipations about Poland and Russia, as these countries were try-ing to break loose from an ongoing financial struggle39. Both countries were anticipated to be far more important than the Baltic region according to Gunnar Tersman, an analyst with Handelsbanken40. The Nordic region also faced financial difficulties during the early 1990s but was stabilized after a few years, while the Baltic region continued to struggle.
35 Johansson, L. (1998). Fokus Bank: Styrelsen förordar danskar. Dagens Nyheter, 13 No-vember; Förenade Landsorts Tidningar (1999). SHB vill köpa norsk bank. Förenade Lands-orts Tidningar, 3 May; Haskel, A. (1998). Aggressivt och rätt. FinansTidningen, 2 November; TT (1998). Handelsbanken på efterkälken i kampen om Fokus bank. TT, 12 November; Leijonhufvud, S. (1998). Mårtensson om norsk dragkamp: ”Ologiskt att bjuda så mycket för Fokus”. Svenska Dagbladet, 14 November 36 Wrede, G. (1996). Handelsbanken sneglar på Danmark. Dagens Industri, 17 October; An-dersson, L. (1996). Danskt privatkontor led i SHBs nordiska strategi. Dagens Industri, 4 October 37 Sundling, M. (1995). Börs & Finans: Den goda cirkeln. Dagens Industri, 14 September; Nyhetsbyrån Direkt (1996). SHB: Svensk industrikonjunktur följer med uppåt. Nyhetsbyrån Direkt, 11 March; Affärsvärlden (1996). SHB: Bankåret blir bra. Affärsvärlden, 24 April; Persson, M. (1999). Ökad optimism om svenska ekonomin. Förenade Landsorts Tidningar, 25 February; Sekund, B. B. (2000). SHB: Ser stark global tillväxt, ytterligare euroförsvag-ning. Nyhetsbyrån Direkt, 11 May; Nyhetsbyrån Direkt (2000). SHB: Stark svensk tillväxt väntas i år och nästa år. Nyhetsbyrån Direkt, 11 September 38 Nyhetsbyrån Direkt (1996). Handelsbanken: Satsar på att bli en av de tre största. Nyhetsby-rån Direkt, 22 October; Hellblom, O. (1996). Baltikum har en lång väg till EU. Dagens Indu-stri, 27 March 39 Forsberg, H. (1997). Ryssland: Reformer ger lån på 1,2 miljarder dollar. Svenska Dagbla-det, 11 February; Myrsten, J. (1997). Handelsbanken: Försiktig optimistny östeuropachef. Svenska Dagbladet, 10 February; Steneberg, K. (1997). Ryssland blir allt starkare svensk handelspartner. FinansTidningen, 30 September; TT (1997). Handelsbanken: Tillväxt i Ryss-land nästa år. TT, 29 September 40 Hummel, C. (1997). “Baltikum intressant men osäkert”. Dagens Nyheter, 8 October
44
Later in 1997 Handelsbanken invested further in Finland by opening three new offices. By that time Swedish banks controlled more than half of the Finnish banking market41. A small share-broker business, Aktoris, active in the Baltic region and located in Tallinn, was merged, with complete owner-ship. Aktoris was seen as a small yet highly profitable firm for which Han-delsbanken had high hopes.42 The investment was regarded as a strategic decision to open up the possibility of expansion in the Baltic region43. De-spite the fact that Handelsbanken had previously deemed the Baltic region unconvincing; however, only a couple of months later Handelsbanken seem-ingly changed this evaluation44. The Baltic region was facing a turnaround and Handelsbanken soon reviewed Estonia with high hopes and considered it part of the Nordic home market45. While entry and expansion were being made in almost all Nordic countries and Estonia, a decrease in investments could also be seen. Operations in London, for example, declined46. CEO Arne Mårtensson commented on the continuing expansion by saying that Handelsbanken was always interested in acquisition (small and big) assum-ing the price was right. At that point all the interesting objects were regarded as overpriced and instead Handelsbanken applied a cautious expansion poli-cy. The CEO stated that continued expansion would be determined by organ-ic growth.47 Late summer in year 1998 Russia faced a financial crisis where Handels-banken’s exposure was rather low (about USD 12-25 million) and accord-ingly did not cause much worry48. This was primarily because most of Han-delsbanken’s business in Russia was with Scandinavian customers and not local firms that were struggling49. As Mårtensson commented: “All our for-eign business outside of the Nordic region is in conjunction with the Nordic
41 Dagens Industri (1997). HSHB öppnar tre nya kontor i Finland. Dagens Industri, 13 March; Wallén, M. (1997). Sverige styr halva den finska bankmarknaden. Dagens Industri, 14 Octo-ber 42 Wrede, G. (1997). Handelsbanken köper estnisk aktiemäklare. Dagens Industri, 25 March; Nyhetsbyrån Direkt (1997). Handelsbanken köper Estniska AS Aktoris. Nyhetsbyrån Direkt, 24 March 43 Gianuzzi, M. (1997). SHB startar handel i baltfonder. Dagens Industri, 5 April 44 Forsberg, H. (1997). SHB spår snart ekonomiskt oberoende för Baltikum. Svenska Dagbla-det, 8 April 45 Johansson, G. (1997). Handelsbanken tror på Estland. Dagens Industri, 24 November; Dagens Industri (1997). Handelsbanken ser Baltikum som del av nordiska hemmamarknaden. Dagens Industri, 22 October 46 Dagens Industri & Reuter (1998). S-E-Banken och SHB bantar i London. Dagens Industri, 30 May 47 Lindqvist, C. & Ekelund, U. (1998). SHB: Kan tänka sig större förvärv i Norden. Nyhetsby-rån Direkt, 3 June 48 Dagens Industri (1998). Små risker för svenska banker. Dagens Industri, 18 August; Ny-hetsbyrån Direkt (1998). SHB: Har tillräckliga reserver för Asien, Ryssland. Nyhetsbyrån Direkt, 25 August 49 Belfrage, S. (1998). Bankerna redovisar länderrisker. FinansTidningen, 28 October
45
region”50. Further, when questioned in an interview regarding Russia, Mårtensson replied that the main strategy was to always have a low risk profile, especially when associated with emerging markets51. During this period of time the bank incurred about USD two million in losses52. As the turbulence hit the Russian market, Handelsbanken begun to lie low and con-tinued to do so until 2004. The financial crisis was also seen in Southeast Asia (Philippines, Indonesia, Malaysia, South Korea, and Thailand). Handelsbanken was more exposed in these areas with investments about USD 283 million (compared to USD 3 million in Russia at the time) but it was still regarded as a small risk53. Soon Handelsbanken reversed its decision, realizing that it had underestimated the crisis and that its extensive impact was unexpected54. The bank assessed the crisis as persisting for another four to five years, and a couple of weeks later Handelsbanken closed down the Tokyo office despite 26 years of presence55. From the closing Tokyo office the departing manager Juan Engström said, “we do not take unnecessary risks” and “it is a very difficult situation in Southeast Asia and Japan”56. Through the distant offices in Hong Kong and Singapore some services were still being provided to customers in Japan. In Estonia Handelsbanken was also suffering losses, and the bank finally decid-ed to indefinitely terminate its membership in the stock exchange. Handels-banken kept a state office but reduced its number of staff.57 Organic expansion in the Nordic region continued to be Handelsbanken’s major strategy during year 1999 combined with a continual search for acqui-sitions58. A few years earlier the bank had left Brussels due to high taxes but in 1999 it returned and opened an office because of hopes of a growing mar-ket there59. But, although organic the bank’s expansion continued which also followed the bank’s main strategy the bank as already stated also searched for interesting acquisitions, which it also during the year found. Handels-
50 Ibid. 51 Myrsten, J. (1998). Handelsbanken skyr nya riskzoner. Svenska Dagbladet, 28 October 52 Ibid. 53 Nyhetsbyrån Direkt (1998). SHB: Har tillräckliga reserver för Asien, Ryssland. Nyhetsby-rån Direkt, 25 August 54 Bergkvist, L-G. (1998). Handelsbanken: Ekonomisk samsyn råder trots valträta. Svenska Dagbladet, 3 September 55 Dagens Industri (1998). “Minst fem år kvar innan Asien är tillbaka på topp”. Dagens Indu-stri, 3 October; Jonsson, G. (1998). SEB bygger ut – SHB lägger ned. Dagens Industri, 26 October 56 Jonsson, G. (1998). SEB bygger ut – SHB lägger ned. Dagens Industri, 26 October 57 Dagens Industri (1998). Handelsbanken lämnar Tallinnbörsen. Dagens Industri, 4 Novem-ber 58 Nyhetsbyrån Direkt (1999). Handelsbanken: Ska växa organiskt i Norden. Nyhetsbyrån Direkt, 23 February; Persson, H. & Pettersson, O. (1999). Bankerna rustar för förvärv. Fi-nansTidningen, 24 February 59 Dagens Industri (1999). Handelsbanken öppnar i Bryssel. Dagens Industri, 26 February
44
Later in 1997 Handelsbanken invested further in Finland by opening three new offices. By that time Swedish banks controlled more than half of the Finnish banking market41. A small share-broker business, Aktoris, active in the Baltic region and located in Tallinn, was merged, with complete owner-ship. Aktoris was seen as a small yet highly profitable firm for which Han-delsbanken had high hopes.42 The investment was regarded as a strategic decision to open up the possibility of expansion in the Baltic region43. De-spite the fact that Handelsbanken had previously deemed the Baltic region unconvincing; however, only a couple of months later Handelsbanken seem-ingly changed this evaluation44. The Baltic region was facing a turnaround and Handelsbanken soon reviewed Estonia with high hopes and considered it part of the Nordic home market45. While entry and expansion were being made in almost all Nordic countries and Estonia, a decrease in investments could also be seen. Operations in London, for example, declined46. CEO Arne Mårtensson commented on the continuing expansion by saying that Handelsbanken was always interested in acquisition (small and big) assum-ing the price was right. At that point all the interesting objects were regarded as overpriced and instead Handelsbanken applied a cautious expansion poli-cy. The CEO stated that continued expansion would be determined by organ-ic growth.47 Late summer in year 1998 Russia faced a financial crisis where Handels-banken’s exposure was rather low (about USD 12-25 million) and accord-ingly did not cause much worry48. This was primarily because most of Han-delsbanken’s business in Russia was with Scandinavian customers and not local firms that were struggling49. As Mårtensson commented: “All our for-eign business outside of the Nordic region is in conjunction with the Nordic
41 Dagens Industri (1997). HSHB öppnar tre nya kontor i Finland. Dagens Industri, 13 March; Wallén, M. (1997). Sverige styr halva den finska bankmarknaden. Dagens Industri, 14 Octo-ber 42 Wrede, G. (1997). Handelsbanken köper estnisk aktiemäklare. Dagens Industri, 25 March; Nyhetsbyrån Direkt (1997). Handelsbanken köper Estniska AS Aktoris. Nyhetsbyrån Direkt, 24 March 43 Gianuzzi, M. (1997). SHB startar handel i baltfonder. Dagens Industri, 5 April 44 Forsberg, H. (1997). SHB spår snart ekonomiskt oberoende för Baltikum. Svenska Dagbla-det, 8 April 45 Johansson, G. (1997). Handelsbanken tror på Estland. Dagens Industri, 24 November; Dagens Industri (1997). Handelsbanken ser Baltikum som del av nordiska hemmamarknaden. Dagens Industri, 22 October 46 Dagens Industri & Reuter (1998). S-E-Banken och SHB bantar i London. Dagens Industri, 30 May 47 Lindqvist, C. & Ekelund, U. (1998). SHB: Kan tänka sig större förvärv i Norden. Nyhetsby-rån Direkt, 3 June 48 Dagens Industri (1998). Små risker för svenska banker. Dagens Industri, 18 August; Ny-hetsbyrån Direkt (1998). SHB: Har tillräckliga reserver för Asien, Ryssland. Nyhetsbyrån Direkt, 25 August 49 Belfrage, S. (1998). Bankerna redovisar länderrisker. FinansTidningen, 28 October
45
region”50. Further, when questioned in an interview regarding Russia, Mårtensson replied that the main strategy was to always have a low risk profile, especially when associated with emerging markets51. During this period of time the bank incurred about USD two million in losses52. As the turbulence hit the Russian market, Handelsbanken begun to lie low and con-tinued to do so until 2004. The financial crisis was also seen in Southeast Asia (Philippines, Indonesia, Malaysia, South Korea, and Thailand). Handelsbanken was more exposed in these areas with investments about USD 283 million (compared to USD 3 million in Russia at the time) but it was still regarded as a small risk53. Soon Handelsbanken reversed its decision, realizing that it had underestimated the crisis and that its extensive impact was unexpected54. The bank assessed the crisis as persisting for another four to five years, and a couple of weeks later Handelsbanken closed down the Tokyo office despite 26 years of presence55. From the closing Tokyo office the departing manager Juan Engström said, “we do not take unnecessary risks” and “it is a very difficult situation in Southeast Asia and Japan”56. Through the distant offices in Hong Kong and Singapore some services were still being provided to customers in Japan. In Estonia Handelsbanken was also suffering losses, and the bank finally decid-ed to indefinitely terminate its membership in the stock exchange. Handels-banken kept a state office but reduced its number of staff.57 Organic expansion in the Nordic region continued to be Handelsbanken’s major strategy during year 1999 combined with a continual search for acqui-sitions58. A few years earlier the bank had left Brussels due to high taxes but in 1999 it returned and opened an office because of hopes of a growing mar-ket there59. But, although organic the bank’s expansion continued which also followed the bank’s main strategy the bank as already stated also searched for interesting acquisitions, which it also during the year found. Handels-
50 Ibid. 51 Myrsten, J. (1998). Handelsbanken skyr nya riskzoner. Svenska Dagbladet, 28 October 52 Ibid. 53 Nyhetsbyrån Direkt (1998). SHB: Har tillräckliga reserver för Asien, Ryssland. Nyhetsby-rån Direkt, 25 August 54 Bergkvist, L-G. (1998). Handelsbanken: Ekonomisk samsyn råder trots valträta. Svenska Dagbladet, 3 September 55 Dagens Industri (1998). “Minst fem år kvar innan Asien är tillbaka på topp”. Dagens Indu-stri, 3 October; Jonsson, G. (1998). SEB bygger ut – SHB lägger ned. Dagens Industri, 26 October 56 Jonsson, G. (1998). SEB bygger ut – SHB lägger ned. Dagens Industri, 26 October 57 Dagens Industri (1998). Handelsbanken lämnar Tallinnbörsen. Dagens Industri, 4 Novem-ber 58 Nyhetsbyrån Direkt (1999). Handelsbanken: Ska växa organiskt i Norden. Nyhetsbyrån Direkt, 23 February; Persson, H. & Pettersson, O. (1999). Bankerna rustar för förvärv. Fi-nansTidningen, 24 February 59 Dagens Industri (1999). Handelsbanken öppnar i Bryssel. Dagens Industri, 26 February
46
banken made an offer of USD 199 million for Norwegian Bergensbanken for a total share of 92.3 percent60. The bank already held an 8.2-percent owner-ship and if the deal went through Handelsbanken estimated it would reach beyond 100 000 customers in Norway and that its balance sheet total would increase by 50 percent61. The reason for this interest in Bergensbanken was according to Gustaf Elmstedt (investor relator in Handelsbanken) that the bank wanted access to the northern part of Norway62. This strategy to invest in regional banks was somewhat of a new strategy to Handelsbanken, which was convinced it would work63, probably because establishing through regional acquisitions fit the strategy in Sweden by hav-ing a large number of local offices. Another difference between the failed acquisition of Fokus bank and the emerging acquisition of Bergensbanken was that this time Handelsbanken promised there would be no name or other major changes64. Shortly afterwards the bid was accepted and the acquisition went through65. Interestingly this was not enough and soon afterwards Han-delsbanken showed an interest in other Norwegian banks, namely Den Norske Bank and Kreditkassen66. One of the major banks in the Nordic re-gion, Merita Nordbanken, had already made a bid on Kreditkassen worth USD 3 billion. But, Handelsbanken estimated it could bid higher. The real obstacle the bank faced was whether the Norwegian government would ac-cept the bank’s offers since the government held a 60 percent ownership in Den Norske Bank and 35 percent in Kreditkassen. Merita-Nordbanken’s bid was accepted and Kreditkassen invited Handelsbanken to bid but Handels-banken declined. Handelsbanken’s board was unsure of the political circum-stances in Norway and if the Norwegian government would accept bids from foreign banks67. The Norwegian government subsequently rejected Merita-Nordbanken’s bid, as it wanted to keep the bank’s ownership domestic68. However, a year later the Norwegian government gave the green light, and once again Merita-Nordbanken, Handelsbanken as well as Swedish bank 60 Nyhetsbyrån Direkt (1999). SHB: Lägger bud värt 1.550 mln nok på Bergensbanken. Ny-hetsbyrån Direkt, 3 May; The New York Times (1999). International Briefs; Swedish Bank Moves To Expand Into Norway. The New York Times, 4 May; Press release (1999). Handels-banken lägger bud på Bergensbanken. Handelsbanken, 3 May 61 Nyhetsbyrån Direkt (1999). SHB: Bergensbanksköp ger positiv effekt på räntabilitet. Ny-hetsbyrån Direkt, 3 May 62 Wranne, H. (1999). SHB: Bergensbanken kan ge positivt resultatbidrag i år. Nyhetsbyrån Direkt, 3 May 63 Nyhetsbyrån Direkt (1999). SHB: Inte intresserat av fientligt köp. Nyhetsbyrån Direkt, 3 May 64 Persson, M. (1999). SHB vill köpa norsk bank. Förenade Landsorts Tidningar, 3 May 65 Johansson, L. (1999). Bergensbanken säger ja till Handelsbanken. Dagens Nyheter, 14 May 66 Thomas Petersohn, T. (1999). SHB tar sikte på bankstrid i Norge. Dagens Industri, 1 Octo-ber 67 Sundberg, M. (1999). Handelsbanken håller Kreditkassen på halster. Dagens Industri, 21 October; TT (1999). Handelsbanken vill köpa norska banker. TT, 26 October 68 Hammar, I. (1999). Norska staten tackar nej till MNB:s bud på Kreditkassen. FinansTid-ningen, 26 October
47
FöreningsSparbanken made offers. Unfortunately Handelsbanken once again found itself drawing the shortest straw, after a “desperate bid” according to CEO Mårtensson, by Merita-Nordbanken69. As the previous bid of USD 199 million was accepted for Bergensbanken, plans for further expansion were made70. One new office was set to open in Fredrikstad (Norway). This was in line with the aim of opening nine offices in cities with a population of at least 50 00071. In general, Handelsbanken’s development in the Nordic region was realizing a high level of its expecta-tions. Seven new offices were projected to open in Norway in the future and about 10-15 new offices in total in the Nordic region. The CEO, Mårtensson, when discussing Handelsbanken’s future, brought this up. The experiences from the ongoing expansion made the CEO to announce that there could be more acquisitions in the future in the Nordic but that the main region of in-terest now would be Great Britain.72 To expand in Great Britain the new strategy was letting the current offices in Birmingham, London and Manchester do business with whomever they wish and no longer be limited to Scandinavian companies. To support these offic-es in providing services to the private sector the bank planned to open anoth-er five offices73. Great Britain was of particular interest to the bank since it was Europe’s largest market74. Furthermore, the bank wanted to advance its current offices with Internet banking, and the planned offices were declared by the CEO to be on a trial basis with long-term plans. But before more in-vestments could be made in Great Britain, the Board and CEO declared a need for further experience.75 Handelsbanken wanted to know how it could limit the risks associated with expansion. Strategically the foremost principal was to let the bank grow on its own and make smaller acquisitions in strategic spots76. The first step to
69 Holmström, P. (2000). Handelsbanken: “Vi är inte besvikna”. FinansTidningen, 17 October 70 Press release (1999). Handelsbanken is given permission to buy Bergensbanken. Handels-banken, 8 November; Press release (1999). Handelsbanken kontrollerar 97 % av aktierna i Bergensbanken. Handelsbanken, 3 June; Press release (2000). Highlights of Annual Report 1999. Handelsbanken, 22 February 71 Nyhetsbyrån Direkt (1999). SHB: Planerar att öppna ett nytt kontor i Norge. Nyhetsbyrån Direkt, 4 May 72 Långström, N. (1999). Intervju: Arne Mårtensson – Handelsbanken till Storbritannien. FinansTidningen, 2 June 73 Förenade Landsorts Tidningar (1999). Handelsbanken satsar i England. Förenade Lands-orts Tidningar, 26 October; Nyhetsbyrån Direkt (1999). SHB: Ska erbjuda komplett bankut-bud i Storbritannien. Nyhetsbyrån Direkt, 26 October; Nyhetsbyrån Direkt (1999). SHB: Vill etablera sig i ytterligare 3 brittiska städer – VD. Nyhetsbyrån Direkt, 26 October 74 Ibid. 75 Ibid. 76 Nyhetsbyrån Direkt (1999). SHB: Kan tänka sig ytterligare förvärv i Norge. Nyhetsbyrån Direkt, 24 August; Nyhetsbyrån Direkt (1999). SHB: Utreder förutsättning för bankkoncept i
46
banken made an offer of USD 199 million for Norwegian Bergensbanken for a total share of 92.3 percent60. The bank already held an 8.2-percent owner-ship and if the deal went through Handelsbanken estimated it would reach beyond 100 000 customers in Norway and that its balance sheet total would increase by 50 percent61. The reason for this interest in Bergensbanken was according to Gustaf Elmstedt (investor relator in Handelsbanken) that the bank wanted access to the northern part of Norway62. This strategy to invest in regional banks was somewhat of a new strategy to Handelsbanken, which was convinced it would work63, probably because establishing through regional acquisitions fit the strategy in Sweden by hav-ing a large number of local offices. Another difference between the failed acquisition of Fokus bank and the emerging acquisition of Bergensbanken was that this time Handelsbanken promised there would be no name or other major changes64. Shortly afterwards the bid was accepted and the acquisition went through65. Interestingly this was not enough and soon afterwards Han-delsbanken showed an interest in other Norwegian banks, namely Den Norske Bank and Kreditkassen66. One of the major banks in the Nordic re-gion, Merita Nordbanken, had already made a bid on Kreditkassen worth USD 3 billion. But, Handelsbanken estimated it could bid higher. The real obstacle the bank faced was whether the Norwegian government would ac-cept the bank’s offers since the government held a 60 percent ownership in Den Norske Bank and 35 percent in Kreditkassen. Merita-Nordbanken’s bid was accepted and Kreditkassen invited Handelsbanken to bid but Handels-banken declined. Handelsbanken’s board was unsure of the political circum-stances in Norway and if the Norwegian government would accept bids from foreign banks67. The Norwegian government subsequently rejected Merita-Nordbanken’s bid, as it wanted to keep the bank’s ownership domestic68. However, a year later the Norwegian government gave the green light, and once again Merita-Nordbanken, Handelsbanken as well as Swedish bank 60 Nyhetsbyrån Direkt (1999). SHB: Lägger bud värt 1.550 mln nok på Bergensbanken. Ny-hetsbyrån Direkt, 3 May; The New York Times (1999). International Briefs; Swedish Bank Moves To Expand Into Norway. The New York Times, 4 May; Press release (1999). Handels-banken lägger bud på Bergensbanken. Handelsbanken, 3 May 61 Nyhetsbyrån Direkt (1999). SHB: Bergensbanksköp ger positiv effekt på räntabilitet. Ny-hetsbyrån Direkt, 3 May 62 Wranne, H. (1999). SHB: Bergensbanken kan ge positivt resultatbidrag i år. Nyhetsbyrån Direkt, 3 May 63 Nyhetsbyrån Direkt (1999). SHB: Inte intresserat av fientligt köp. Nyhetsbyrån Direkt, 3 May 64 Persson, M. (1999). SHB vill köpa norsk bank. Förenade Landsorts Tidningar, 3 May 65 Johansson, L. (1999). Bergensbanken säger ja till Handelsbanken. Dagens Nyheter, 14 May 66 Thomas Petersohn, T. (1999). SHB tar sikte på bankstrid i Norge. Dagens Industri, 1 Octo-ber 67 Sundberg, M. (1999). Handelsbanken håller Kreditkassen på halster. Dagens Industri, 21 October; TT (1999). Handelsbanken vill köpa norska banker. TT, 26 October 68 Hammar, I. (1999). Norska staten tackar nej till MNB:s bud på Kreditkassen. FinansTid-ningen, 26 October
47
FöreningsSparbanken made offers. Unfortunately Handelsbanken once again found itself drawing the shortest straw, after a “desperate bid” according to CEO Mårtensson, by Merita-Nordbanken69. As the previous bid of USD 199 million was accepted for Bergensbanken, plans for further expansion were made70. One new office was set to open in Fredrikstad (Norway). This was in line with the aim of opening nine offices in cities with a population of at least 50 00071. In general, Handelsbanken’s development in the Nordic region was realizing a high level of its expecta-tions. Seven new offices were projected to open in Norway in the future and about 10-15 new offices in total in the Nordic region. The CEO, Mårtensson, when discussing Handelsbanken’s future, brought this up. The experiences from the ongoing expansion made the CEO to announce that there could be more acquisitions in the future in the Nordic but that the main region of in-terest now would be Great Britain.72 To expand in Great Britain the new strategy was letting the current offices in Birmingham, London and Manchester do business with whomever they wish and no longer be limited to Scandinavian companies. To support these offic-es in providing services to the private sector the bank planned to open anoth-er five offices73. Great Britain was of particular interest to the bank since it was Europe’s largest market74. Furthermore, the bank wanted to advance its current offices with Internet banking, and the planned offices were declared by the CEO to be on a trial basis with long-term plans. But before more in-vestments could be made in Great Britain, the Board and CEO declared a need for further experience.75 Handelsbanken wanted to know how it could limit the risks associated with expansion. Strategically the foremost principal was to let the bank grow on its own and make smaller acquisitions in strategic spots76. The first step to
69 Holmström, P. (2000). Handelsbanken: “Vi är inte besvikna”. FinansTidningen, 17 October 70 Press release (1999). Handelsbanken is given permission to buy Bergensbanken. Handels-banken, 8 November; Press release (1999). Handelsbanken kontrollerar 97 % av aktierna i Bergensbanken. Handelsbanken, 3 June; Press release (2000). Highlights of Annual Report 1999. Handelsbanken, 22 February 71 Nyhetsbyrån Direkt (1999). SHB: Planerar att öppna ett nytt kontor i Norge. Nyhetsbyrån Direkt, 4 May 72 Långström, N. (1999). Intervju: Arne Mårtensson – Handelsbanken till Storbritannien. FinansTidningen, 2 June 73 Förenade Landsorts Tidningar (1999). Handelsbanken satsar i England. Förenade Lands-orts Tidningar, 26 October; Nyhetsbyrån Direkt (1999). SHB: Ska erbjuda komplett bankut-bud i Storbritannien. Nyhetsbyrån Direkt, 26 October; Nyhetsbyrån Direkt (1999). SHB: Vill etablera sig i ytterligare 3 brittiska städer – VD. Nyhetsbyrån Direkt, 26 October 74 Ibid. 75 Ibid. 76 Nyhetsbyrån Direkt (1999). SHB: Kan tänka sig ytterligare förvärv i Norge. Nyhetsbyrån Direkt, 24 August; Nyhetsbyrån Direkt (1999). SHB: Utreder förutsättning för bankkoncept i
48
acquire experience was made in Poland where the bank opened its own of-fice instead of making an acquisition. Earlier experiment in Great Britain brought valuable experience and Bengt Ragnå, manager of the branch, re-ported that this was the Handelsbanken’s way, to grow on its own.77 At the same time as investments were increasing in some foreign markets a small decrease in investment was also effected. As mentioned, for example, the service provided in London (currency and money-market trading) was trans-ferred to Stockholm as part of reorganization to centralize the task and about 50 of the 200 staff members in London were released from duty78. Since the beginning of 1996 when the expansion in Denmark began, 1999 came to be the first year that Handelsbanken profited on its investments in the country79. This was followed by plans to obtain a new acquisition within a three-year period80. At the same time investments were made in other coun-tries. One office opened in Poland, which was considered to be of great in-terest to Swedish companies and therefore of interest to Handelsbanken81. Handelsbanken’s aim was to build from scratch in Poland instead of invest-ing in an established bank82. The entry into Poland was the first entry made by any Scandinavian bank, and a year later the bank received a license to finalize the opening of the office in Poland. This was the same strategy that Handelsbanken had used everywhere so far. Bengt Ragnå, manager of the Warsaw office, sketched that the 1,400 active Nordic firms in Poland were to become the bank’s core customers.83 In Finland Handelsbanken was checking the Finnish bank Leonia. The Finn-ish government was deciding whether it would permit foreign banks to pur-chase the bank. Handelsbanken made its interest official but signaled that the bank would wait to make a move until the Finnish government had made its decision84. Only a few days later Leonia partnered up with another Finnish
England. Nyhetsbyrån Direkt, 24 August; Nyhetsbyrån Direkt (2000). SHB: Planerar starta Internetbank i Storbritannien. Nyhetsbyrån Direkt, 22 February 77 Håstad, D. (1999). Handelsbanken: Satsning på eget istället för uppköp. Dagens Nyheter, 27 August 78 Nyhetsbyrån Direkt (1999). SHB: Lägger ned viss verksamhet i London. Nyhetsbyrån Direkt, 9 December 79 Nyhetsbyrån Direkt (1999). Handelsbanken vill köpa dansk bank. Nyhetsbyrån Direkt, 22 July 80 Svensson, V. (1999). Handelsbanken siktar på danskt förvärv. FinansTidningen, 23 July; Nyhetsbyrån Direkt (1999). Handelsbanken: Danskt förvärv kommer inom tre år. Nyhetsby-rån Direkt, 28 December 81 Borgström, H. (1999). Svenska företag stormar Polen. Dagens Industri, 5 October; Sönne, A. (2000). Handelsbanken öppnar kontor i Polen. Dagens Industri, 12 May 82 Bergström, P. (2008). Analys: Handelsbanken ett tryggt val. Börsveckan, 28 July 83 Åstad, D. (1999). Handelsbanken: Satsning på eget i stället för uppköp. Dagens Nyheter, 27 August 84 Grennfelt, P. (1999). SHB: Ska titta på Leonia om Finländska staten vill sälja. Nyhetsbyrån Direkt, 8 October
49
insurance firm instead85. CEO Mårtensson told that there was no need to stress, providing quality service and customer solutions were of more im-portance than making certain acquisitions, adding that Handelsbanken still was a major bank in the Nordic region86. As predicted for the year 2000 a new office in Nottingham (Great Britain) opened. The bank provided services not only to business firms but to private consumers as well. The future of the investments in Great Britain was esti-mated to be bright, and CEO Mårtensson noted that it was easier to attract new customers in Great Britain and Norway than in Sweden. Because of these future outlooks new plans were laid to open further offices, noticeably in industrial cities87. Another office was opened in Norway, and thoughts of making an acquisition in Denmark arose once again88. The latter thoughts also materialized, as USD 11.9 million was invested for complete ownership of the Danish finance corporation Spartacus. Handelsbanken had developed a platform that Spartacus was estimated to suit, hence the bank’s interest.89 The signs were however clear that Sweden was becoming too small for Han-delsbanken as it slowly grew abroad.
4.3 2001-2007 Picks up the expansion pace Table 3 below discloses the number of staff and offices in different countries for this period and it shows that Handelsbanken’s expansion continued in this following period. It also displays that development does not always mean progressive incremental changes. However, the variations are not dras-tic. Like the rest of the presented empirical data Table 3 shows that the bank slowly continued its expansion abroad though with more intensity as the years passed. 85 Ekelund, U. (1999). Mårtensson snuvad igen. FinansTidningen, 14 October 86 Svenska Dagbladet (2000). SHB låter sig inte stressas. Svenska Dagbladet, 9 March; Holmström, P. (2000). Handelsbanken: “Vi är inte besvikna”. FinansTidningen, 17 October; Haskel, A. (2000). Mårtenssons maratonlopp fortsätter. FinansTidningen, 23 February 87 Ormerod, P. H. (2000). Än lever bankkontoret. Svenska Dagbladet, 30 August 88 Nyhetsbyrån Direkt (2000). Handelsbanken: Inbjuder mindre danska banker att ingå. Ny-hetsbyrån Direkt, 22 September; Aftenposten (2000). Handelsbanken åpner kontor i Tromsø. Aftenposten, 6 January 89 Nyhetsbyrån Direkt (2000). Handelsbanken: Betalar 105 mln dkk för Spartacus. Nyhetsby-rån Direkt, 23 October
48
acquire experience was made in Poland where the bank opened its own of-fice instead of making an acquisition. Earlier experiment in Great Britain brought valuable experience and Bengt Ragnå, manager of the branch, re-ported that this was the Handelsbanken’s way, to grow on its own.77 At the same time as investments were increasing in some foreign markets a small decrease in investment was also effected. As mentioned, for example, the service provided in London (currency and money-market trading) was trans-ferred to Stockholm as part of reorganization to centralize the task and about 50 of the 200 staff members in London were released from duty78. Since the beginning of 1996 when the expansion in Denmark began, 1999 came to be the first year that Handelsbanken profited on its investments in the country79. This was followed by plans to obtain a new acquisition within a three-year period80. At the same time investments were made in other coun-tries. One office opened in Poland, which was considered to be of great in-terest to Swedish companies and therefore of interest to Handelsbanken81. Handelsbanken’s aim was to build from scratch in Poland instead of invest-ing in an established bank82. The entry into Poland was the first entry made by any Scandinavian bank, and a year later the bank received a license to finalize the opening of the office in Poland. This was the same strategy that Handelsbanken had used everywhere so far. Bengt Ragnå, manager of the Warsaw office, sketched that the 1,400 active Nordic firms in Poland were to become the bank’s core customers.83 In Finland Handelsbanken was checking the Finnish bank Leonia. The Finn-ish government was deciding whether it would permit foreign banks to pur-chase the bank. Handelsbanken made its interest official but signaled that the bank would wait to make a move until the Finnish government had made its decision84. Only a few days later Leonia partnered up with another Finnish
England. Nyhetsbyrån Direkt, 24 August; Nyhetsbyrån Direkt (2000). SHB: Planerar starta Internetbank i Storbritannien. Nyhetsbyrån Direkt, 22 February 77 Håstad, D. (1999). Handelsbanken: Satsning på eget istället för uppköp. Dagens Nyheter, 27 August 78 Nyhetsbyrån Direkt (1999). SHB: Lägger ned viss verksamhet i London. Nyhetsbyrån Direkt, 9 December 79 Nyhetsbyrån Direkt (1999). Handelsbanken vill köpa dansk bank. Nyhetsbyrån Direkt, 22 July 80 Svensson, V. (1999). Handelsbanken siktar på danskt förvärv. FinansTidningen, 23 July; Nyhetsbyrån Direkt (1999). Handelsbanken: Danskt förvärv kommer inom tre år. Nyhetsby-rån Direkt, 28 December 81 Borgström, H. (1999). Svenska företag stormar Polen. Dagens Industri, 5 October; Sönne, A. (2000). Handelsbanken öppnar kontor i Polen. Dagens Industri, 12 May 82 Bergström, P. (2008). Analys: Handelsbanken ett tryggt val. Börsveckan, 28 July 83 Åstad, D. (1999). Handelsbanken: Satsning på eget i stället för uppköp. Dagens Nyheter, 27 August 84 Grennfelt, P. (1999). SHB: Ska titta på Leonia om Finländska staten vill sälja. Nyhetsbyrån Direkt, 8 October
49
insurance firm instead85. CEO Mårtensson told that there was no need to stress, providing quality service and customer solutions were of more im-portance than making certain acquisitions, adding that Handelsbanken still was a major bank in the Nordic region86. As predicted for the year 2000 a new office in Nottingham (Great Britain) opened. The bank provided services not only to business firms but to private consumers as well. The future of the investments in Great Britain was esti-mated to be bright, and CEO Mårtensson noted that it was easier to attract new customers in Great Britain and Norway than in Sweden. Because of these future outlooks new plans were laid to open further offices, noticeably in industrial cities87. Another office was opened in Norway, and thoughts of making an acquisition in Denmark arose once again88. The latter thoughts also materialized, as USD 11.9 million was invested for complete ownership of the Danish finance corporation Spartacus. Handelsbanken had developed a platform that Spartacus was estimated to suit, hence the bank’s interest.89 The signs were however clear that Sweden was becoming too small for Han-delsbanken as it slowly grew abroad.
4.3 2001-2007 Picks up the expansion pace Table 3 below discloses the number of staff and offices in different countries for this period and it shows that Handelsbanken’s expansion continued in this following period. It also displays that development does not always mean progressive incremental changes. However, the variations are not dras-tic. Like the rest of the presented empirical data Table 3 shows that the bank slowly continued its expansion abroad though with more intensity as the years passed. 85 Ekelund, U. (1999). Mårtensson snuvad igen. FinansTidningen, 14 October 86 Svenska Dagbladet (2000). SHB låter sig inte stressas. Svenska Dagbladet, 9 March; Holmström, P. (2000). Handelsbanken: “Vi är inte besvikna”. FinansTidningen, 17 October; Haskel, A. (2000). Mårtenssons maratonlopp fortsätter. FinansTidningen, 23 February 87 Ormerod, P. H. (2000). Än lever bankkontoret. Svenska Dagbladet, 30 August 88 Nyhetsbyrån Direkt (2000). Handelsbanken: Inbjuder mindre danska banker att ingå. Ny-hetsbyrån Direkt, 22 September; Aftenposten (2000). Handelsbanken åpner kontor i Tromsø. Aftenposten, 6 January 89 Nyhetsbyrån Direkt (2000). Handelsbanken: Betalar 105 mln dkk för Spartacus. Nyhetsby-rån Direkt, 23 October
50
Handelsbanken picks up the pace of expanding abroad Year 2001 2002 2003 2004 2005 2006 2007
Sweden 458 456 453 453 455 457 461
7 276 7 575 7 194 7 100 7 228 7 256 7 543
Denmark 32 33 33 36 35 37 39
445 558 500 464 461 475 522
Finland 28 28 30 35 36 36 44
532 577 553 533 542 572 632
Great Britain
6 8 10 15 20 26 42
143 159 165 201 248 292 380
Norway 27 27 28 34 37 42 46
525 554 530 530 569 623 692
Others combined
16 17 11 11 14 17 28
318 329 316 322 347 370 440
Bold = Offices, Italic = Staff
Table 3. Handelsbanken expansion in period 2001-2007
Cost reductions continued as usual and usually through IT advances in rela-tionships with customers in foreign markets. But there were no plans to re-duce the number of staff or offices90. Vice CEO Lars O Grönstedt spoke openly about this in an interview a few years later.
“IT is wonderful when it comes to making things but it is almost useless in building trust. Because banking depends on a high degree of trust it was dif-ficult to see how IT could be a competitive advantage”91
Grönstedt and the board reached the conclusion that IT was necessary and useful but the bank had to focus on offices in order to maintain the custom-er’s confidence. In early 2001 Grönstedt assumed the position of CEO of Handelsbanken, replacing Mårtensson who instead took over as board chairman. Grönstedt had earlier held various high positions within the bank since 1983 and acted as Vice CEO from 1997, responsible for IT and prod-uct development. In February 2001 Grönstedt announced that there were no incentives to make any acquisitions or fusions with other foreign banks mainly because they already had “the highest return profit on their own capi-
90 Nyhetsbyrån Direkt (2002). SHB: IT-projekt ger potentiella besparingar på drygt 300 mkr/år. Nyhetsbyrån Direkt, 12 February; Svensson, K. (2001). Baltikum, nej tack. Dagens Industri, 11 June; Byttner, K-J. (2002). Succé för nätbank. Computer Sweden, 12 February 91 Stenshamn, C. (2004). Porträtt: Lars O Grönstedt – En man utan visioner. Veckans Affärer, 12 January
51
tal of all the Nordic banks,” and that the bank wanted to grow on its own92. Mårtensson commented on this subject at the same time, saying that in long-term any country would be possible to enter and that the bank was surprised how easy it was to reach private customers in Great Britain – more so than anywhere else.93 The chairman of the board, Mårtensson, was optimistic about the future and reported that the Nordic business environment looked strong94. Looking for-ward, Grönstedt was happy with the domestic expansion but it was time for further expansion outside Sweden’s borders. In contradiction to his previous statements, he now said, “If an interesting opportunity in Denmark or Nor-way were to arise we would be interested […] but the market in Germany is too regulated”95. Only a month later Handelsbanken used USD 246.5 million to invest in Denmark’s seventh largest bank Midtbank, with 20 offices. Han-delsbanken paid 151 percent of what Midtbank was estimated to be worth.96 CEO Grönstedt was relieved when the purchase of Midtbank was finalized. He predicted that the investments in the Nordic markets would eventually return profits at the same level as in Sweden and that the bank would contin-ue to grow organically97. With this purchase, Handelsbanken became the fifth largest bank in Denmark, and the Danish customer preferred local banks, which suited Handelsbanken’s decentralized and customer-oriented approach, according to Anders Bouvin head of Handelsbanken’s Danish department98.
92 Båge, J. (2001). SHB-chefen vill sköta sig själv. Dagens Industri, 24 February 93 Nyhetsbyrån Direkt (2001). SHB: Planerar öppna kontor i fler länder – AFV. Nyhetsbyrån Direkt, 28 February 94 Ibid. 95 Törnwall, M. (2001). Handelsbanken växer försiktigt. FinansTidningen, 9 March 96 Wrede, G. (2001). Dyr dansk affär för SHB. Dagens Industri, 12 April; TT (2001). Han-delsbanken köper danska Midtbank. TT, 11 April; Nyhetsbyrån Direkt (2001). SHB: Nummer fem i Danmark efter köp av Midtbank – IC. Nyhetsbyrån Direkt, 11 April; Nyhetsbyrån Di-rekt (2001). Handelsbanken: Bjuder 850 DKR/Aktie för Midtbank. Nyhetsbyrån Direkt, 11 April; Svensson, B. (2001). Kanske värt pengarna. Dagens Industri, 12 April; Affärsvärlden (2001). Handelsbanken ökar i Danmark. Affärsvärlden, 19 April; TT (2001). Finansinspekt-ionen säger ja till bankaffär. TT, 12 April; Andersson, J. (2001). Handelsbanken avancerar i Danmark. Sydsvenska Dagbladet, 12 April; Nyhetsbyrån Ticker (2001). Handelsbanken: Har 10% av aktierna i Midtbank. Nyhetsbyrån Ticker, 27 April; Nyhetsbyrån Direkt (2001). SHB: Har 98% av kapitalet i Midtbank. Nyhetsbyrån Direkt, 3 July 97 Nyhetsbyrån Direkt (2001). SHB: Tillräckligt stora på alla nordiska marknader. Nyhetsby-rån Direkt, 11 June 98 Nyhetsbyrån Direkt (2002). SHB: Vill köpa fler banker i Danmark enligt regionchef. Ny-hetsbyrån Direkt, 3 October
50
Handelsbanken picks up the pace of expanding abroad Year 2001 2002 2003 2004 2005 2006 2007
Sweden 458 456 453 453 455 457 461
7 276 7 575 7 194 7 100 7 228 7 256 7 543
Denmark 32 33 33 36 35 37 39
445 558 500 464 461 475 522
Finland 28 28 30 35 36 36 44
532 577 553 533 542 572 632
Great Britain
6 8 10 15 20 26 42
143 159 165 201 248 292 380
Norway 27 27 28 34 37 42 46
525 554 530 530 569 623 692
Others combined
16 17 11 11 14 17 28
318 329 316 322 347 370 440
Bold = Offices, Italic = Staff
Table 3. Handelsbanken expansion in period 2001-2007
Cost reductions continued as usual and usually through IT advances in rela-tionships with customers in foreign markets. But there were no plans to re-duce the number of staff or offices90. Vice CEO Lars O Grönstedt spoke openly about this in an interview a few years later.
“IT is wonderful when it comes to making things but it is almost useless in building trust. Because banking depends on a high degree of trust it was dif-ficult to see how IT could be a competitive advantage”91
Grönstedt and the board reached the conclusion that IT was necessary and useful but the bank had to focus on offices in order to maintain the custom-er’s confidence. In early 2001 Grönstedt assumed the position of CEO of Handelsbanken, replacing Mårtensson who instead took over as board chairman. Grönstedt had earlier held various high positions within the bank since 1983 and acted as Vice CEO from 1997, responsible for IT and prod-uct development. In February 2001 Grönstedt announced that there were no incentives to make any acquisitions or fusions with other foreign banks mainly because they already had “the highest return profit on their own capi-
90 Nyhetsbyrån Direkt (2002). SHB: IT-projekt ger potentiella besparingar på drygt 300 mkr/år. Nyhetsbyrån Direkt, 12 February; Svensson, K. (2001). Baltikum, nej tack. Dagens Industri, 11 June; Byttner, K-J. (2002). Succé för nätbank. Computer Sweden, 12 February 91 Stenshamn, C. (2004). Porträtt: Lars O Grönstedt – En man utan visioner. Veckans Affärer, 12 January
51
tal of all the Nordic banks,” and that the bank wanted to grow on its own92. Mårtensson commented on this subject at the same time, saying that in long-term any country would be possible to enter and that the bank was surprised how easy it was to reach private customers in Great Britain – more so than anywhere else.93 The chairman of the board, Mårtensson, was optimistic about the future and reported that the Nordic business environment looked strong94. Looking for-ward, Grönstedt was happy with the domestic expansion but it was time for further expansion outside Sweden’s borders. In contradiction to his previous statements, he now said, “If an interesting opportunity in Denmark or Nor-way were to arise we would be interested […] but the market in Germany is too regulated”95. Only a month later Handelsbanken used USD 246.5 million to invest in Denmark’s seventh largest bank Midtbank, with 20 offices. Han-delsbanken paid 151 percent of what Midtbank was estimated to be worth.96 CEO Grönstedt was relieved when the purchase of Midtbank was finalized. He predicted that the investments in the Nordic markets would eventually return profits at the same level as in Sweden and that the bank would contin-ue to grow organically97. With this purchase, Handelsbanken became the fifth largest bank in Denmark, and the Danish customer preferred local banks, which suited Handelsbanken’s decentralized and customer-oriented approach, according to Anders Bouvin head of Handelsbanken’s Danish department98.
92 Båge, J. (2001). SHB-chefen vill sköta sig själv. Dagens Industri, 24 February 93 Nyhetsbyrån Direkt (2001). SHB: Planerar öppna kontor i fler länder – AFV. Nyhetsbyrån Direkt, 28 February 94 Ibid. 95 Törnwall, M. (2001). Handelsbanken växer försiktigt. FinansTidningen, 9 March 96 Wrede, G. (2001). Dyr dansk affär för SHB. Dagens Industri, 12 April; TT (2001). Han-delsbanken köper danska Midtbank. TT, 11 April; Nyhetsbyrån Direkt (2001). SHB: Nummer fem i Danmark efter köp av Midtbank – IC. Nyhetsbyrån Direkt, 11 April; Nyhetsbyrån Di-rekt (2001). Handelsbanken: Bjuder 850 DKR/Aktie för Midtbank. Nyhetsbyrån Direkt, 11 April; Svensson, B. (2001). Kanske värt pengarna. Dagens Industri, 12 April; Affärsvärlden (2001). Handelsbanken ökar i Danmark. Affärsvärlden, 19 April; TT (2001). Finansinspekt-ionen säger ja till bankaffär. TT, 12 April; Andersson, J. (2001). Handelsbanken avancerar i Danmark. Sydsvenska Dagbladet, 12 April; Nyhetsbyrån Ticker (2001). Handelsbanken: Har 10% av aktierna i Midtbank. Nyhetsbyrån Ticker, 27 April; Nyhetsbyrån Direkt (2001). SHB: Har 98% av kapitalet i Midtbank. Nyhetsbyrån Direkt, 3 July 97 Nyhetsbyrån Direkt (2001). SHB: Tillräckligt stora på alla nordiska marknader. Nyhetsby-rån Direkt, 11 June 98 Nyhetsbyrån Direkt (2002). SHB: Vill köpa fler banker i Danmark enligt regionchef. Ny-hetsbyrån Direkt, 3 October
52
Handelsbanken’s main Swedish competitors were continuing to invest in the Baltic region. CEO Grönstedt was skeptical, however, and uninterested in whatever potential the competitors saw in the region.99 He stated:
“I think we can be more profitable elsewhere although I could be wrong.100 […] It is possible that our cautiousness is putting a hex on us. But I am wor-ried that the Baltic countries are only a credit crisis away from financial dis-aster. Their system has not been tested during difficult setbacks.101“
The Baltic region was considered too risky for Handelsbanken. Instead prior-ities lay elsewhere, namely Great Britain, although Poland was of increasing interest too. The ambition of organic growth continued and was the main objective. In Great Britain Handelsbanken’s seventh office opened in New-castle, and so far all of the offices were located in industrial regions. To get things going smoothly four new employees were handpicked from a local bank.102 Director of Handelsbanken British department Ulf Sylvan under-lined the importance of the handpicked staff as follows:
“We do not open a regional office unless we find the right team with the right contacts because it is the local contacts that quickly open up new doors.”103 [Further on he added] “The most important thing is being well known locally. […] We only recruit people who have experience in banking, accounting and law, those that are well known locally”104.
A few months later a new regional was office established in Great Britain105, while lending abroad increased by 40 percent during 2001. In an interview Grönstedt spoke about the bank and expansion in broad terms, how the bank’s philosophy of expanding was via organic growth, and how he en-joyed working with risks, trying to understand and control them.106 CEO Grönstedt backed up Ulf Sylvan’s citation above by commenting:
“The most important aspect is finding the right local chief with the right knowledge and independency to start a new operation”107
99 Nyhetsbyrån Direkt (2002). SHB: Inga planer på att expansion i Baltikum. Nyhetsbyrån Direkt, 12 February 100 Ibid. 101 Svensson, K. (2001). Baltikum, nej tack. Dagens Industri, 11 June 102 Ormerod, P. H. (2002). Handelsbanken växer vidare i Storbritannien. Svenska Dagbladet, 13 March; Svensson, K. (2001). Baltikum, nej tack. Dagens Industri, 11 June 103 Ormerod, P. H. (2002). Handelsbanken växer vidare i Storbritannien. Svenska Dagbladet, 13 March 104 Svedbom, A. (2003). SHB i nio städer i Storbritannien. Dagens Industri, 16 June 105 Nyhetsbyrån Direkt (2002). SHB: Storbritannien ny regionbank. Nyhetsbyrån Direkt, 27 April 106 Ericson, B. (2002). Intervju: Lars O Grönstedt – Myntsamlaren. Veckans Affärer, 18 March 107 Ibid.
53
He also added that:
“Expanding abroad was a necessity and using profits to grow domestically would be hazardous […] and if the Handelsbanken model was working well in Sweden, why would it not work abroad?”108.
When the CEO Grönstedt was asked about entering new markets he replied that the current operations had a lot more work to do, considerably in Great Britain though Poland was of great interest too. Poland had a population of 38 million, with a large number of Nordic-related businesses and according-ly a stable regulation system109. The expansion in Great Britain was progress-ing and the board discussed possible acquisitions, yet nothing materialized110. In Germany (Frankfurt) a HQ was established and offices in Hamburg, Lux-embourg, Paris, Zurich, and Vienna were to report to this unit. Frankfurt was chosen since Frankfurt was the continent’s ‘absolute financial centrum’ ac-cording to Pär-Ivan Pärson, manager of Handelsbanken’s German depart-ment.111 In December of 2002 Handelsbanken opened a new representative office in Shanghai while Handelsbanken celebrated the 20th anniversary of its office in Peking. Göran Tullberg, responsible for East Asia, explained, “the Nordic companies have vastly increased their activities in Shanghai and we can see that there still is business to be done by keeping Swedish personnel around”112. Germany at that time was facing some financial struggle, which created opportunities for the bank, which faced lower costs than most of its German competitors. While competitors closed their offices, Handelsbanken was able to provide full service and absorb customers from competitors.113 Almost every office in the UK was profitable by 2003. In general it took about a year from the opening of an office for it to become profitable114. When the board realized the profitability in the market investments, it felt ready to start researching possibilities of making acquisitions115. Three new offices were projected to open during 2003 and the biggest limitation to opening offices according to CEO Grönstedt was finding the right office
108 Ibid. 109 Ibid. 110 Djuphammar, D. (2002). SHB: Möjligt växa fort i England, utesluter ej förvärv. Nyhetsby-rån Direkt, 9 September 111 Björk, M. (2001). Handelsbanken väljer Frankfurt som centrum. Dagens Industri, 12 June 112 Engqvist, A. (2002). SHB öppnar nytt kontor i Shanghai. Dagens Industri, 3 December 113 Björk, M. (2003). Tyska banker i kris öppnar för svenskar. Dagens Industri, 17 March 114 Andersson, J. (2003). Handelsbanken fortsätter att expandera i England. Sydsvenska Dag-bladet, 16 February; Nyhetsbyrån Direkt (2003). SHB: Fyra av fem nyöppnade brittiska kon-tor nu lönsamma. Nyhetsbyrån Direkt, 18 February 115 Nyhetsbyrån Direkt (2003). SHB: Fyra av fem nyöppnade brittiska kontor nu lönsamma. Nyhetsbyrån Direkt, 18 February
52
Handelsbanken’s main Swedish competitors were continuing to invest in the Baltic region. CEO Grönstedt was skeptical, however, and uninterested in whatever potential the competitors saw in the region.99 He stated:
“I think we can be more profitable elsewhere although I could be wrong.100 […] It is possible that our cautiousness is putting a hex on us. But I am wor-ried that the Baltic countries are only a credit crisis away from financial dis-aster. Their system has not been tested during difficult setbacks.101“
The Baltic region was considered too risky for Handelsbanken. Instead prior-ities lay elsewhere, namely Great Britain, although Poland was of increasing interest too. The ambition of organic growth continued and was the main objective. In Great Britain Handelsbanken’s seventh office opened in New-castle, and so far all of the offices were located in industrial regions. To get things going smoothly four new employees were handpicked from a local bank.102 Director of Handelsbanken British department Ulf Sylvan under-lined the importance of the handpicked staff as follows:
“We do not open a regional office unless we find the right team with the right contacts because it is the local contacts that quickly open up new doors.”103 [Further on he added] “The most important thing is being well known locally. […] We only recruit people who have experience in banking, accounting and law, those that are well known locally”104.
A few months later a new regional was office established in Great Britain105, while lending abroad increased by 40 percent during 2001. In an interview Grönstedt spoke about the bank and expansion in broad terms, how the bank’s philosophy of expanding was via organic growth, and how he en-joyed working with risks, trying to understand and control them.106 CEO Grönstedt backed up Ulf Sylvan’s citation above by commenting:
“The most important aspect is finding the right local chief with the right knowledge and independency to start a new operation”107
99 Nyhetsbyrån Direkt (2002). SHB: Inga planer på att expansion i Baltikum. Nyhetsbyrån Direkt, 12 February 100 Ibid. 101 Svensson, K. (2001). Baltikum, nej tack. Dagens Industri, 11 June 102 Ormerod, P. H. (2002). Handelsbanken växer vidare i Storbritannien. Svenska Dagbladet, 13 March; Svensson, K. (2001). Baltikum, nej tack. Dagens Industri, 11 June 103 Ormerod, P. H. (2002). Handelsbanken växer vidare i Storbritannien. Svenska Dagbladet, 13 March 104 Svedbom, A. (2003). SHB i nio städer i Storbritannien. Dagens Industri, 16 June 105 Nyhetsbyrån Direkt (2002). SHB: Storbritannien ny regionbank. Nyhetsbyrån Direkt, 27 April 106 Ericson, B. (2002). Intervju: Lars O Grönstedt – Myntsamlaren. Veckans Affärer, 18 March 107 Ibid.
53
He also added that:
“Expanding abroad was a necessity and using profits to grow domestically would be hazardous […] and if the Handelsbanken model was working well in Sweden, why would it not work abroad?”108.
When the CEO Grönstedt was asked about entering new markets he replied that the current operations had a lot more work to do, considerably in Great Britain though Poland was of great interest too. Poland had a population of 38 million, with a large number of Nordic-related businesses and according-ly a stable regulation system109. The expansion in Great Britain was progress-ing and the board discussed possible acquisitions, yet nothing materialized110. In Germany (Frankfurt) a HQ was established and offices in Hamburg, Lux-embourg, Paris, Zurich, and Vienna were to report to this unit. Frankfurt was chosen since Frankfurt was the continent’s ‘absolute financial centrum’ ac-cording to Pär-Ivan Pärson, manager of Handelsbanken’s German depart-ment.111 In December of 2002 Handelsbanken opened a new representative office in Shanghai while Handelsbanken celebrated the 20th anniversary of its office in Peking. Göran Tullberg, responsible for East Asia, explained, “the Nordic companies have vastly increased their activities in Shanghai and we can see that there still is business to be done by keeping Swedish personnel around”112. Germany at that time was facing some financial struggle, which created opportunities for the bank, which faced lower costs than most of its German competitors. While competitors closed their offices, Handelsbanken was able to provide full service and absorb customers from competitors.113 Almost every office in the UK was profitable by 2003. In general it took about a year from the opening of an office for it to become profitable114. When the board realized the profitability in the market investments, it felt ready to start researching possibilities of making acquisitions115. Three new offices were projected to open during 2003 and the biggest limitation to opening offices according to CEO Grönstedt was finding the right office
108 Ibid. 109 Ibid. 110 Djuphammar, D. (2002). SHB: Möjligt växa fort i England, utesluter ej förvärv. Nyhetsby-rån Direkt, 9 September 111 Björk, M. (2001). Handelsbanken väljer Frankfurt som centrum. Dagens Industri, 12 June 112 Engqvist, A. (2002). SHB öppnar nytt kontor i Shanghai. Dagens Industri, 3 December 113 Björk, M. (2003). Tyska banker i kris öppnar för svenskar. Dagens Industri, 17 March 114 Andersson, J. (2003). Handelsbanken fortsätter att expandera i England. Sydsvenska Dag-bladet, 16 February; Nyhetsbyrån Direkt (2003). SHB: Fyra av fem nyöppnade brittiska kon-tor nu lönsamma. Nyhetsbyrån Direkt, 18 February 115 Nyhetsbyrån Direkt (2003). SHB: Fyra av fem nyöppnade brittiska kontor nu lönsamma. Nyhetsbyrån Direkt, 18 February
54
managers116. Grönstedt made a prognosis where he expected a growth rate of about 20 percent in the UK and to increase expansion the bank wanted to use all profits on acquisitions117. He also noted, “seen over time we are probably the most efficient universal bank in the world”118. During the summer of 2003 a new office opened in Cardiff in Wales, and Ulf Sylvan remarked, “The UK is a very lucrative market for us”119. CEO Grönstedt was nonethe-less hoping to increase the pace of expansion and estimated that during year 2004 and 2005 ten or more offices would open in Great Britain, seven in Norway and nine to twelve in Denmark and Finland combined. He estimated the costs of these activities at about USD 20 million120. The bank’s wish to increase the expansion led to an experiment where the bank opened more offices than usual. If the experiment was successful in Great Britain and Norway then the bank would be able to increase its expansion rate121. In year 2004, the bank opened a new office in Great Britain approximately every quarter. After six months of experiment Handelsbanken was happy, and Grönstedt once again commented that the only limitation to expansion was finding the right people to open new offices:
“So far everything indicates that we have a scalable model. The only limita-tion regarding opening new offices is finding the right staff. […] we will go [open] where there are people” […] “every new office increases the [finan-cial] results by about SEK three million [USD 400 000] year by year”122
He also reported that the establishments in Poland and Russia were predicted to reach higher profits in the long-term123. The test was set to continue during 2005, and in 2006 the expansion pace was projected to accelerate124. During the early months of 2004 the bank planned, as mentioned, to open up seven new offices in Norway and hire 50 new employees. There was also a
116 Sjöberg, L. (2003). SHB: Räknar med att öppna fler kontor utomlands i år. Nyhetsbyrån Direkt, 18 February 117 Öhlin, H. (2003). Handelsbanken: VD spår uthållig kundtillväxt 20 % i UK. Nyhetsbyrån Ticker, 30 May; Demery, C. & Öhlin, H. (2003). Handelsbanken: Kostn forts ned, förvärv högt prissatta. Nyhetsbyrån Ticker, 19 August 118 Öhlin, H. (2003). Handelsbanken: VD spår uthållig kundtillväxt 20 % i UK. Nyhetsbyrån Ticker, 30 May 119 Svedbom, A. (2003). SHB i nio städer i Storbritannien. Dagens Industri, 16 June 120 Nyhetsbyrån Direkt (2003). SHB: Skyndar på utlandsexpansion, kostn 150 mkr. Nyhetsby-rån Direkt, 21 October 121 Dehlån, J. & Swahnberg, O. (2003). SHB-Kan komma att ge sig in i nya länder. Reuters svenska ekonomi-nyheter, 8 December 122 Nyhetsbyrån Direkt (2004). SHB: Står fast vid öppna 15 nya kontor i år, 2005 – VD. Ny-hetsbyrån Direkt, 17 August 123 Ibid. 124 Nyhetsbyrån Direkt (2004). SHB: Ska öppna 20 nya kontor i år, nästa år – VD. Nyhetsby-rån Direkt, 19 August
55
possibility of making some small acquisitions.125 This was a rather large ex-pansion for Handelsbanken considering, it had only 28 offices located in Norway. In Denmark the board was enthusiastic about the future, and the market development was satisfactory. Talks about making further acquisi-tions arose as well as opening three new offices126. The same enthusiasm was seen in Finland and continued into 2006127. Late in 2004 indications of ma-kings of a small acquisition were sent out128. CEO Grönstedt was delighted to send the signal of an increasing expansion rate but also expressed regret about what he would have done differently if he had a second chance to go back in time and start over as CEO. The only business decision he regretted was that the bank had not entered the Baltic region earlier129. China’s progressive development during the previous years finally caught the attention of Handelsbanken. The board had a very optimistic view of China’s future and the bank’s developments130. The bank had earlier de-creased its local presence by reducing staff members following decreases in profits, as the bank’s customers were uncertain about the Chinese market. But by 2004 the board’s expectations changed, and the board calculated that investing in China would be profitable131. The bank then sent an application (granted a year later) to open a branch in Shanghai that would service Swe-dish and UK firms. Johan Andrén, who had long experience as a representa-tive in Beijing, was sent to manage the branch132. The cost of starting a branch in China was at least USD 29.3 million133. Andrén estimated that the bank could cover China completely from there and that its number of ongo-ing customers in China was around 2,000134. As mentioned in the previous chapter Handelsbanken decreased its activities significantly in Russia in 1998 and only partially remained in the market. By
125 Thulin, C. (2003). Handelsbanken växer i Norge. Dagens Industri, 10 December; Lundin, K. (2003). Handelsbanken vill växa rejält i Norge. Dagens Industri, 29 December 126 Dagens Industri (2004). Handelsbanken har fått en bra start på året i… Dagens Industri, 12 March 127 TT (2004). Finländska Handelsbanken spår stark tillväxt för Finland. TT, 22 September; Hufvudstadsbladet (2005). Handelsbanken spår fortsatt snabb tillväxt. Hufvudstadsbladet, 15 February 128 Flores, J. (2003). Ryssland nästa för SHB. Dagens Nyheter, 18 February; Nyhetsbyrån Direkt (2004). SHB: Ser ökat antal förvärvsobjekt på marknaden – VD. Nyhetsbyrån Direkt, 19 October 129 Nyhetsbyrån Direkt (2004). Handelsbanken ökar expansion, fler nya kontor i år. Nyhetsby-rån Direkt, 5 April 130 Engqvist, A. (2004). ”Kina har en fantastisk tillväxt”. Dagens Industri, 17 January 131 Ibid.; Öhlin, H. (2005). Handelsbanken: Öppnar bankkontor i Shanghai, Kina. Nyhetsbyrån Ticker, 5 September 132 Nyhetsbyrån Direkt (2004). SHBA: Handelsbanken öppnar Bankrörelse i Kina. Nyhetsby-rån Direkt, 30 June 133 Dagens Industri (2004). Handelsbanken pionjär i Shanghai. Dagens Industri, 1 July 134 Engqvist, A. (2005). Hård strid mellan svenska banker i Kina. Dagens Industri, 6 Septem-ber
54
managers116. Grönstedt made a prognosis where he expected a growth rate of about 20 percent in the UK and to increase expansion the bank wanted to use all profits on acquisitions117. He also noted, “seen over time we are probably the most efficient universal bank in the world”118. During the summer of 2003 a new office opened in Cardiff in Wales, and Ulf Sylvan remarked, “The UK is a very lucrative market for us”119. CEO Grönstedt was nonethe-less hoping to increase the pace of expansion and estimated that during year 2004 and 2005 ten or more offices would open in Great Britain, seven in Norway and nine to twelve in Denmark and Finland combined. He estimated the costs of these activities at about USD 20 million120. The bank’s wish to increase the expansion led to an experiment where the bank opened more offices than usual. If the experiment was successful in Great Britain and Norway then the bank would be able to increase its expansion rate121. In year 2004, the bank opened a new office in Great Britain approximately every quarter. After six months of experiment Handelsbanken was happy, and Grönstedt once again commented that the only limitation to expansion was finding the right people to open new offices:
“So far everything indicates that we have a scalable model. The only limita-tion regarding opening new offices is finding the right staff. […] we will go [open] where there are people” […] “every new office increases the [finan-cial] results by about SEK three million [USD 400 000] year by year”122
He also reported that the establishments in Poland and Russia were predicted to reach higher profits in the long-term123. The test was set to continue during 2005, and in 2006 the expansion pace was projected to accelerate124. During the early months of 2004 the bank planned, as mentioned, to open up seven new offices in Norway and hire 50 new employees. There was also a
116 Sjöberg, L. (2003). SHB: Räknar med att öppna fler kontor utomlands i år. Nyhetsbyrån Direkt, 18 February 117 Öhlin, H. (2003). Handelsbanken: VD spår uthållig kundtillväxt 20 % i UK. Nyhetsbyrån Ticker, 30 May; Demery, C. & Öhlin, H. (2003). Handelsbanken: Kostn forts ned, förvärv högt prissatta. Nyhetsbyrån Ticker, 19 August 118 Öhlin, H. (2003). Handelsbanken: VD spår uthållig kundtillväxt 20 % i UK. Nyhetsbyrån Ticker, 30 May 119 Svedbom, A. (2003). SHB i nio städer i Storbritannien. Dagens Industri, 16 June 120 Nyhetsbyrån Direkt (2003). SHB: Skyndar på utlandsexpansion, kostn 150 mkr. Nyhetsby-rån Direkt, 21 October 121 Dehlån, J. & Swahnberg, O. (2003). SHB-Kan komma att ge sig in i nya länder. Reuters svenska ekonomi-nyheter, 8 December 122 Nyhetsbyrån Direkt (2004). SHB: Står fast vid öppna 15 nya kontor i år, 2005 – VD. Ny-hetsbyrån Direkt, 17 August 123 Ibid. 124 Nyhetsbyrån Direkt (2004). SHB: Ska öppna 20 nya kontor i år, nästa år – VD. Nyhetsby-rån Direkt, 19 August
55
possibility of making some small acquisitions.125 This was a rather large ex-pansion for Handelsbanken considering, it had only 28 offices located in Norway. In Denmark the board was enthusiastic about the future, and the market development was satisfactory. Talks about making further acquisi-tions arose as well as opening three new offices126. The same enthusiasm was seen in Finland and continued into 2006127. Late in 2004 indications of ma-kings of a small acquisition were sent out128. CEO Grönstedt was delighted to send the signal of an increasing expansion rate but also expressed regret about what he would have done differently if he had a second chance to go back in time and start over as CEO. The only business decision he regretted was that the bank had not entered the Baltic region earlier129. China’s progressive development during the previous years finally caught the attention of Handelsbanken. The board had a very optimistic view of China’s future and the bank’s developments130. The bank had earlier de-creased its local presence by reducing staff members following decreases in profits, as the bank’s customers were uncertain about the Chinese market. But by 2004 the board’s expectations changed, and the board calculated that investing in China would be profitable131. The bank then sent an application (granted a year later) to open a branch in Shanghai that would service Swe-dish and UK firms. Johan Andrén, who had long experience as a representa-tive in Beijing, was sent to manage the branch132. The cost of starting a branch in China was at least USD 29.3 million133. Andrén estimated that the bank could cover China completely from there and that its number of ongo-ing customers in China was around 2,000134. As mentioned in the previous chapter Handelsbanken decreased its activities significantly in Russia in 1998 and only partially remained in the market. By
125 Thulin, C. (2003). Handelsbanken växer i Norge. Dagens Industri, 10 December; Lundin, K. (2003). Handelsbanken vill växa rejält i Norge. Dagens Industri, 29 December 126 Dagens Industri (2004). Handelsbanken har fått en bra start på året i… Dagens Industri, 12 March 127 TT (2004). Finländska Handelsbanken spår stark tillväxt för Finland. TT, 22 September; Hufvudstadsbladet (2005). Handelsbanken spår fortsatt snabb tillväxt. Hufvudstadsbladet, 15 February 128 Flores, J. (2003). Ryssland nästa för SHB. Dagens Nyheter, 18 February; Nyhetsbyrån Direkt (2004). SHB: Ser ökat antal förvärvsobjekt på marknaden – VD. Nyhetsbyrån Direkt, 19 October 129 Nyhetsbyrån Direkt (2004). Handelsbanken ökar expansion, fler nya kontor i år. Nyhetsby-rån Direkt, 5 April 130 Engqvist, A. (2004). ”Kina har en fantastisk tillväxt”. Dagens Industri, 17 January 131 Ibid.; Öhlin, H. (2005). Handelsbanken: Öppnar bankkontor i Shanghai, Kina. Nyhetsbyrån Ticker, 5 September 132 Nyhetsbyrån Direkt (2004). SHBA: Handelsbanken öppnar Bankrörelse i Kina. Nyhetsby-rån Direkt, 30 June 133 Dagens Industri (2004). Handelsbanken pionjär i Shanghai. Dagens Industri, 1 July 134 Engqvist, A. (2005). Hård strid mellan svenska banker i Kina. Dagens Industri, 6 Septem-ber
56
2004 Handelsbanken returned as the market stabilized, and Handelsbanken applied to be a full-service bank (granted in 2005) in Moscow. The head of the office was Raimo Valo, the former manager of the Polish department, who a few years later would join Swedbank and help with its expansion into Russia. The Russian office was budgeted USD 56.8 million with initially 25 staff members, and the establishment was based upon experience from the Polish market, with the main objective of providing service to firms from Great Britain and Sweden135. Also, two new offices were anticipated to open in Russia during the first six months of 2005 in a similar approach as had been employed in Great Britain136. The bank was only eligible to service business customers during the initial two years but was hoping to reach pri-vate customers subsequently137. Simultaneously in Great Britain a total of five new offices were opened (Hull, Norwich, Guildford, Stoke and Chelms-ford), with three new offices in Denmark, five in Finland and six in Norway. In Great Britain all offices opened before 2004 had reached at least break-even by then, and the number of offices allocated was now up to 15. The bank had at the time 120 offices located in Great Britain, Denmark, Finland, and Norway combined.138 Meanwhile the bank opened a new branch ‘Poland Handelsbanken’ in Warszawa139. Handelsbanken opened 20 new offices during 2004 and estimated that the same number of offices would open during 2005 with a focus on Norway and Great Britain140. Further, CEO Grönstedt estimated that the 90 new of-fices that had opened during the past ten years should be able to increase the financial results by USD 36.2 million a year from that point in time. Organic growth was still regarded as less risky and cost saving.141 In the first quarter of 2005 the bank increased its lending to private consum-ers by 27 percent142. In the previous few years the bank had not made any real attempt to make an acquisition even though the bank from time to time stated that it was looking for banks to acquire in foreign markets. Once again the topic was brought up during a presentation where CEO Grönstedt men-
135 Johansson, J. (2004). Handelsbanken: Startar verksamhet i Ryssland. Nyhetsbyrån Ticker, 17 February; Lindh Hök, M. & Öhlin, H. (2004). Handelsbanken: Bedömer rysk bank igång 2005 – VD (forts). Nyhetsbyrån Ticker, 17 February; Öhlin, H. (2005). Handelsbanken: Öpp-nar egen verksamhet i Ryssland. Nyhetsbyrån Ticker, 31 May 136 Nyhetsbyrån Direkt (2004). SHB: Planerar öppna 2 kontor i Ryssland 1h 2005. Nyhetsby-rån Direkt, 15 December 137 Östlund, A. (2005). Svenskar bankar jagar ryska privatkunder. Realtid.se, 27 June 138 Öhlin, H. (2005). Handelsbanken: UK-kontor öppnade före 2004 nått break-even. Nyhets-byrån Ticker, 22 February 139 Svedbom, A. (2004). Svensk bankstrid blåser upp i Polen. Dagens Industri, 7 December 140 Källström, A. & Öhlin, H. (2005). Handelsbanken: Planerar öppna cirka 20 nya kontor 2005 – VD. Nyhetsbyrån Ticker, 22 February 141 Ibid. 142 Källström, A. & Öhlin, H. (2005). Handelsbanken: Har tagit kunder i Norge – VD. Ny-hetsbyrån Ticker, 25 April
57
tioned that the climate for making acquisition was brighter than before143. Before Sylvan (regional chief in Great Britain) retired he commented that the British had enjoyed how the bank worked and that the bank had been very selective over the years when lending money144. CEO Grönstedt later on added that the risk levels had never been so low and that the bank had re-fused many big companies where the risk had been regarded as too high145. The accelerated expansion required a high level of energy from the offices and according to the CEO Grönstedt they were running out of locations to open offices in Norway and Great Britain146. For a moment, the expansion in Norway and Great Britain ceased. The next year (2006) was supposed to be a year to refuel. Grönstedt told that the market conditions had not changed but that offices needed time to re-charge147. The bank had opened five new offices and the number of staff had increased by 20 percent. In just the first nine months of 2005 lending had increased by 39 percent whereof 20 percent was in private banking148. On this subject Magnus Uggla (regional chief in Great Britain) added that there was an initiative to increase the share of private banking to reduce risk lev-els149. He took the OECD’s warnings lightly about the over estimation of the housing market in Great Britain150. Magnus Uggla also discussed making acquisitions and said he was always evaluating the options but that he was more fond of establishing offices from scratch151. By the end of 2005 he did not dismiss the possibility of opening new offices but that the priority was to find the right people for the existing offices and keeping these offices profit-able even during expansion152. How many offices that were to open during the coming year depended on some conditions and, “the bigger we get the more easily we can open new offices”153. But Uggla seemed more optimistic about stepping up the pace again, and like his predecessor Ulf Sylvan, he also emphasized finding the right people. One of the reasons was that when-ever the bank opened an office, usually no one in that town knew about or
143 Hillström, P. (2005). SHB: Ser lite förbättrat affärsklimat – VD. Nyhetsbyrån Direkt, 25 April 144 Bark, S. (2005). Handelsbanken tar fart i Storbritannien. Dagens Industri, 20 June 145 Braconier, F. (2005). Handelsbanken vill söka tillväxt utanför Norden. Svenska Dagbladet, 24 August; Hedelius, P. (2005). SHB: Fortsätter öka utlåningen utanför Sverige – VD. Ny-hetsbyrån Direkt, 23 November 146 Braconier, F. (2005). Handelsbanken vill söka tillväxt utanför Norden. Svenska Dagbladet, 24 August 147 Banknytt Online (2005). Grönstedt kommenterar SHB:s expansionsplaner. Banknytt On-line, 24 August 148 Hedelius, P. (2005). SHB: Brittisk regionbank ska bidra väsentligt utan köp – VVD. Ny-hetsbyrån Direkt, 6 December 149 Ibid. 150 Ibid. 151 Ibid. 152 Ibid. 153 Ibid.
56
2004 Handelsbanken returned as the market stabilized, and Handelsbanken applied to be a full-service bank (granted in 2005) in Moscow. The head of the office was Raimo Valo, the former manager of the Polish department, who a few years later would join Swedbank and help with its expansion into Russia. The Russian office was budgeted USD 56.8 million with initially 25 staff members, and the establishment was based upon experience from the Polish market, with the main objective of providing service to firms from Great Britain and Sweden135. Also, two new offices were anticipated to open in Russia during the first six months of 2005 in a similar approach as had been employed in Great Britain136. The bank was only eligible to service business customers during the initial two years but was hoping to reach pri-vate customers subsequently137. Simultaneously in Great Britain a total of five new offices were opened (Hull, Norwich, Guildford, Stoke and Chelms-ford), with three new offices in Denmark, five in Finland and six in Norway. In Great Britain all offices opened before 2004 had reached at least break-even by then, and the number of offices allocated was now up to 15. The bank had at the time 120 offices located in Great Britain, Denmark, Finland, and Norway combined.138 Meanwhile the bank opened a new branch ‘Poland Handelsbanken’ in Warszawa139. Handelsbanken opened 20 new offices during 2004 and estimated that the same number of offices would open during 2005 with a focus on Norway and Great Britain140. Further, CEO Grönstedt estimated that the 90 new of-fices that had opened during the past ten years should be able to increase the financial results by USD 36.2 million a year from that point in time. Organic growth was still regarded as less risky and cost saving.141 In the first quarter of 2005 the bank increased its lending to private consum-ers by 27 percent142. In the previous few years the bank had not made any real attempt to make an acquisition even though the bank from time to time stated that it was looking for banks to acquire in foreign markets. Once again the topic was brought up during a presentation where CEO Grönstedt men-
135 Johansson, J. (2004). Handelsbanken: Startar verksamhet i Ryssland. Nyhetsbyrån Ticker, 17 February; Lindh Hök, M. & Öhlin, H. (2004). Handelsbanken: Bedömer rysk bank igång 2005 – VD (forts). Nyhetsbyrån Ticker, 17 February; Öhlin, H. (2005). Handelsbanken: Öpp-nar egen verksamhet i Ryssland. Nyhetsbyrån Ticker, 31 May 136 Nyhetsbyrån Direkt (2004). SHB: Planerar öppna 2 kontor i Ryssland 1h 2005. Nyhetsby-rån Direkt, 15 December 137 Östlund, A. (2005). Svenskar bankar jagar ryska privatkunder. Realtid.se, 27 June 138 Öhlin, H. (2005). Handelsbanken: UK-kontor öppnade före 2004 nått break-even. Nyhets-byrån Ticker, 22 February 139 Svedbom, A. (2004). Svensk bankstrid blåser upp i Polen. Dagens Industri, 7 December 140 Källström, A. & Öhlin, H. (2005). Handelsbanken: Planerar öppna cirka 20 nya kontor 2005 – VD. Nyhetsbyrån Ticker, 22 February 141 Ibid. 142 Källström, A. & Öhlin, H. (2005). Handelsbanken: Har tagit kunder i Norge – VD. Ny-hetsbyrån Ticker, 25 April
57
tioned that the climate for making acquisition was brighter than before143. Before Sylvan (regional chief in Great Britain) retired he commented that the British had enjoyed how the bank worked and that the bank had been very selective over the years when lending money144. CEO Grönstedt later on added that the risk levels had never been so low and that the bank had re-fused many big companies where the risk had been regarded as too high145. The accelerated expansion required a high level of energy from the offices and according to the CEO Grönstedt they were running out of locations to open offices in Norway and Great Britain146. For a moment, the expansion in Norway and Great Britain ceased. The next year (2006) was supposed to be a year to refuel. Grönstedt told that the market conditions had not changed but that offices needed time to re-charge147. The bank had opened five new offices and the number of staff had increased by 20 percent. In just the first nine months of 2005 lending had increased by 39 percent whereof 20 percent was in private banking148. On this subject Magnus Uggla (regional chief in Great Britain) added that there was an initiative to increase the share of private banking to reduce risk lev-els149. He took the OECD’s warnings lightly about the over estimation of the housing market in Great Britain150. Magnus Uggla also discussed making acquisitions and said he was always evaluating the options but that he was more fond of establishing offices from scratch151. By the end of 2005 he did not dismiss the possibility of opening new offices but that the priority was to find the right people for the existing offices and keeping these offices profit-able even during expansion152. How many offices that were to open during the coming year depended on some conditions and, “the bigger we get the more easily we can open new offices”153. But Uggla seemed more optimistic about stepping up the pace again, and like his predecessor Ulf Sylvan, he also emphasized finding the right people. One of the reasons was that when-ever the bank opened an office, usually no one in that town knew about or
143 Hillström, P. (2005). SHB: Ser lite förbättrat affärsklimat – VD. Nyhetsbyrån Direkt, 25 April 144 Bark, S. (2005). Handelsbanken tar fart i Storbritannien. Dagens Industri, 20 June 145 Braconier, F. (2005). Handelsbanken vill söka tillväxt utanför Norden. Svenska Dagbladet, 24 August; Hedelius, P. (2005). SHB: Fortsätter öka utlåningen utanför Sverige – VD. Ny-hetsbyrån Direkt, 23 November 146 Braconier, F. (2005). Handelsbanken vill söka tillväxt utanför Norden. Svenska Dagbladet, 24 August 147 Banknytt Online (2005). Grönstedt kommenterar SHB:s expansionsplaner. Banknytt On-line, 24 August 148 Hedelius, P. (2005). SHB: Brittisk regionbank ska bidra väsentligt utan köp – VVD. Ny-hetsbyrån Direkt, 6 December 149 Ibid. 150 Ibid. 151 Ibid. 152 Ibid. 153 Ibid.
58
had ever heard of Handelsbanken. Therefore, it was of the outmost im-portance to find the right people locally, as Uggla states below:
“Most often nobody knows what Handelsbanken is when we start up in a place. Consequently we have to build our brand locally by recruiting good people that the local environment knows of. […] our main strategy is to grow on our own…”154
Although the expansion in Great Britain and Norway temporarily ground to a halt, expansion did not cease completely. Plans for expansion in Russia were made, and so far Handelsbanken had not reentered the Baltic region in spite of the CEO’s earlier regrets. But by the spring of 2006 the bank opened an office in Tallinn.155 Harri Tuohimaa, the former chief executive of the bank’s financial department in Finland, was sent to manage it, and he stated:
”Since our customers have more and more contact with this region, particu-larly Estonia, it is important for us to be present in the region […] We want to make decisions close [to] the customer and believe that our operations will be as successful in Estonia as in other markets which are subject to tough competition where our model has proved to be successful.”156
Consequently there was a need to enter the market and there seemed to be a moderate hope of success. At the same time as Harri Tuohimaa released the statement above, CEO Grönstedt declared that the bank did not eliminate the possibility of an acquisition in Eastern Europe to boost its expansion outside of Sweden157. Five years earlier the bank decided to skip the Baltic region and focus on Great Britain. Grönstedt said that for a good bank it was never too late to conduct good business, when he was asked if it was too late to enter the Baltic region where Swedish competitors had already been estab-lished for some time. One of the reasons why the bank did not enter the Bal-tic region and instead focused on Great Britain was, according to Grönstedt, that the latter consisted of a single market containing 60 million people. Great Britain was more interesting than a market consisting of nine million people split into three countries (Baltic region).158 In an interview CEO Grönstedt revealed that the bank was preparing for expansion in Poland and that the bank was happy with the platform estab-lished in Great Britain. He was also happy with the expansion in the Nordic
154 Jonsson, J. (2006). Handelsbanken går till brittisk offensiv. Dagens Industri, 9 January 155 Nyhetsbyrån Ticker (2005). Handelsbanken öppnar kontor i Tallinn. Nyhetsbyrån Ticker, 23 August; Landberg, R. (2005). Handelsbanken: Ser över expansionsmöjligheter i Östeu-ropa-DJ. Nyhetsbyrån Ticker, 30 January; Fond & Bank (2005). Lars O Grönstedt om SHB:s expansionsplaner. Fond & Bank, 17 October 156 Press release, Handelsbanken (2005). Handelsbanken opens branch in Tallinn. 23 August 157 Öhlin, H. (2005). Handelsbanken: Utesluter inte förvärv i Östeuropa. Nyhetsbyrån Ticker, 23 August 158 Lucas, D. (2005). Grönstedt gnetar hellre än köper dyrt. Dagens Nyheter, 6 November
59
countries, declaring that that it was time to establish elsewhere. Of most interest were big markets and France was suggested as a possible destina-tion. Earlier in the expansion the board had focused on providing service for clients in the Nordic countries and Great Britain. But now Handelsbanken wanted to reach Polish households. France was yet of interest but the bank had progressed much further in Poland than in France, which was why the bank decided to wait with France and focus on Poland. Grönstedt was con-vinced that Handelsbanken’s business model would work almost anywhere in the world.159 During 2006 chairman of the board and former CEO Arne Mårtensson went on a long vacation to sail around the world and was not to return until 2010. After only five years as CEO Grönstedt replaced him as chairman, and Pär Boman was selected as CEO. Boman had held various positions in the bank over the past 15 years, and picking him was an easy choice according to Mårtensson.160 Furthermore 15 to 20 new offices were expected to open dur-ing 2006, among them, five in Norway, two in Poland, one in Estonia and one in Spain161. The office in Spain was opened in Costa Blanco, where about 100 000 Nordic people lived, highlighting private banking for Nordic citizens, and manager Eva Tärnström was optimistic162. A representative office was also on its way to open in India (Mumbai) mainly due to the de-mand from Handelsbanken’s British clients163. The manager of the office, John Ödmann, commented that the interest was overwhelming in a positive sense and that the conditions for continued growth were ideal164. Also, the ambition to develop an adequate bank operation in Poland continued. Two new offices were to open, one in Gdansk and one in Poznan165.
159 Hedelius, P. (2005). SHB: Fortsätter öka utlåningen utanför Sverige – VD. Nyhetsbyrån Direkt, 23 November 160 Nyhetsbyrån Direkt (2005). SHB: Valet av Pär Boman till ny VD var enkelt – Mårtensson. Nyhetsbyrån Direkt, 27 September; Aronsson, C. (2005). Pär Boman en försiktig general. Dagens Industri, 27 September 161 Öhlin, H. (2006). Handelsbanken: Öppnar 15-20 nya kontor utanför Sverige 2006. Nyhets-byrån Ticker, 21 February; Nyhetsbyrån Direkt (2006). Handelsbanken: Ökat res från utland, 5 nya kontor i Norge 2006. Nyhetsbyrån Direkt, 21 February 162 Öhlin, H. (2006). Handelsbanken: Öppnar kontor på Costa Blanco, Spanien. Nyhetsbyrån Ticker, 6 April 163 Lässker, E-L. & Öhlin, H. (2006). Handelsbanken: Ambition att bygga fullvärdig bank i Polen. Nyhetsbyrån Ticker, 22 February 164 Nyhetsbyrån Ticker (2006). Klart för Handelsbanken i Indien. Nyhetsbyrån Ticker, 3 May 165 Almroth, L. (2006). Utlandet allt viktigare för Handelsbanken. Dagens Nyheter, 22 Febru-ary
58
had ever heard of Handelsbanken. Therefore, it was of the outmost im-portance to find the right people locally, as Uggla states below:
“Most often nobody knows what Handelsbanken is when we start up in a place. Consequently we have to build our brand locally by recruiting good people that the local environment knows of. […] our main strategy is to grow on our own…”154
Although the expansion in Great Britain and Norway temporarily ground to a halt, expansion did not cease completely. Plans for expansion in Russia were made, and so far Handelsbanken had not reentered the Baltic region in spite of the CEO’s earlier regrets. But by the spring of 2006 the bank opened an office in Tallinn.155 Harri Tuohimaa, the former chief executive of the bank’s financial department in Finland, was sent to manage it, and he stated:
”Since our customers have more and more contact with this region, particu-larly Estonia, it is important for us to be present in the region […] We want to make decisions close [to] the customer and believe that our operations will be as successful in Estonia as in other markets which are subject to tough competition where our model has proved to be successful.”156
Consequently there was a need to enter the market and there seemed to be a moderate hope of success. At the same time as Harri Tuohimaa released the statement above, CEO Grönstedt declared that the bank did not eliminate the possibility of an acquisition in Eastern Europe to boost its expansion outside of Sweden157. Five years earlier the bank decided to skip the Baltic region and focus on Great Britain. Grönstedt said that for a good bank it was never too late to conduct good business, when he was asked if it was too late to enter the Baltic region where Swedish competitors had already been estab-lished for some time. One of the reasons why the bank did not enter the Bal-tic region and instead focused on Great Britain was, according to Grönstedt, that the latter consisted of a single market containing 60 million people. Great Britain was more interesting than a market consisting of nine million people split into three countries (Baltic region).158 In an interview CEO Grönstedt revealed that the bank was preparing for expansion in Poland and that the bank was happy with the platform estab-lished in Great Britain. He was also happy with the expansion in the Nordic
154 Jonsson, J. (2006). Handelsbanken går till brittisk offensiv. Dagens Industri, 9 January 155 Nyhetsbyrån Ticker (2005). Handelsbanken öppnar kontor i Tallinn. Nyhetsbyrån Ticker, 23 August; Landberg, R. (2005). Handelsbanken: Ser över expansionsmöjligheter i Östeu-ropa-DJ. Nyhetsbyrån Ticker, 30 January; Fond & Bank (2005). Lars O Grönstedt om SHB:s expansionsplaner. Fond & Bank, 17 October 156 Press release, Handelsbanken (2005). Handelsbanken opens branch in Tallinn. 23 August 157 Öhlin, H. (2005). Handelsbanken: Utesluter inte förvärv i Östeuropa. Nyhetsbyrån Ticker, 23 August 158 Lucas, D. (2005). Grönstedt gnetar hellre än köper dyrt. Dagens Nyheter, 6 November
59
countries, declaring that that it was time to establish elsewhere. Of most interest were big markets and France was suggested as a possible destina-tion. Earlier in the expansion the board had focused on providing service for clients in the Nordic countries and Great Britain. But now Handelsbanken wanted to reach Polish households. France was yet of interest but the bank had progressed much further in Poland than in France, which was why the bank decided to wait with France and focus on Poland. Grönstedt was con-vinced that Handelsbanken’s business model would work almost anywhere in the world.159 During 2006 chairman of the board and former CEO Arne Mårtensson went on a long vacation to sail around the world and was not to return until 2010. After only five years as CEO Grönstedt replaced him as chairman, and Pär Boman was selected as CEO. Boman had held various positions in the bank over the past 15 years, and picking him was an easy choice according to Mårtensson.160 Furthermore 15 to 20 new offices were expected to open dur-ing 2006, among them, five in Norway, two in Poland, one in Estonia and one in Spain161. The office in Spain was opened in Costa Blanco, where about 100 000 Nordic people lived, highlighting private banking for Nordic citizens, and manager Eva Tärnström was optimistic162. A representative office was also on its way to open in India (Mumbai) mainly due to the de-mand from Handelsbanken’s British clients163. The manager of the office, John Ödmann, commented that the interest was overwhelming in a positive sense and that the conditions for continued growth were ideal164. Also, the ambition to develop an adequate bank operation in Poland continued. Two new offices were to open, one in Gdansk and one in Poznan165.
159 Hedelius, P. (2005). SHB: Fortsätter öka utlåningen utanför Sverige – VD. Nyhetsbyrån Direkt, 23 November 160 Nyhetsbyrån Direkt (2005). SHB: Valet av Pär Boman till ny VD var enkelt – Mårtensson. Nyhetsbyrån Direkt, 27 September; Aronsson, C. (2005). Pär Boman en försiktig general. Dagens Industri, 27 September 161 Öhlin, H. (2006). Handelsbanken: Öppnar 15-20 nya kontor utanför Sverige 2006. Nyhets-byrån Ticker, 21 February; Nyhetsbyrån Direkt (2006). Handelsbanken: Ökat res från utland, 5 nya kontor i Norge 2006. Nyhetsbyrån Direkt, 21 February 162 Öhlin, H. (2006). Handelsbanken: Öppnar kontor på Costa Blanco, Spanien. Nyhetsbyrån Ticker, 6 April 163 Lässker, E-L. & Öhlin, H. (2006). Handelsbanken: Ambition att bygga fullvärdig bank i Polen. Nyhetsbyrån Ticker, 22 February 164 Nyhetsbyrån Ticker (2006). Klart för Handelsbanken i Indien. Nyhetsbyrån Ticker, 3 May 165 Almroth, L. (2006). Utlandet allt viktigare för Handelsbanken. Dagens Nyheter, 22 Febru-ary
60
“I would not want to use the word unlikely anymore while speaking about acquisition. There is reason for us to be bolder in this aspect, especially since our acquisition of Midtbank in Denmark cost us less and progressed faster than we expected. But also because of our developments in Great Britain with fast organic growth. We have experience of how to make a ‘Handels-banken’ out of operations that had never had the thought of it earlier. We will probably have more guts and be more aggressive in our acquisitions from now on.”166
Chairman of the board Grönstedt’s comment above reveals a more aggres-sive approach in the bank’s strategy to expand. Polish bank BPH, which owned almost half of the market shares in Poland, was for sale; however, this was of no interest to Handelsbanken. “Polish banks are very expensive. The bank is not too big but too expensive” said Grönstedt167. He also noted that the period to get to know a new market in a foreign country could de-crease in time168. The head of Handelsbanken’s Danish department, Anders Bouvin, was convinced that the number of offices in Denmark would in-crease and did not dismiss the possibility of making an acquisition by point-ing to the success of the previously acquired Midtbank in Denmark169. Petri Hatakka head of Handelsbanken’s Finnish department reported that between fourteen or sixteen new offices were to be located in Finland in coming years170. Ten to twelve of these offices were to open in 2007 due to the posi-tive progress throughout 2006171. Moreover as of June 2006 the bank was able provide customer service via the Internet in China172. The Swedish media were skeptical of Handelsbanken’s expansion abroad and commented it as too slow. According to them the bank had fallen behind its competitors and made too few large acquisitions173. One of the first com-ments made by the new CEO Pär Boman was about expansion. Boman said that the pace of expansion would not decline during the year and that the focus on organic growth would continue174. Shortly afterwards CEO Boman participated in an interview where he spoke fondly of Handelsbanken:
166 Nyhetsbyrån Direkt (2006). Handelsbanken: Vi vågar nog vara aggressivare i förvärv – VD. Nyhetsbyrån Direkt, 24 April 167 Nyhetsbyrån Direkt (2006). Handelsbanken: Större möjligheter till förvärv – VD. Nyhets-byrån Direkt, 24 April 168 Ibid. 169 Öhlin, H. (2006). Handelsbanken: Öppnar för förvärv i Danmark. Nyhetsbyrån Ticker, 16 May 170 Hufvudstadsbladet (2006). Handelsbanken vill utvidga i Finland. Hufvudstadsbladet, 25 April 171 Finska Notisbyrån (2006). Handelsbanken öppnar nya kontor. Finska Notisbyrån, 28 November 172 Hugin – Sweden (2006). Handelsbanken erbjuder Internetbanktjänster i Kina. Hugin – Sweden, 2 June 173 Lindsten, P. O. (2006). Bankpartyt går mot sitt slut. Veckans Affärer, 5 June 174 Dagens Industri (2006). Handelsbanken tänker hålla expansionstakt. Dagens Industri, 15 June
61
“However you measure it, we are the most cost-effective bank in Europe and perhaps even globally. […] Great Britain is where we have had our biggest success outside of Sweden.”175
He explained that the British banks were very centralized and the customers enjoyed being noticed when they met staff members in Handelsbanken. However, the focus, as others before him had noted, was to establish in Po-land and the rest of Europe. He stated that, “We have opened two offices in Poland. This is not to say we are building a net of branches there. […] Our idea is to export our way to operating a bank”176. Boman at that point did not want to stress expansion in Poland, and he expressed that organic growth was of greater importance rather than acquisitions. With organic growth the offices could have the right sentiments from the start. Acquisitions took more time to adjust.177 At the same time as the office in Gdansk (Poland) was opened, Handelsbanken Finans entered Poland as well. CEO stated:
“More and more of our British customers are establishing in Poland. The de-mand and need for leasing as a financial source has therefore increased among our customers. Because of this, it feels good to take the next step in our progress in Poland and offer our customers a leasing product.”178
Taking the next step into Poland was, according to Mikael Sörensen, manag-er of Handelsbanken’s Polish department, the right decision and a necessary step to make in order to follow the bank’s customers. Another office was announced to open in Poland (Poznan) later that same year. Each office that opened in Poland was run the same way as offices in Great Britain, which entailed carefully choosing a suitable manager who knew the local environ-ment and undertook the setting up of the local office.179 Sörensen anticipated that two offices a year would be opened in Poland; hence growth would need to be primarily organic180. The same was applicable to Russia where the bank denied rumors of making a particular acquisition and insisted that its expan-sion primarily would continue through organic growth181. Late in 2006 Handelsbanken opened up a new department, Handelsbanken International. The purpose was to support the bank’s customers in the Nordic countries and Great Britain in their international affairs and develop regional banks according to their business model182. The investments previously made
175 Sjögren, S. (2006). Nye vd:n öppnar dörren mot Europa. Göteborgs-Posten, 10 July 176 Ibid. 177 Ibid. 178 Hugin – Sweden (2006). Handelsbanken Finans startar i Polen. Hugin – Sweden, 20 June 179 Fond & Bank Online (2006). SHB med nytt kontor i Gdansk och snart Poznan. Fond & Bank Online, 22 June 180 Ibid. 181 TT (2006). Handelsbankens ryska strategi inte ändrad. TT, 28 September; Smålandsposten (2006). Handelsbanken planerar ryskt förvärv. Smålandsposten, 28 September 182 Handelsbanken’s homepage. www.handelsbanken.com, Retrieved 2011-11-25
60
“I would not want to use the word unlikely anymore while speaking about acquisition. There is reason for us to be bolder in this aspect, especially since our acquisition of Midtbank in Denmark cost us less and progressed faster than we expected. But also because of our developments in Great Britain with fast organic growth. We have experience of how to make a ‘Handels-banken’ out of operations that had never had the thought of it earlier. We will probably have more guts and be more aggressive in our acquisitions from now on.”166
Chairman of the board Grönstedt’s comment above reveals a more aggres-sive approach in the bank’s strategy to expand. Polish bank BPH, which owned almost half of the market shares in Poland, was for sale; however, this was of no interest to Handelsbanken. “Polish banks are very expensive. The bank is not too big but too expensive” said Grönstedt167. He also noted that the period to get to know a new market in a foreign country could de-crease in time168. The head of Handelsbanken’s Danish department, Anders Bouvin, was convinced that the number of offices in Denmark would in-crease and did not dismiss the possibility of making an acquisition by point-ing to the success of the previously acquired Midtbank in Denmark169. Petri Hatakka head of Handelsbanken’s Finnish department reported that between fourteen or sixteen new offices were to be located in Finland in coming years170. Ten to twelve of these offices were to open in 2007 due to the posi-tive progress throughout 2006171. Moreover as of June 2006 the bank was able provide customer service via the Internet in China172. The Swedish media were skeptical of Handelsbanken’s expansion abroad and commented it as too slow. According to them the bank had fallen behind its competitors and made too few large acquisitions173. One of the first com-ments made by the new CEO Pär Boman was about expansion. Boman said that the pace of expansion would not decline during the year and that the focus on organic growth would continue174. Shortly afterwards CEO Boman participated in an interview where he spoke fondly of Handelsbanken:
166 Nyhetsbyrån Direkt (2006). Handelsbanken: Vi vågar nog vara aggressivare i förvärv – VD. Nyhetsbyrån Direkt, 24 April 167 Nyhetsbyrån Direkt (2006). Handelsbanken: Större möjligheter till förvärv – VD. Nyhets-byrån Direkt, 24 April 168 Ibid. 169 Öhlin, H. (2006). Handelsbanken: Öppnar för förvärv i Danmark. Nyhetsbyrån Ticker, 16 May 170 Hufvudstadsbladet (2006). Handelsbanken vill utvidga i Finland. Hufvudstadsbladet, 25 April 171 Finska Notisbyrån (2006). Handelsbanken öppnar nya kontor. Finska Notisbyrån, 28 November 172 Hugin – Sweden (2006). Handelsbanken erbjuder Internetbanktjänster i Kina. Hugin – Sweden, 2 June 173 Lindsten, P. O. (2006). Bankpartyt går mot sitt slut. Veckans Affärer, 5 June 174 Dagens Industri (2006). Handelsbanken tänker hålla expansionstakt. Dagens Industri, 15 June
61
“However you measure it, we are the most cost-effective bank in Europe and perhaps even globally. […] Great Britain is where we have had our biggest success outside of Sweden.”175
He explained that the British banks were very centralized and the customers enjoyed being noticed when they met staff members in Handelsbanken. However, the focus, as others before him had noted, was to establish in Po-land and the rest of Europe. He stated that, “We have opened two offices in Poland. This is not to say we are building a net of branches there. […] Our idea is to export our way to operating a bank”176. Boman at that point did not want to stress expansion in Poland, and he expressed that organic growth was of greater importance rather than acquisitions. With organic growth the offices could have the right sentiments from the start. Acquisitions took more time to adjust.177 At the same time as the office in Gdansk (Poland) was opened, Handelsbanken Finans entered Poland as well. CEO stated:
“More and more of our British customers are establishing in Poland. The de-mand and need for leasing as a financial source has therefore increased among our customers. Because of this, it feels good to take the next step in our progress in Poland and offer our customers a leasing product.”178
Taking the next step into Poland was, according to Mikael Sörensen, manag-er of Handelsbanken’s Polish department, the right decision and a necessary step to make in order to follow the bank’s customers. Another office was announced to open in Poland (Poznan) later that same year. Each office that opened in Poland was run the same way as offices in Great Britain, which entailed carefully choosing a suitable manager who knew the local environ-ment and undertook the setting up of the local office.179 Sörensen anticipated that two offices a year would be opened in Poland; hence growth would need to be primarily organic180. The same was applicable to Russia where the bank denied rumors of making a particular acquisition and insisted that its expan-sion primarily would continue through organic growth181. Late in 2006 Handelsbanken opened up a new department, Handelsbanken International. The purpose was to support the bank’s customers in the Nordic countries and Great Britain in their international affairs and develop regional banks according to their business model182. The investments previously made
175 Sjögren, S. (2006). Nye vd:n öppnar dörren mot Europa. Göteborgs-Posten, 10 July 176 Ibid. 177 Ibid. 178 Hugin – Sweden (2006). Handelsbanken Finans startar i Polen. Hugin – Sweden, 20 June 179 Fond & Bank Online (2006). SHB med nytt kontor i Gdansk och snart Poznan. Fond & Bank Online, 22 June 180 Ibid. 181 TT (2006). Handelsbankens ryska strategi inte ändrad. TT, 28 September; Smålandsposten (2006). Handelsbanken planerar ryskt förvärv. Smålandsposten, 28 September 182 Handelsbanken’s homepage. www.handelsbanken.com, Retrieved 2011-11-25
62
in China had been profitable since 2005, and marketing Director of China Göran Tullberg commented that China’s market were developing in a posi-tive direction but the next step in the expansion depended on how fast the deregulation of the banking market would go. He additionally reported that the bank geographically covered all of China and the focus was to service the bank’s Nordic and British customers. The Internet bank helped the bank’s customers’ parent companies manage their accounts from abroad.183 Concerning business in the US, the bank received a warning that the country could be facing a recession in the coming year, although the Swedish econ-omy was anticipated to continue to do well184. Nevertheless, the next stop on Handelsbanken’s expansion was India (Mumbai) where Björn Börjesson, manager of the new branch stated:
“we see the largest expansion opportunity […] we have followed our cus-tomers out in the world for 30 years. But you have to be more observant abroad. There is a risk that the new customers, who are the easiest one to catch, are the ones you do not want […] In this part of the world we are the Nordic bank with the strongest presence. You have to be here to understand what you can bring to the table. […] We believe in building office by office and eventually spinning them off into regional banks, each with its own deputy CEO”185
Beside the ambition for the future to continue to grow in the countries the bank was already active in, on the bank’s wish list to enter Italy, Spain, Switzerland, and Eastern Europe186. In early 2007 two new branches opened in Denmark (Aarhus and Aalborg) recruiting staff from local competitors187. Bouvin, CEO of ‘Handelsbanken Denmark’ commented on this as follows:
“Our tradition is that we decentralize business decisions. 98 percent of all credit evaluations are done locally, which means satisfied customers, and we believe that whoever is closest to the customer geographically is the best one to make these judgments. […] We do not have any planned or outspoken strategy. Instead we are focusing on catching the opportunities that arise. What is essential is to find the right staff and we find them by searching for people who are tired of their current situation where they are not able to ful-fill their need for amenability.”188
Like earlier commentators in this chapter, Bouvin stressed the subject of decentralization, staff, and flexibility. Rick Spencer director of the branch in Cardiff, and Frank Vang-Jensen, newly assigned manager in Denmark, made 183 Fond & Bank (2006). Storbanker om sina satsningar i Kina. Fond & Bank, 25 October 184 Privataaffärer.se (2006). Handelsbanken ser ökad risk för recession i USA. Privataaffä-rer.se, 8 December; DN.no (2006). Tror på USA-resesjon. DN.no, 5 December 185 Sistek, H. (2007). Indien nästa för SHB. Dagens Industri, 17 January 186 Ibid. 187 Barkholt Fruelund, B. (2007). SHB: Två nya filialer i Danmark, öppnar fler. Nyhetsbyrån Direkt, 1 February 188 Ibid.
63
similar statements in harmony with Bouvin’s statement189. In this report Bouvin also showed an interest in further expansion in Denmark. The CEO, Pär Boman, boosted this interest as he declared that the bank was looking for an opportunity of making a small acquisition with a special interest in Den-mark190. Boman and Bouvin then stated that finding the right staff and man-agers was the bank’s biggest limitation in expanding in Denmark and espe-cially in Great Britain. This problem affected the expansion strategy of set-ting up offices on the bank’s own initiative in these countries191. The expansion rate was planned to increase during 2007 by opening 30-40 new offices abroad, specifically in Great Britain, Finland and Norway192. This was a significant rise in comparison to past year, when 21 new offices were established in foreign countries193. Pär Boman considered it a test to see if it was possible to step up the pace further194. To manage the growing ex-pansion rate, a new position was developed to support and help coordinate the expansion195. By the end of year 2007 a total of 41 new offices had opened abroad, among them 16 in Great Britain, 8 in Finland, 4 in Norway and Poland, 2 in Denmark and Germany, and 1 in Netherlands. Two repre-sentative offices in Spain were converted into branches and one office opened in Malaysia.196 Earlier reports the same year indicate that the bank was looking to redouble its offices in Germany and Poland while establish-ing an infrastructure for new offices in the Netherlands and Russia197. In early 2007 the bank announced six new offices to open in Finland during the spring and two new in Poland, and as Table 3 show the bank opened eight new offices in Finland in 2007. The bank aimed to enter Latvia (Riga) and Lithuania (Vilnius) in the following year.198 The bank’s Finnish depart-ment, which managed the expansion in the Baltic region together with Nina
189 Realtid.se (2007). Handelsbanken gör succé i Storbritannien. Realtid.se, 22 March; Han-delsbanken Press release, 2007-05-22 190 Joons, A. (2007). SHB: Skulle gärna köpa mindre bank i exempelvis Danmark – VD. Nyhetsbyrån Direkt, 20 February; Öhlin, H. (2007). Handelsbanken: Intresserade av förvärv i Danmark – BN. Nyhetsbyrån Ticker, 15 March 191 Joons, A. (2007). SHB: Tillgång till kontorschefer begränsar expansion i England – VD. Nyhetsbyrån Direkt, 23 April; Joons, A. (2007). SHB: Tillväxtmöjlighet utomlands främst i Norge, Finland, UK. Nyhetsbyrån Direkt, 20 February 192 Öhlin, H. (2007). Handelsbanken: Ökar expansionstakten utanför Sverige 2007. Nyhetsby-rån Direkt, 20 February 193 Ibid. 194 Nordell, H. (2007). Handelsbanken: Överväger höja mål för nya kontor utomlands – VD. Nyhetsbyrån Ticker, 18 July 195 Omnell, T. (2007). Han ska sätta fart på SHB i London. Dagens Industri, 25 September 196 Handelsbanken Annual Report 2007, p. 3, 24-26 197 Joons, A. (2007). SHB: International har fokus nya marknader, först Polen, Tyskland. Nyhetsbyrån Direkt, 20 February 198 Hufvudstadsbladet (2007). Handelsbanken expanderar. Hufvudstadsbladet, 24 April; Finska Notisbyrån (2007). Handelsbanken utvidgar i Baltikum. Finska Notisbyrån, 16 March
62
in China had been profitable since 2005, and marketing Director of China Göran Tullberg commented that China’s market were developing in a posi-tive direction but the next step in the expansion depended on how fast the deregulation of the banking market would go. He additionally reported that the bank geographically covered all of China and the focus was to service the bank’s Nordic and British customers. The Internet bank helped the bank’s customers’ parent companies manage their accounts from abroad.183 Concerning business in the US, the bank received a warning that the country could be facing a recession in the coming year, although the Swedish econ-omy was anticipated to continue to do well184. Nevertheless, the next stop on Handelsbanken’s expansion was India (Mumbai) where Björn Börjesson, manager of the new branch stated:
“we see the largest expansion opportunity […] we have followed our cus-tomers out in the world for 30 years. But you have to be more observant abroad. There is a risk that the new customers, who are the easiest one to catch, are the ones you do not want […] In this part of the world we are the Nordic bank with the strongest presence. You have to be here to understand what you can bring to the table. […] We believe in building office by office and eventually spinning them off into regional banks, each with its own deputy CEO”185
Beside the ambition for the future to continue to grow in the countries the bank was already active in, on the bank’s wish list to enter Italy, Spain, Switzerland, and Eastern Europe186. In early 2007 two new branches opened in Denmark (Aarhus and Aalborg) recruiting staff from local competitors187. Bouvin, CEO of ‘Handelsbanken Denmark’ commented on this as follows:
“Our tradition is that we decentralize business decisions. 98 percent of all credit evaluations are done locally, which means satisfied customers, and we believe that whoever is closest to the customer geographically is the best one to make these judgments. […] We do not have any planned or outspoken strategy. Instead we are focusing on catching the opportunities that arise. What is essential is to find the right staff and we find them by searching for people who are tired of their current situation where they are not able to ful-fill their need for amenability.”188
Like earlier commentators in this chapter, Bouvin stressed the subject of decentralization, staff, and flexibility. Rick Spencer director of the branch in Cardiff, and Frank Vang-Jensen, newly assigned manager in Denmark, made 183 Fond & Bank (2006). Storbanker om sina satsningar i Kina. Fond & Bank, 25 October 184 Privataaffärer.se (2006). Handelsbanken ser ökad risk för recession i USA. Privataaffä-rer.se, 8 December; DN.no (2006). Tror på USA-resesjon. DN.no, 5 December 185 Sistek, H. (2007). Indien nästa för SHB. Dagens Industri, 17 January 186 Ibid. 187 Barkholt Fruelund, B. (2007). SHB: Två nya filialer i Danmark, öppnar fler. Nyhetsbyrån Direkt, 1 February 188 Ibid.
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similar statements in harmony with Bouvin’s statement189. In this report Bouvin also showed an interest in further expansion in Denmark. The CEO, Pär Boman, boosted this interest as he declared that the bank was looking for an opportunity of making a small acquisition with a special interest in Den-mark190. Boman and Bouvin then stated that finding the right staff and man-agers was the bank’s biggest limitation in expanding in Denmark and espe-cially in Great Britain. This problem affected the expansion strategy of set-ting up offices on the bank’s own initiative in these countries191. The expansion rate was planned to increase during 2007 by opening 30-40 new offices abroad, specifically in Great Britain, Finland and Norway192. This was a significant rise in comparison to past year, when 21 new offices were established in foreign countries193. Pär Boman considered it a test to see if it was possible to step up the pace further194. To manage the growing ex-pansion rate, a new position was developed to support and help coordinate the expansion195. By the end of year 2007 a total of 41 new offices had opened abroad, among them 16 in Great Britain, 8 in Finland, 4 in Norway and Poland, 2 in Denmark and Germany, and 1 in Netherlands. Two repre-sentative offices in Spain were converted into branches and one office opened in Malaysia.196 Earlier reports the same year indicate that the bank was looking to redouble its offices in Germany and Poland while establish-ing an infrastructure for new offices in the Netherlands and Russia197. In early 2007 the bank announced six new offices to open in Finland during the spring and two new in Poland, and as Table 3 show the bank opened eight new offices in Finland in 2007. The bank aimed to enter Latvia (Riga) and Lithuania (Vilnius) in the following year.198 The bank’s Finnish depart-ment, which managed the expansion in the Baltic region together with Nina
189 Realtid.se (2007). Handelsbanken gör succé i Storbritannien. Realtid.se, 22 March; Han-delsbanken Press release, 2007-05-22 190 Joons, A. (2007). SHB: Skulle gärna köpa mindre bank i exempelvis Danmark – VD. Nyhetsbyrån Direkt, 20 February; Öhlin, H. (2007). Handelsbanken: Intresserade av förvärv i Danmark – BN. Nyhetsbyrån Ticker, 15 March 191 Joons, A. (2007). SHB: Tillgång till kontorschefer begränsar expansion i England – VD. Nyhetsbyrån Direkt, 23 April; Joons, A. (2007). SHB: Tillväxtmöjlighet utomlands främst i Norge, Finland, UK. Nyhetsbyrån Direkt, 20 February 192 Öhlin, H. (2007). Handelsbanken: Ökar expansionstakten utanför Sverige 2007. Nyhetsby-rån Direkt, 20 February 193 Ibid. 194 Nordell, H. (2007). Handelsbanken: Överväger höja mål för nya kontor utomlands – VD. Nyhetsbyrån Ticker, 18 July 195 Omnell, T. (2007). Han ska sätta fart på SHB i London. Dagens Industri, 25 September 196 Handelsbanken Annual Report 2007, p. 3, 24-26 197 Joons, A. (2007). SHB: International har fokus nya marknader, först Polen, Tyskland. Nyhetsbyrån Direkt, 20 February 198 Hufvudstadsbladet (2007). Handelsbanken expanderar. Hufvudstadsbladet, 24 April; Finska Notisbyrån (2007). Handelsbanken utvidgar i Baltikum. Finska Notisbyrån, 16 March
64
Hyrsky, the manager of this department, reported that the rapid economic growth in Latvian market was the reason behind this interest199. The bank opened a new office in Germany (Munich) and a new branch in Russia (Saint Petersburg). The plan was to mainly support customers from Great Britain and the Nordic countries with long-term plans of operating private banking.200 Most of the announced 30-40 new offices were anticipat-ed to open in Great Britain, Finland, and Norway. Estimations of ten new offices in Great Britain were made with a goal of reaching approximately 60 offices in the future, about twice the amount of offices allocated at the time.201 Shortly after this estimation a new projection was launched. Instead of ten new offices the bank anticipated opening fourteen offices in Great Britain. At that time earnings in Great Britain amounted to about USD 21.4 million, yet regional manager Uggla’s prognosis was to reach USD 142.4 million within five years.202 Spencer, the director of the branch in Cardiff, noted, “Right now we are still rather small compared to the larger British banks, but now we are on the radar. We are doing well, and because of this we are expanding”203. Spencer was optimistic about the future, especially of the establishments in the capital of Wales: “It is the newest and fastest grow-ing capital in Europe”204. Although he was unsure how big expansion in Great Britain would be during the year he declared, “Nobody knows exactly how many new offices will be established this year. It would surprise me a lot if it was fewer than last year.”205. He continued to say that he was about to leave Cardiff to manage an office soon to open in Exeter. After that he was supposed to open a new office in Swansea but he had been unsuccessful so far in finding a suitable bank manager for it.206 He added:
“We have received firm support from Handelsbanken’s strong organization in combination with our local competence and our knowledge. Being a Swe-dish bank has certainly been an advantage in comparison with originating from another country. There is an international image of Sweden as some-what trustworthy. Combining this with our locally recruited staff provides a positive impression.”207
199 Nyhetsbyrån Direkt (2007). Handelsbanken: Överväger öppna kontor i Lettland och Li-tauen. Nyhetsbyrån Direkt, 14 March 200 Fond & Bank Online (2007). Handelsbanken öppnar i München. Fond & Bank Online, 18 September; Öhlin, H. (2007). Handelsbanken: Öppnar nytt kontor i Sankt Petersburg. Nyhets-byrån Ticker, 5 March 201 Lässker, E-L. & Öhlin, H. (2007). Handelsbanken: Fortsatt hög expansionstakt i kontors-nätet. Nyhetsbyrån Ticker, 20 February 202 Strandberg, H. (2007). SHB ökar takten i England. Dagens Industri, 5 March 203 Ibid. 204 Realtid.se (2007). Handelsbanken gör succé i Storbritannien. Realtid.se, 22 March; Real-tid.se (2007). SHBs segertåg i Storbritannien. Realtid.se, 22 March 205 Ibid. 206 Realtid.se (2007). SHBs segertåg i Storbritannien. Realtid.se, 22 March 207 Ibid.
65
According to Spencer was Handelsbanken successful thanks to a ‘strong organization’ combining ‘local competence’ with knowledge. The new re-gional office that opened was regarded as an engine that would propel the bank into Scotland, and the head of Handelsbanken’s Danish department, Anders Bouvin, was transferred to manage the new office208. All of this de-spite the fact that the financial market struggled worldwide. The bank certi-fied that the effects of the financial market had no impact on the expansion in Great Britain at the time209. In 2001 the bank opened its first branch in Poland (Warsaw) and in 2006 two new branches opened in Gdansk and Poznan. Elisa Saarinen, the newly ap-pointed manager of Handelsbanken’s venture in Poland, reported that the bank for some time had tested its business model in Poland and now it was time to grow. Saarinen hoped to make the business profitable sooner rather than later210. Meanwhile CEO Boman defended the bank’s earlier decision for entering Eastern Europe so late (compared to Swedish competitors):
“We want to work with people and businesses that have money. Banks tar-geting mass markets are more about finding customers without money and providing them with as much money as they dare to.” 211
Boman argued that it was never too late to enter a market, and Handelsbank-en was in no rush212. The impact of Handelsbanken’s increasing expansion was seen and in the first-quarter report where business earnings grew by 29 percent from operations abroad213. Thus far the expansion had been done with what was regarded as long-term investments that naturally required expenses. But as soon as an office reached profitability, it continued to in-crease each year.214 In the years before 2007 the four largest Swedish banks, Handelsbanken, Nordea, SEB and Swedbank, together reported a profit of over USD 11.7 billion, an increase of 16 percent. The profits continued to grow throughout the year. Some analysts worried however about the continuation and doubted that these figures could be recorded once again.215 Others took an interest in Handelsbanken’s financial secureness and reported that, although the stock 208 Strandberg, H. (2007). Handelsbanken snabbväxare i Storbritannien. Dagens Industri, 23 May 209 Nordell, H. (2007). Handelsbanken: Fortsatt expansion i Storbritannien – VD. Nyhetsbyrån Ticker, 23 October 210 Kothbauer, J. (2007). Mot nästa land. Dagens Industri, 23 April 211 Hammarström, M. (2007). Handelsbanken försvarar östpassivitet. Dagens Industri, 30 March 212 Ibid. 213 Fond & Bank (2007). Handelsbanken expanderar kraftigast i utlandet. Fond & Bank, 14 August 214 Munkhammar, V. (2007). SHB växer i England. Dagens Industri, 29 December 215 Kiepels, C. (2007). Storabankernas gyllene år. Dagens Industri, 22 February
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Hyrsky, the manager of this department, reported that the rapid economic growth in Latvian market was the reason behind this interest199. The bank opened a new office in Germany (Munich) and a new branch in Russia (Saint Petersburg). The plan was to mainly support customers from Great Britain and the Nordic countries with long-term plans of operating private banking.200 Most of the announced 30-40 new offices were anticipat-ed to open in Great Britain, Finland, and Norway. Estimations of ten new offices in Great Britain were made with a goal of reaching approximately 60 offices in the future, about twice the amount of offices allocated at the time.201 Shortly after this estimation a new projection was launched. Instead of ten new offices the bank anticipated opening fourteen offices in Great Britain. At that time earnings in Great Britain amounted to about USD 21.4 million, yet regional manager Uggla’s prognosis was to reach USD 142.4 million within five years.202 Spencer, the director of the branch in Cardiff, noted, “Right now we are still rather small compared to the larger British banks, but now we are on the radar. We are doing well, and because of this we are expanding”203. Spencer was optimistic about the future, especially of the establishments in the capital of Wales: “It is the newest and fastest grow-ing capital in Europe”204. Although he was unsure how big expansion in Great Britain would be during the year he declared, “Nobody knows exactly how many new offices will be established this year. It would surprise me a lot if it was fewer than last year.”205. He continued to say that he was about to leave Cardiff to manage an office soon to open in Exeter. After that he was supposed to open a new office in Swansea but he had been unsuccessful so far in finding a suitable bank manager for it.206 He added:
“We have received firm support from Handelsbanken’s strong organization in combination with our local competence and our knowledge. Being a Swe-dish bank has certainly been an advantage in comparison with originating from another country. There is an international image of Sweden as some-what trustworthy. Combining this with our locally recruited staff provides a positive impression.”207
199 Nyhetsbyrån Direkt (2007). Handelsbanken: Överväger öppna kontor i Lettland och Li-tauen. Nyhetsbyrån Direkt, 14 March 200 Fond & Bank Online (2007). Handelsbanken öppnar i München. Fond & Bank Online, 18 September; Öhlin, H. (2007). Handelsbanken: Öppnar nytt kontor i Sankt Petersburg. Nyhets-byrån Ticker, 5 March 201 Lässker, E-L. & Öhlin, H. (2007). Handelsbanken: Fortsatt hög expansionstakt i kontors-nätet. Nyhetsbyrån Ticker, 20 February 202 Strandberg, H. (2007). SHB ökar takten i England. Dagens Industri, 5 March 203 Ibid. 204 Realtid.se (2007). Handelsbanken gör succé i Storbritannien. Realtid.se, 22 March; Real-tid.se (2007). SHBs segertåg i Storbritannien. Realtid.se, 22 March 205 Ibid. 206 Realtid.se (2007). SHBs segertåg i Storbritannien. Realtid.se, 22 March 207 Ibid.
65
According to Spencer was Handelsbanken successful thanks to a ‘strong organization’ combining ‘local competence’ with knowledge. The new re-gional office that opened was regarded as an engine that would propel the bank into Scotland, and the head of Handelsbanken’s Danish department, Anders Bouvin, was transferred to manage the new office208. All of this de-spite the fact that the financial market struggled worldwide. The bank certi-fied that the effects of the financial market had no impact on the expansion in Great Britain at the time209. In 2001 the bank opened its first branch in Poland (Warsaw) and in 2006 two new branches opened in Gdansk and Poznan. Elisa Saarinen, the newly ap-pointed manager of Handelsbanken’s venture in Poland, reported that the bank for some time had tested its business model in Poland and now it was time to grow. Saarinen hoped to make the business profitable sooner rather than later210. Meanwhile CEO Boman defended the bank’s earlier decision for entering Eastern Europe so late (compared to Swedish competitors):
“We want to work with people and businesses that have money. Banks tar-geting mass markets are more about finding customers without money and providing them with as much money as they dare to.” 211
Boman argued that it was never too late to enter a market, and Handelsbank-en was in no rush212. The impact of Handelsbanken’s increasing expansion was seen and in the first-quarter report where business earnings grew by 29 percent from operations abroad213. Thus far the expansion had been done with what was regarded as long-term investments that naturally required expenses. But as soon as an office reached profitability, it continued to in-crease each year.214 In the years before 2007 the four largest Swedish banks, Handelsbanken, Nordea, SEB and Swedbank, together reported a profit of over USD 11.7 billion, an increase of 16 percent. The profits continued to grow throughout the year. Some analysts worried however about the continuation and doubted that these figures could be recorded once again.215 Others took an interest in Handelsbanken’s financial secureness and reported that, although the stock 208 Strandberg, H. (2007). Handelsbanken snabbväxare i Storbritannien. Dagens Industri, 23 May 209 Nordell, H. (2007). Handelsbanken: Fortsatt expansion i Storbritannien – VD. Nyhetsbyrån Ticker, 23 October 210 Kothbauer, J. (2007). Mot nästa land. Dagens Industri, 23 April 211 Hammarström, M. (2007). Handelsbanken försvarar östpassivitet. Dagens Industri, 30 March 212 Ibid. 213 Fond & Bank (2007). Handelsbanken expanderar kraftigast i utlandet. Fond & Bank, 14 August 214 Munkhammar, V. (2007). SHB växer i England. Dagens Industri, 29 December 215 Kiepels, C. (2007). Storabankernas gyllene år. Dagens Industri, 22 February
66
market was uninterested in the bank’s financial strength. The bank’s low level of risk associations would make the bank a winner if times should get rough.216 Most reports discussed the world economy with optimism while some voiced their concern217. It was not long before growth slowed down in Denmark, Germany, France and Italy while the US was financially strug-gling, which caused the bank to send out warning signals218. Vice manager of the Swedish State bank Lars Nyberg tried to calm Swedes and stated that the risk of spreading the financial worry to Sweden was low219. Handelsbanken remained rather calm, however, CEO Boman conveyed that the financial struggle might affect some business. But that would always be the case, noted Boman, who was assured that the bank’s depositable assets were more than enough220. The bank would continue as usual and was ready to manage changes even if the financial market’s insecurity increased221. Boman even bragged that the first nine months of 2007 were the best months so far222. Yet a month later CEO Boman stated that the imbalance in the fi-nancial market would increase and was far from the bank’s predictions223. In spite of the financial struggle that the US market was facing, newly pro-moted Stefan Nilsson (manager of the bank’s American department) wanted to expand in the US. Nilsson was projected to investigate how much of an expansion could be accomplished in the US and he was optimistic. At least one new office was assumed to open the following year (2008) and anything less would surprise him. He was also examining whether there were any interesting acquisitions to be made. But he was assertive that the bank need-ed to grow on its own before it would be able to make an acquisition and have the capacity to manage it. To increase capacity, Nilsson wanted to in-crease the number of staff, predominantly by bringing in staff from Sweden. Regarding the financial struggle Nilsson worried that it was threatening to become far worse than the crisis during the 1990s. The reports were looking
216 Sjöberg, H. (2007). Analys: Handelsbanken – Handelsbanken vinnare – om tiderna blir sämre. Aktiespararen, 5 April 217 Finska notisbyrån (2007). Handelsbanken tror på snabb tillväxt. Finska notisbyrån, 9 May; Finansavisen (2007). – 50 prosent sjanse for resesjon i USA. Finansavisen, 11 May 218 TT (2007). EU-Tillväxt bromsar in. TT, 14 August; Johansson, L. (2007). Konjunktur: Tecken på överhettning dyker upp i Sverige – SHB. Nyhetsbyrån Ticker, 21 August; DI.se (2007). Dansk ekonomi växer neråt. DI.se, 15 October 219 Uppsala Nya Tidning (2007). Riksbankschef tonar ner finansoro. Uppsala Nya Tidning, 5 September 220 Nordell, H. (2007). Handelsbanken: Relativt opåverkad av kreditoron – VD. Nyhetsbyrån Ticker, 23 October 221 Sjögren, S. (2007). Handelsbanken klarade kreditkrisen. Göteborgs Posten, 24 October 222 Ibid. 223 Nyhetsbyrån Direkt (2007). Bank: Handelsbankens VD varnar för fortsatt kreditoro – DI. Nyhetsbyrån Direkt, 6 December
67
poor and he noted that in his experience a crisis in general lasted about two years before one could see signs of a turnaround.224
4.4 2008-2010 Turbulent times In late 2008 a worldwide crisis occurred, affecting Handelsbanken’s expan-sion. How this impacted the bank’s internationalization will be disclosed, but also a number of other interesting activities that occurred will be revealed.
Handelsbanken during global financial crisis Year 2008 2009 2010
Sweden 461 461 461 7 714 7 502 7 549
Denmark 54 53 53 615 750 699
Finland 45 45 45 647 624 582
Great Britain 56 62 83 516 574 708
Norway 48 48 49 755 772 765
Others combined 38 35 32 585 599 547
Bold = Offices, Italic = Staff
Table 4. Handelsbanken expansion in period 2008-2010
The year 2008 began with Handelsbanken Finans entering Estonia, offering the possibility of leasing services225. Operations in the Netherlands expanded, and the office that had been established earlier in Amsterdam turned into a regional office226. To accompany the regional office a new office opened in Amsterdam and another one in Rotterdam227. So far the services in the Neth-erlands had only been available to businesses, but from now on the services were also available to private consumers228. Further expansion was consid-ered but depended on whether the bank would be able to find the right man-
224 Taltavull, B. (2007). Tillträdande USA-chefen Stefan Nilsson om framtidsplanerna: Så ska Handelsbanken expandera i USA. Fond & Bank, 11 December 225 Sandkvist, L. (2008). Handelsbanken Finans utvidgar till Estland. Fond & Bank Online, 7 January 226 Ibid. 227 Ibid. 228 Ibid.
66
market was uninterested in the bank’s financial strength. The bank’s low level of risk associations would make the bank a winner if times should get rough.216 Most reports discussed the world economy with optimism while some voiced their concern217. It was not long before growth slowed down in Denmark, Germany, France and Italy while the US was financially strug-gling, which caused the bank to send out warning signals218. Vice manager of the Swedish State bank Lars Nyberg tried to calm Swedes and stated that the risk of spreading the financial worry to Sweden was low219. Handelsbanken remained rather calm, however, CEO Boman conveyed that the financial struggle might affect some business. But that would always be the case, noted Boman, who was assured that the bank’s depositable assets were more than enough220. The bank would continue as usual and was ready to manage changes even if the financial market’s insecurity increased221. Boman even bragged that the first nine months of 2007 were the best months so far222. Yet a month later CEO Boman stated that the imbalance in the fi-nancial market would increase and was far from the bank’s predictions223. In spite of the financial struggle that the US market was facing, newly pro-moted Stefan Nilsson (manager of the bank’s American department) wanted to expand in the US. Nilsson was projected to investigate how much of an expansion could be accomplished in the US and he was optimistic. At least one new office was assumed to open the following year (2008) and anything less would surprise him. He was also examining whether there were any interesting acquisitions to be made. But he was assertive that the bank need-ed to grow on its own before it would be able to make an acquisition and have the capacity to manage it. To increase capacity, Nilsson wanted to in-crease the number of staff, predominantly by bringing in staff from Sweden. Regarding the financial struggle Nilsson worried that it was threatening to become far worse than the crisis during the 1990s. The reports were looking
216 Sjöberg, H. (2007). Analys: Handelsbanken – Handelsbanken vinnare – om tiderna blir sämre. Aktiespararen, 5 April 217 Finska notisbyrån (2007). Handelsbanken tror på snabb tillväxt. Finska notisbyrån, 9 May; Finansavisen (2007). – 50 prosent sjanse for resesjon i USA. Finansavisen, 11 May 218 TT (2007). EU-Tillväxt bromsar in. TT, 14 August; Johansson, L. (2007). Konjunktur: Tecken på överhettning dyker upp i Sverige – SHB. Nyhetsbyrån Ticker, 21 August; DI.se (2007). Dansk ekonomi växer neråt. DI.se, 15 October 219 Uppsala Nya Tidning (2007). Riksbankschef tonar ner finansoro. Uppsala Nya Tidning, 5 September 220 Nordell, H. (2007). Handelsbanken: Relativt opåverkad av kreditoron – VD. Nyhetsbyrån Ticker, 23 October 221 Sjögren, S. (2007). Handelsbanken klarade kreditkrisen. Göteborgs Posten, 24 October 222 Ibid. 223 Nyhetsbyrån Direkt (2007). Bank: Handelsbankens VD varnar för fortsatt kreditoro – DI. Nyhetsbyrån Direkt, 6 December
67
poor and he noted that in his experience a crisis in general lasted about two years before one could see signs of a turnaround.224
4.4 2008-2010 Turbulent times In late 2008 a worldwide crisis occurred, affecting Handelsbanken’s expan-sion. How this impacted the bank’s internationalization will be disclosed, but also a number of other interesting activities that occurred will be revealed.
Handelsbanken during global financial crisis Year 2008 2009 2010
Sweden 461 461 461 7 714 7 502 7 549
Denmark 54 53 53 615 750 699
Finland 45 45 45 647 624 582
Great Britain 56 62 83 516 574 708
Norway 48 48 49 755 772 765
Others combined 38 35 32 585 599 547
Bold = Offices, Italic = Staff
Table 4. Handelsbanken expansion in period 2008-2010
The year 2008 began with Handelsbanken Finans entering Estonia, offering the possibility of leasing services225. Operations in the Netherlands expanded, and the office that had been established earlier in Amsterdam turned into a regional office226. To accompany the regional office a new office opened in Amsterdam and another one in Rotterdam227. So far the services in the Neth-erlands had only been available to businesses, but from now on the services were also available to private consumers228. Further expansion was consid-ered but depended on whether the bank would be able to find the right man-
224 Taltavull, B. (2007). Tillträdande USA-chefen Stefan Nilsson om framtidsplanerna: Så ska Handelsbanken expandera i USA. Fond & Bank, 11 December 225 Sandkvist, L. (2008). Handelsbanken Finans utvidgar till Estland. Fond & Bank Online, 7 January 226 Ibid. 227 Ibid. 228 Ibid.
68
agers for the new offices229. Only a few months later the bank opened its first office in Latvia (Riga), as had been announced previous year230. Another new plan was to open an office in Lithuania (Vilnius)231. China’s economy was growing, so the bank increased its activities in China and began with leasing232. CEO Boman stated that “Our customers are step-ping up their expansion in China, so we are doing the same”233. The newly appointed manager, Michael Zell, said: “We were the first Nordic bank to become established in China, and we still have the largest presence among the Nordic banks. My goal is to increase our lead.”234. The bank as usual followed its customers and felt the presence of the competitors. As of De-cember of 2008 the bank was granted the opportunity to practice the Chinese local currency Renminbi235. Early in the year reports of a decline in the world economy began to ap-pear236. Still the CEO announced plans of expansion abroad with about 35-45 new offices237. This was similar to the past year when the bank opened 41 new offices238. The bank for example declared that its interest in Denmark had increased and it was prepared to make an acquisition. Expansion in Denmark was not struggling but it was not progressing as anticipated. The CEO specified that it was difficult to keep the staff as well as find new ones. A key to the solution could be to make an acquisition. Due to the difficulties of finding the right staff (mainly managers) the bank had only opened two new offices in Denmark during 2007.239 To increase profits in the region Handelsbanken decided to do more business with its current relations and
229 Fond & Bank Online (2007). SHB öppnar fyra kontor i Nederländerna. Fond & Bank Online, 12 December 230 Öhlin, H. (2008). Handelsbanken: Öppnar första kontoret i Lettland. Nyhetsbyrån SIX, 6 May 231 Sandkvist, L. (2008). Handelsbanken planerar kontor i Litauen. Fond & Bank Online, 10 June 232 Fond & Bank Online (2008). SHB Finans har startat leasingbolag Kina. Fond & Bank Online, 18 September 233 Hugin – Sverige (2008). Handelsbanken steps up expansion in China. Hugin – Sverige, 16 June 234 Ibid. 235 Nyhetsbyrån Direkt (2008). SHB: Fått tillstånd bedriva bankverksamhet i Kinesisk valuta. Nyhetsbyrån Direkt, 28 November 236 Aftenposten (2008). USA er i resesjon. Aftenposten, 6 February; E24 (2008). De goda banktiderna kan vara över. E24, 6 February; DI.se (2008). Amerikanskinflationssiffra fortsät-ter oroa ränteexperter. DI.se, 21 February 237 Öhlin, H. (2008). Handelsbanken: Mål öppna 35-45 nya kontor utanför Sverige 2008. Nyhetsbyrån Six, 27 February 238 Lundqvist, J. (2008). Handelsbanken: Storbritannien fortsatt prioriterad marknad – VD. Nyhetsbyrån Six, 27 February 239 Ibid.; Nyhetsbyrån Direkt (2008). SHB: Står fast vid intresse av välskött dansk bank – VD. Nyhetsbyrån Direkt, 22 July
69
open a few new offices.240 The plan to make an acquisition in Denmark mate-rialized late in 2008. The bank bid USD 155.2 million for Lokalbanken (lo-cated on Zealand, Denmark’s main island), a bid that was estimated to be well above the market’s evaluation of Lokalbanken.241 Boman commented on the acquisition as follows:
“We believe this is a bank that suits us perfectly, and this verifies our strategy for expansion by establishing office by office and complement this with small acquisitions. It is of course a great joy to strike this kind of deal when the moment is right, regardless of the economic situation. It proves a point of having long-sightedness and a strategy that works over time. […] we are pre-pared and open to [additional] acquisition of this kind. The size [of this deal] is excellent for us. […] It is a very good price for a good bank. We are paying a little above their equity. But what we are paying corresponds well to our investment costs’ when we grow organically.”242
According to CEO Boman this was a part of a long-term plan, and there could be supplementary acquirements in the future. Boman insisted that there were a lot of promising small banks in Denmark. But uncertainty in the Danish market made the bank cautious243. The deal was struck, and Lo-kalbanken added 14 new offices. The new offices were located in districts where Handelsbanken had not yet been established. With help from the in-creased dispersion of offices the bank advanced its expansion in Denmark244. The world economy was riding a roller coaster. Every week a new prognosis was made. The declining world economy did not thwart the bank’s ambi-tions in Great Britain but it followed the financial status in the world with increased attention. It also changed one of its banking activities in terms of focusing more on lending on the short-term markets rather than borrowing. Furthermore, entering new markets was a recurrent topic and this was to be accomplished by replicating the bank’s establishments in Great Britain.245 The markets in the Baltic region continued to decline and the Nordic markets were predicted to decline and to continue to do so. Swedish experts worried about the Baltic region and to some degree about Handelsbanken’s increased
240 Nyhetsbyrån Direkt (2008). SHB: Känner sig väl preparerad för förvärv i Danmark – VD. Nyhetsbyrån Direkt, 27 February 241 Nyhetsbyrån Direkt (2008). SHB: Köper Lokalbanken i Nordsjälland för 810 mln dkk (ny). Nyhetsbyrån Direkt, 5 September 242 Joons, A. (2008). SHB: Danskt förvärv kan följas av fler – VD. Nyhetsbyrån Direkt, 15 September 243 Fond & Bank (2008). Pär Boman: Därför köper SHB danska Lokalbanken. Fond & Bank, 24 September 244 Ibid. 245 Lundqvist, J. (2008). Handelsbanken: Storbritannien fortsatt prioriterad marknad – VD. Nyhetsbyrån Six, 27 February; Nyhetsbyrån Direkt (2008). SHB: Eventuellt ny marknad på längre sikt – ordförande. Nyhetsbyrån Direkt, 6 May; Braconier, F. (2008). ”Sverige blir inte sämst i klassen”. Andra länder får det värre enligt Handelsbanken. Svenska Dagbladet, 29 August
68
agers for the new offices229. Only a few months later the bank opened its first office in Latvia (Riga), as had been announced previous year230. Another new plan was to open an office in Lithuania (Vilnius)231. China’s economy was growing, so the bank increased its activities in China and began with leasing232. CEO Boman stated that “Our customers are step-ping up their expansion in China, so we are doing the same”233. The newly appointed manager, Michael Zell, said: “We were the first Nordic bank to become established in China, and we still have the largest presence among the Nordic banks. My goal is to increase our lead.”234. The bank as usual followed its customers and felt the presence of the competitors. As of De-cember of 2008 the bank was granted the opportunity to practice the Chinese local currency Renminbi235. Early in the year reports of a decline in the world economy began to ap-pear236. Still the CEO announced plans of expansion abroad with about 35-45 new offices237. This was similar to the past year when the bank opened 41 new offices238. The bank for example declared that its interest in Denmark had increased and it was prepared to make an acquisition. Expansion in Denmark was not struggling but it was not progressing as anticipated. The CEO specified that it was difficult to keep the staff as well as find new ones. A key to the solution could be to make an acquisition. Due to the difficulties of finding the right staff (mainly managers) the bank had only opened two new offices in Denmark during 2007.239 To increase profits in the region Handelsbanken decided to do more business with its current relations and
229 Fond & Bank Online (2007). SHB öppnar fyra kontor i Nederländerna. Fond & Bank Online, 12 December 230 Öhlin, H. (2008). Handelsbanken: Öppnar första kontoret i Lettland. Nyhetsbyrån SIX, 6 May 231 Sandkvist, L. (2008). Handelsbanken planerar kontor i Litauen. Fond & Bank Online, 10 June 232 Fond & Bank Online (2008). SHB Finans har startat leasingbolag Kina. Fond & Bank Online, 18 September 233 Hugin – Sverige (2008). Handelsbanken steps up expansion in China. Hugin – Sverige, 16 June 234 Ibid. 235 Nyhetsbyrån Direkt (2008). SHB: Fått tillstånd bedriva bankverksamhet i Kinesisk valuta. Nyhetsbyrån Direkt, 28 November 236 Aftenposten (2008). USA er i resesjon. Aftenposten, 6 February; E24 (2008). De goda banktiderna kan vara över. E24, 6 February; DI.se (2008). Amerikanskinflationssiffra fortsät-ter oroa ränteexperter. DI.se, 21 February 237 Öhlin, H. (2008). Handelsbanken: Mål öppna 35-45 nya kontor utanför Sverige 2008. Nyhetsbyrån Six, 27 February 238 Lundqvist, J. (2008). Handelsbanken: Storbritannien fortsatt prioriterad marknad – VD. Nyhetsbyrån Six, 27 February 239 Ibid.; Nyhetsbyrån Direkt (2008). SHB: Står fast vid intresse av välskött dansk bank – VD. Nyhetsbyrån Direkt, 22 July
69
open a few new offices.240 The plan to make an acquisition in Denmark mate-rialized late in 2008. The bank bid USD 155.2 million for Lokalbanken (lo-cated on Zealand, Denmark’s main island), a bid that was estimated to be well above the market’s evaluation of Lokalbanken.241 Boman commented on the acquisition as follows:
“We believe this is a bank that suits us perfectly, and this verifies our strategy for expansion by establishing office by office and complement this with small acquisitions. It is of course a great joy to strike this kind of deal when the moment is right, regardless of the economic situation. It proves a point of having long-sightedness and a strategy that works over time. […] we are pre-pared and open to [additional] acquisition of this kind. The size [of this deal] is excellent for us. […] It is a very good price for a good bank. We are paying a little above their equity. But what we are paying corresponds well to our investment costs’ when we grow organically.”242
According to CEO Boman this was a part of a long-term plan, and there could be supplementary acquirements in the future. Boman insisted that there were a lot of promising small banks in Denmark. But uncertainty in the Danish market made the bank cautious243. The deal was struck, and Lo-kalbanken added 14 new offices. The new offices were located in districts where Handelsbanken had not yet been established. With help from the in-creased dispersion of offices the bank advanced its expansion in Denmark244. The world economy was riding a roller coaster. Every week a new prognosis was made. The declining world economy did not thwart the bank’s ambi-tions in Great Britain but it followed the financial status in the world with increased attention. It also changed one of its banking activities in terms of focusing more on lending on the short-term markets rather than borrowing. Furthermore, entering new markets was a recurrent topic and this was to be accomplished by replicating the bank’s establishments in Great Britain.245 The markets in the Baltic region continued to decline and the Nordic markets were predicted to decline and to continue to do so. Swedish experts worried about the Baltic region and to some degree about Handelsbanken’s increased
240 Nyhetsbyrån Direkt (2008). SHB: Känner sig väl preparerad för förvärv i Danmark – VD. Nyhetsbyrån Direkt, 27 February 241 Nyhetsbyrån Direkt (2008). SHB: Köper Lokalbanken i Nordsjälland för 810 mln dkk (ny). Nyhetsbyrån Direkt, 5 September 242 Joons, A. (2008). SHB: Danskt förvärv kan följas av fler – VD. Nyhetsbyrån Direkt, 15 September 243 Fond & Bank (2008). Pär Boman: Därför köper SHB danska Lokalbanken. Fond & Bank, 24 September 244 Ibid. 245 Lundqvist, J. (2008). Handelsbanken: Storbritannien fortsatt prioriterad marknad – VD. Nyhetsbyrån Six, 27 February; Nyhetsbyrån Direkt (2008). SHB: Eventuellt ny marknad på längre sikt – ordförande. Nyhetsbyrån Direkt, 6 May; Braconier, F. (2008). ”Sverige blir inte sämst i klassen”. Andra länder får det värre enligt Handelsbanken. Svenska Dagbladet, 29 August
70
risks associated with Great Britain. A few analysts compared the crisis in the Baltic region to the crisis in Asia during the 1980s. Meanwhile the Baltic region was recognized as a growing market and its rapid growth inspired Swedish banks to consider it as cheap and profitable. Swedbank had about USD 25.7 billion lent out in the Baltic region, SEB USD 23.8 billion, Nordea USD 9 billion and Handelsbanken approximately USD 0.64 bil-lion.246 The obstacle the bank would be facing was related to market expansion combined with increasing losses. The price of expansion was increasing.247 Though among the worried experts there were also some optimistic ones who reflected that Handelsbanken was well poised for whatever the bank was about to face. The bank could cope with a possible financial crisis and at the same time be able to make acquisitions248. However, the financial prob-lems in the US did force the bank to reduce its exposure there249. Finally parts of the bank even left the US with losses incurred, about USD 165.9 million250. The financial turbulence in the world continued and escalated when the investment bank Lehman Brothers crashed251. Three months later Stefan Nilsson, manager in Handelsbanken’s department in the US, stated:
“It is not sunny yet, but the rain has stopped. […] It will at least take until next year before we can heal our wounds. […] [But] we have a strong name, which grants us good business opportunities, and for the past six months we have seen greatly increased demand from our customers. […] who mostly are Scandinavian. […] things could turn around fast […] if the system shows some confidence”252.
246 Bränfeldt, L-E. (2008). Finanskrisen: Devalveringshotet förmörkar Baltikum. Affärsvärl-den, 29 October 247 Hedelius, P. (2008). Bankernas tillväxt bromsar in. Dagens Nyheter, 3 March; Sveriges Radio (2008). Stora effekter av finanskrisen. Sveriges Radio, 17 March; Braconier, F. (2008). Skenande baltisk inflation. Svenska Dagbladet, 11 March; Nyhetsbyrån Direkt (2008). SHB: Baltisk hårdlandning kan bli värre – Häggström. Nyhetsbyrån Direkt, 28 August 248 Öhlin, H. (2008). Handelsbanken: Laddar för förvärv, köp – Affärsvärlden. Nyhetsbyrån Six, 19 March; Munkhammar, V. (2008). Svenska banker i drömsits efter kris. Dagens Indu-stri, 12 April; Bergström, P. (2008). Analys: Handelsbanken ett tryggt val. Börsveckan, 28 July; Ström Melvinger, K. (2008). Svenska grisen klarar krisen. Experterna eniga: de in-hemska bankerna står pall. Sydsvenskan, 28 September 249 Lind, J. (2008). Handelsbanken: Osäkerhet i USA delmotiv bakom avyttring – IR. Nyhets-byrån Six, 1 April; Nyhetsbyrån Direkt (2008). SHB: Avvecklar exponering mot amerikanska obligationer (ny). Nyhetsbyrån Direkt, 31 March 250 Almgren, J. (2008). Såren djupa i Handelsbanken. Svenska Dagbladet, 24 April 251 DI.se (2008). Sverige hotas stagflation. DI.se, 11 June; The Local (2008). Higher inflation worries analysts. The Local, 10 June; TT (2008). Räkna med skakig börs. TT, 10 June; DI.se (2008). SHB räknar med stagflation. DI.se, 12 June; Nyhetsbyrån Direkt (2008). Bank: Svenska storbanker går igenom Lehman-exponeringar – IR. Nyhetsbyrån Direkt, 15 Septem-ber; Johansson, I. (2008). Analytikerna: ”svenska banker inte i farozonen”. Göteborgs Posten, 16 September 252 Granström, K. (2008). New York avundas Handelsbanken. Dagens Industri, 15 October
71
The reduced exposure led Handelsbanken to put its interests in the US on hold until the market turned around and Handelsbanken could return. Han-delsbanken felt reassured, as the bank was able to cope whatever the future would bring. Since the bank’s liquid assets of approximately USD 33.7 mil-lion could be freed up within 48 hours253. Most of the new offices that had been announced in early 2008 were planned to open in the UK, with a focus on expanding in Scotland. An ambition to open a new office each week was revealed, a couple of days less than the previous year254. The specific districts were not planned and depended on where the bank was able to find the right staff255. Only one thing remained certain, namely, focusing more attention on Manchester whose regional office was responsible for the Scottish region256. Unexpectedly chairman of the board and former CEO Grönstedt stepped down and left Handelsbanken. Traditionally CEOs and chairmen kept their positions for a long time, and CEOs usually replaced the chairmen. There were differences of opinion between Grönstedt and the rests of the board, including Boman. The issue that in the long-term caused this break down was about how to run the bank and its strategies257. Vice chairman of the board Hans Larsson replaced Grönstedt, thus strengthening Boman’s posi-tion as CEO who was more traditional than his predecessor258. Boman had some disagreements with Grönstedt and was in favor of expanding abroad but less enthusiastic about the investment-banking and insurance businesses that had enticed Grönstedt259. Some experts speculated that there could have been differences in opinion about how to expand the bank abroad that led to Grönstedt’s withdrawal260. There were also those who believed that it was a power struggle where the principal owner of Handelsbanken wanted more influence, which Grönstedt opposed261. To quell any unease about the future, the bank announced that the earlier set plan to open 35-45 new offices in foreign countries was still proceeding262. Boman added, “Organic growth was undoubtedly an alternative to purchas-
253 TT & Ydrenäs, R. (2008). Handelsbanken vinnare på finanskrisen. Privataaffärer.se, 22 October 254 Nyhetsbyrån Direkt (2008). SHB: Kontorsöpp UK, inkl Skottland och Norden i fokus 08 – VD. Nyhetsbyrån Direkt, 27 February 255 Ibid. 256 Ibid. 257 E24 (2008). Han hoppar av från SHB. E24, 3 April 258 Forsman, F. (2008).”Boman stärks i VD-rollen”. E24, 3 April 259 Ibid.; Billing, A. & Forsberg, B. (2008). Den okända konflikten bakom Lars O Grönstedts fall. Affarsvarlden.se, 6 May 260 Lind, J. (2008). Handelsbanken: Tillväxtsyn möjlig skiljelinje – analytiker. Nyhetsbyrån Six, 3 April 261 Billing, A. & Forsberg, B. (2008). Den okända konflikten bakom Lars O Grönstedts fall. Affarsvarlden.se, 6 May 262 Öhlin, H. (2008). Handelsbanken: Uppr mål 35-45 nya kontor utanför Sverige 2008. Ny-hetsbyrån SIX, 22 April
70
risks associated with Great Britain. A few analysts compared the crisis in the Baltic region to the crisis in Asia during the 1980s. Meanwhile the Baltic region was recognized as a growing market and its rapid growth inspired Swedish banks to consider it as cheap and profitable. Swedbank had about USD 25.7 billion lent out in the Baltic region, SEB USD 23.8 billion, Nordea USD 9 billion and Handelsbanken approximately USD 0.64 bil-lion.246 The obstacle the bank would be facing was related to market expansion combined with increasing losses. The price of expansion was increasing.247 Though among the worried experts there were also some optimistic ones who reflected that Handelsbanken was well poised for whatever the bank was about to face. The bank could cope with a possible financial crisis and at the same time be able to make acquisitions248. However, the financial prob-lems in the US did force the bank to reduce its exposure there249. Finally parts of the bank even left the US with losses incurred, about USD 165.9 million250. The financial turbulence in the world continued and escalated when the investment bank Lehman Brothers crashed251. Three months later Stefan Nilsson, manager in Handelsbanken’s department in the US, stated:
“It is not sunny yet, but the rain has stopped. […] It will at least take until next year before we can heal our wounds. […] [But] we have a strong name, which grants us good business opportunities, and for the past six months we have seen greatly increased demand from our customers. […] who mostly are Scandinavian. […] things could turn around fast […] if the system shows some confidence”252.
246 Bränfeldt, L-E. (2008). Finanskrisen: Devalveringshotet förmörkar Baltikum. Affärsvärl-den, 29 October 247 Hedelius, P. (2008). Bankernas tillväxt bromsar in. Dagens Nyheter, 3 March; Sveriges Radio (2008). Stora effekter av finanskrisen. Sveriges Radio, 17 March; Braconier, F. (2008). Skenande baltisk inflation. Svenska Dagbladet, 11 March; Nyhetsbyrån Direkt (2008). SHB: Baltisk hårdlandning kan bli värre – Häggström. Nyhetsbyrån Direkt, 28 August 248 Öhlin, H. (2008). Handelsbanken: Laddar för förvärv, köp – Affärsvärlden. Nyhetsbyrån Six, 19 March; Munkhammar, V. (2008). Svenska banker i drömsits efter kris. Dagens Indu-stri, 12 April; Bergström, P. (2008). Analys: Handelsbanken ett tryggt val. Börsveckan, 28 July; Ström Melvinger, K. (2008). Svenska grisen klarar krisen. Experterna eniga: de in-hemska bankerna står pall. Sydsvenskan, 28 September 249 Lind, J. (2008). Handelsbanken: Osäkerhet i USA delmotiv bakom avyttring – IR. Nyhets-byrån Six, 1 April; Nyhetsbyrån Direkt (2008). SHB: Avvecklar exponering mot amerikanska obligationer (ny). Nyhetsbyrån Direkt, 31 March 250 Almgren, J. (2008). Såren djupa i Handelsbanken. Svenska Dagbladet, 24 April 251 DI.se (2008). Sverige hotas stagflation. DI.se, 11 June; The Local (2008). Higher inflation worries analysts. The Local, 10 June; TT (2008). Räkna med skakig börs. TT, 10 June; DI.se (2008). SHB räknar med stagflation. DI.se, 12 June; Nyhetsbyrån Direkt (2008). Bank: Svenska storbanker går igenom Lehman-exponeringar – IR. Nyhetsbyrån Direkt, 15 Septem-ber; Johansson, I. (2008). Analytikerna: ”svenska banker inte i farozonen”. Göteborgs Posten, 16 September 252 Granström, K. (2008). New York avundas Handelsbanken. Dagens Industri, 15 October
71
The reduced exposure led Handelsbanken to put its interests in the US on hold until the market turned around and Handelsbanken could return. Han-delsbanken felt reassured, as the bank was able to cope whatever the future would bring. Since the bank’s liquid assets of approximately USD 33.7 mil-lion could be freed up within 48 hours253. Most of the new offices that had been announced in early 2008 were planned to open in the UK, with a focus on expanding in Scotland. An ambition to open a new office each week was revealed, a couple of days less than the previous year254. The specific districts were not planned and depended on where the bank was able to find the right staff255. Only one thing remained certain, namely, focusing more attention on Manchester whose regional office was responsible for the Scottish region256. Unexpectedly chairman of the board and former CEO Grönstedt stepped down and left Handelsbanken. Traditionally CEOs and chairmen kept their positions for a long time, and CEOs usually replaced the chairmen. There were differences of opinion between Grönstedt and the rests of the board, including Boman. The issue that in the long-term caused this break down was about how to run the bank and its strategies257. Vice chairman of the board Hans Larsson replaced Grönstedt, thus strengthening Boman’s posi-tion as CEO who was more traditional than his predecessor258. Boman had some disagreements with Grönstedt and was in favor of expanding abroad but less enthusiastic about the investment-banking and insurance businesses that had enticed Grönstedt259. Some experts speculated that there could have been differences in opinion about how to expand the bank abroad that led to Grönstedt’s withdrawal260. There were also those who believed that it was a power struggle where the principal owner of Handelsbanken wanted more influence, which Grönstedt opposed261. To quell any unease about the future, the bank announced that the earlier set plan to open 35-45 new offices in foreign countries was still proceeding262. Boman added, “Organic growth was undoubtedly an alternative to purchas-
253 TT & Ydrenäs, R. (2008). Handelsbanken vinnare på finanskrisen. Privataaffärer.se, 22 October 254 Nyhetsbyrån Direkt (2008). SHB: Kontorsöpp UK, inkl Skottland och Norden i fokus 08 – VD. Nyhetsbyrån Direkt, 27 February 255 Ibid. 256 Ibid. 257 E24 (2008). Han hoppar av från SHB. E24, 3 April 258 Forsman, F. (2008).”Boman stärks i VD-rollen”. E24, 3 April 259 Ibid.; Billing, A. & Forsberg, B. (2008). Den okända konflikten bakom Lars O Grönstedts fall. Affarsvarlden.se, 6 May 260 Lind, J. (2008). Handelsbanken: Tillväxtsyn möjlig skiljelinje – analytiker. Nyhetsbyrån Six, 3 April 261 Billing, A. & Forsberg, B. (2008). Den okända konflikten bakom Lars O Grönstedts fall. Affarsvarlden.se, 6 May 262 Öhlin, H. (2008). Handelsbanken: Uppr mål 35-45 nya kontor utanför Sverige 2008. Ny-hetsbyrån SIX, 22 April
72
ing growth in the future for Handelsbanken”263. Due to the turbulence on the financial market the prices on banks dropped264. Because of this the bank saw beneficial opportunities in making smaller local acquisitions to strengthen local markets abroad265. Two new offices opened in Scotland while the fi-nancial crisis roamed, and regional manager Uggla explained: “Great Britain is a large potential growth market, and we are building to stay for a hundred years more”266. Whether the market was solid or not, the bank had no inten-tions of leaving Great Britain. Because of the troubled financial situation in the world, however, the bank acted more careful on a daily basis, turning down more customers and reduced its expansion pace267. The financial insta-bility in the world was forecast by Handelsbanken to continue for a long time ahead268. Jens Wiklund, the head of the department in Moscow, dis-cussed with Swedish radio about the future in Russia and that troubled Rus-sian banks had created new opportunities where Handelsbanken’s reputation as a stable bank helped it to seize those opportunities269. The year 2009 began with bleak headlines, and Handelsbanken estimated that Sweden faced troubled times. Great Britain also struggled, and CEO Boman commented the decline: “At some point we will hit rock bottom in Great Britain”270. Regional manager in Great Britain Uggla declared more optimistically:
“Great Britain is a large potential growth market for us and we are building to be here for the next 100 years. […] Deposits have been very dramatic with large circulations. But overall we have become winners. […] the British have a very good image of Sweden, which has been positive for us. […] The mar-ket for syndicated corporate loans is stone dead and there has been a sharp decline in mortgage loans. But if we earlier got one percent of the proposals on this huge market we now get two or three percent. Although we turn down more people than before, last year we experienced extreme growth and al-most doubled the number of offices. Our work continues, but we are noting that the risk levels have increased. […] It has become easier and cheaper to recruit and cheaper to rent new premises.”271
263 Lind, J. (2008). Handelsbanken: Organisk tillväxt tveklöst ett alternativ – VD. Nyhetsby-rån SIX, 22 April 264 Nyhetsbyrån Direkt (2008). SHB: Inga strategiförändringar pga kreditoro – VD. Nyhetsby-rån Direkt, 22 April 265 Ibid. 266 Sönne, A. (2008). SHB tar för sig i London. Dagens Industri, 17 November 267 Ibid. 268 Finska Notisbyrån (2008). Handelsbanken spår lång recession. Finska Notisbyrån, 17 December 269 Wadström, F. (2008). Ryssland lockar banker trots finanskris. Sveriges Radio, 22 October 270 Lind, J. (2009). Handelsbanken: Storbrittanien har kommit längre nedgång – VD. Nyhets-byrån SIX, 28 April 271 Sönne, A. (2008). SHB tar för sig i London. Dagens Industri, 17 November
73
But despite financial instability in the world and in Great Britain, leaving Great Britain was out of the question. Evaluation of the progress in the re-gion would not be carried out until a decade later according to the CEO.272 Expanding in the region would be done carefully during the difficult times, however, and with respect to the new situation the bank was facing273. The regional manager in Great Britain, Bouvin, filled in: “Most important for us is to grow properly and not too fast. Doing it the right way decides the pace of the growth”274. Simultaneously the financial crisis in Great Britain was regarded as an opportunity for Handelsbanken to increase its customers in Great Britain275. André Wallenberg, an expert on banking, still raised a warn-ing and advised the bank to withdraw from Great Britain and Germany be-cause he considered the investments too great and profits too low276. Others continued to worry about Swedish banks’ investments in the Baltic region277. By mid 2009 six new offices had opened in Great Britain, two of which were located in Scotland (Glasgow and Edinburgh)278. Glasgow and Edinburgh made up 75 percent of the Scottish economy, which was why the bank was drawn to these cities279. As regional manager for Great Britain, Anders Bouvin, indicated earlier the opening of new offices would perhaps lessen. Nevertheless Bouvin also referred in the same interview to the past years’ pace of growth in Great Britain and said that there still were plenty of newly opened offices with great potential to advance on their own280. The bank was to continue opening offices in the UK in the long-term. Moreover, Bouvin noted that new offices usually achieved break-even after about two years, regardless of the ongoing market instabilities and continued to say that in comparison to how many offices the bank has in Sweden in terms of popula-tion, the bank would have to have 3,000 offices in the UK281.
272 Lind, J. (2009). Handelsbanken: Är mycket långsiktiga i Storbritannien – VD. Nyhetsbyrån SIX, 10 February; Joons, A. (2009). SHB: Ser enorm tillväxtpotential unga kontor UK – Vice VD. Nyhetsbyrån Direkt, 5 June; Joons, A. (2009). Ser fortsatt störst möjligheter växa orga-niskt i UK – VD. Nyhetsbyrån Direkt, 21 July 273 Lind, J. (2009). Handelsbanken: Är mycket långsiktiga i Storbritannien – VD. Nyhetsbyrån SIX, 10 February 274 Joons, A. (2009). SHB: Ser enorm tillväxtpotential unga kontor UK – Vice VD. Nyhetsby-rån Direkt, 5 June 275 Lucas, D. (2009). Storbritanniens finanskris Handelsbankens chans. Dagens Nyheter, 17 August 276 Wallén, M. (2009). ”Handelsbanken och SEB borde lämna England och Tyskland”. DI.se, 28 September; Wallén, M. (2009). Expert vill att banker skippar dyra länder. Dagens Industri, 29 September 277 Fredriksson, T. (2009). Oro i Lettland pressar svenska banker. Sveriges Radio, 5 October 278 Joons, A. (2009). SHB: Ser enorm tillväxtpotential unga kontor UK – Vice VD. Nyhetsby-rån Direkt, 5 June 279 Ibid. 280 Ibid. 281 Ibid.
72
ing growth in the future for Handelsbanken”263. Due to the turbulence on the financial market the prices on banks dropped264. Because of this the bank saw beneficial opportunities in making smaller local acquisitions to strengthen local markets abroad265. Two new offices opened in Scotland while the fi-nancial crisis roamed, and regional manager Uggla explained: “Great Britain is a large potential growth market, and we are building to stay for a hundred years more”266. Whether the market was solid or not, the bank had no inten-tions of leaving Great Britain. Because of the troubled financial situation in the world, however, the bank acted more careful on a daily basis, turning down more customers and reduced its expansion pace267. The financial insta-bility in the world was forecast by Handelsbanken to continue for a long time ahead268. Jens Wiklund, the head of the department in Moscow, dis-cussed with Swedish radio about the future in Russia and that troubled Rus-sian banks had created new opportunities where Handelsbanken’s reputation as a stable bank helped it to seize those opportunities269. The year 2009 began with bleak headlines, and Handelsbanken estimated that Sweden faced troubled times. Great Britain also struggled, and CEO Boman commented the decline: “At some point we will hit rock bottom in Great Britain”270. Regional manager in Great Britain Uggla declared more optimistically:
“Great Britain is a large potential growth market for us and we are building to be here for the next 100 years. […] Deposits have been very dramatic with large circulations. But overall we have become winners. […] the British have a very good image of Sweden, which has been positive for us. […] The mar-ket for syndicated corporate loans is stone dead and there has been a sharp decline in mortgage loans. But if we earlier got one percent of the proposals on this huge market we now get two or three percent. Although we turn down more people than before, last year we experienced extreme growth and al-most doubled the number of offices. Our work continues, but we are noting that the risk levels have increased. […] It has become easier and cheaper to recruit and cheaper to rent new premises.”271
263 Lind, J. (2008). Handelsbanken: Organisk tillväxt tveklöst ett alternativ – VD. Nyhetsby-rån SIX, 22 April 264 Nyhetsbyrån Direkt (2008). SHB: Inga strategiförändringar pga kreditoro – VD. Nyhetsby-rån Direkt, 22 April 265 Ibid. 266 Sönne, A. (2008). SHB tar för sig i London. Dagens Industri, 17 November 267 Ibid. 268 Finska Notisbyrån (2008). Handelsbanken spår lång recession. Finska Notisbyrån, 17 December 269 Wadström, F. (2008). Ryssland lockar banker trots finanskris. Sveriges Radio, 22 October 270 Lind, J. (2009). Handelsbanken: Storbrittanien har kommit längre nedgång – VD. Nyhets-byrån SIX, 28 April 271 Sönne, A. (2008). SHB tar för sig i London. Dagens Industri, 17 November
73
But despite financial instability in the world and in Great Britain, leaving Great Britain was out of the question. Evaluation of the progress in the re-gion would not be carried out until a decade later according to the CEO.272 Expanding in the region would be done carefully during the difficult times, however, and with respect to the new situation the bank was facing273. The regional manager in Great Britain, Bouvin, filled in: “Most important for us is to grow properly and not too fast. Doing it the right way decides the pace of the growth”274. Simultaneously the financial crisis in Great Britain was regarded as an opportunity for Handelsbanken to increase its customers in Great Britain275. André Wallenberg, an expert on banking, still raised a warn-ing and advised the bank to withdraw from Great Britain and Germany be-cause he considered the investments too great and profits too low276. Others continued to worry about Swedish banks’ investments in the Baltic region277. By mid 2009 six new offices had opened in Great Britain, two of which were located in Scotland (Glasgow and Edinburgh)278. Glasgow and Edinburgh made up 75 percent of the Scottish economy, which was why the bank was drawn to these cities279. As regional manager for Great Britain, Anders Bouvin, indicated earlier the opening of new offices would perhaps lessen. Nevertheless Bouvin also referred in the same interview to the past years’ pace of growth in Great Britain and said that there still were plenty of newly opened offices with great potential to advance on their own280. The bank was to continue opening offices in the UK in the long-term. Moreover, Bouvin noted that new offices usually achieved break-even after about two years, regardless of the ongoing market instabilities and continued to say that in comparison to how many offices the bank has in Sweden in terms of popula-tion, the bank would have to have 3,000 offices in the UK281.
272 Lind, J. (2009). Handelsbanken: Är mycket långsiktiga i Storbritannien – VD. Nyhetsbyrån SIX, 10 February; Joons, A. (2009). SHB: Ser enorm tillväxtpotential unga kontor UK – Vice VD. Nyhetsbyrån Direkt, 5 June; Joons, A. (2009). Ser fortsatt störst möjligheter växa orga-niskt i UK – VD. Nyhetsbyrån Direkt, 21 July 273 Lind, J. (2009). Handelsbanken: Är mycket långsiktiga i Storbritannien – VD. Nyhetsbyrån SIX, 10 February 274 Joons, A. (2009). SHB: Ser enorm tillväxtpotential unga kontor UK – Vice VD. Nyhetsby-rån Direkt, 5 June 275 Lucas, D. (2009). Storbritanniens finanskris Handelsbankens chans. Dagens Nyheter, 17 August 276 Wallén, M. (2009). ”Handelsbanken och SEB borde lämna England och Tyskland”. DI.se, 28 September; Wallén, M. (2009). Expert vill att banker skippar dyra länder. Dagens Industri, 29 September 277 Fredriksson, T. (2009). Oro i Lettland pressar svenska banker. Sveriges Radio, 5 October 278 Joons, A. (2009). SHB: Ser enorm tillväxtpotential unga kontor UK – Vice VD. Nyhetsby-rån Direkt, 5 June 279 Ibid. 280 Ibid. 281 Ibid.
74
“We have the same view as earlier. It can vary in time, it may be 20 months or two years, but it does not change our long-term approach that it is possible to build a profitable business with low risk.”282 […] “This calculation shows the opportunities we have in the UK, but at the same time it is important to grow properly. More regional banks will certainly not be excluded, but we do not address long-term detailed plans that way.”283
The board was also certain that opening more offices in the Nordic region was not necessary. The establishments made in the Nordic region were now large enough to grow on their own.284 During previous troubled times in the world, a pattern had appeared where customers sought out Handelsbanken due to the bank’s stability, a pattern CEO Boman anticipated would be re-peating again285. The regional manager in Great Britain, Uggla, later validat-ed Boman’s predictions: “We have taken customers we under normal cir-cumstances would not”286. Great Britain was, as mentioned, hit hard by the ongoing financial crisis, and Uggla noted that Handelsbanken experienced beneficial effects from this. Not only did the bank get new customers, Uggla also commented that: “[Great Britain] has become a cheap country [to man-age investments in]”, and, although he admitted that this could change later on, he disclosed, “but in the meantime one man’s loss is another man’s gain”.287 Most of the losses suffered were inherited from bankrupted busi-nesses such as Plastal with USD 233.3 million in debts to the bank288. How-ever, according to Handelsbanken there was no particular pattern in where the losses were incurred289. Though the losses were higher so were the profits and the bank was able to continue being profitable. In 2009 the bank, as shown in Table 4, slightly slowed down its internation-alization pace. However, in 2010 the bank was back on track and deployed more than twenty new offices in Great Britain as well as opening a regional office and a HQ. In a press release the CEO Boman was quoted as saying:
282 Ibid. 283 Ibid. 284 Joons, A. (2009). SHB: Ser fortsatt störst möjligheter växa organiskt I UK – VD. Nyhets-byrån Direkt, 21 July 285 Cervenka, A. (2009). Handelsbanken är på offensiven. Svenska Dagbladet, 22 July 286 Lucas, D. (2009). Storbritanniens finanskris Handelsbankens chans. Dagens Nyheter, 17 August; Dagens PS (2009). Inget trolleri att SHB gör succé i Storbriannien. Dagens PS, 17 August 287 Ibid. 288 Joons, A. (2009). SHB: Gått igenom Plastal-engagemang var 90:e dag – VD. Nyhetsbyrån Direkt, 28 April; Affärsvärlden 24 (2009). SHB: Lånat ut 2 mdr kr till Plastal som går i kon-kurs – DI (ny). Affärsvärlden 24, 5 March 289 Nyhetsbyrån Direkt (2009). SHB: Inget mönster i fåtal större förlust-engagemang – VD. Nyhetsbyrån Direkt, 28 April
75
“We also think that there will be good growth in the future. Our decentralized model – where almost all important business decisions are taken close to the costumer at our branches – requires direct, effective, and rapid contact with the central support functions. In order to retain and reinforce this working method we will be opening another regional bank and simultaneously setting up a separate head office for Great Britain. […] The alternative – where only the head office in Stockholm would grow to meet the expanded needs in Great Britain is considered to have less impact, cost more and actually go against our idea of being a bank where all business decisions are taken as close as possible to the customer.”290
Acting close to the market and expanding organically region by region was obviously of great importance. More so regional manager Bouvin explained his assured belief in Handelsbanken’s way of growing, and why opening local offices on the bank’s own initiative in Great Britain was of interest:
“Of course it costs to grow organically in the short term. On the other hand, we know almost with the precision and regularity of a Swiss clock that it will not be that long until we get a positive cash flow. I think we have a very good growth model. Definitely better than the alternative – to go away to countries one may not understand as well as Great Britain and acquire banks”291
As indicated Handelsbanken’s decision to grow in Great Britain continued during year 2010, when a new regional office was unwrapped. The current two regional banks covered the northern and southern parts of Great Britain. With a third one, the middle region was covered too. Work started on estab-lishing a HQ in London to support the three regional offices, and Anders Bouvin was selected to manage it.292 The expansion would continue organi-cally, and Boman stated, as seen below, that there was no interest in making any major acquisitions in other regions.
“Our strategy is to grow organically. We are not open to large acquisitions. It is not important to be big. The focus is on having the most satisfied custom-ers. […] There are no budgets or timetables for growth. But the potential in Great Britain is huge. I cannot see any limitations to our growth.”293
According to CEO Boman the future shone brightly and expansion would run its own pace. In comparison to the three regional offices established in Great Britain, Sweden had six regional offices, Denmark, Finland and Nor-
290 Handelsbanken. Press release (2010). Handelsbanken expands in Great Britain. 18 Febru-ary 291 Joons, A. (2009). SHB: Ser enorm tillväxtpotential unga kontor UK – Vice VD. Nyhetsby-rån Direkt, 5 June 292 Kiepels, C. (2010). Handelsbanken tar för sig i London. Dagens Industri, 5 March; An-dersson, P. (2010). Handelsbanken: Forts växa i UK, öppnar tredje regionbank. Nyhetsbyrån SIX, 18 February 293 Joons, A. (2010). SHB: Ser enorm potential för organisk tillväxt UK, enl VD – FT. Ny-hetsbyrån Direkt, 18 February
74
“We have the same view as earlier. It can vary in time, it may be 20 months or two years, but it does not change our long-term approach that it is possible to build a profitable business with low risk.”282 […] “This calculation shows the opportunities we have in the UK, but at the same time it is important to grow properly. More regional banks will certainly not be excluded, but we do not address long-term detailed plans that way.”283
The board was also certain that opening more offices in the Nordic region was not necessary. The establishments made in the Nordic region were now large enough to grow on their own.284 During previous troubled times in the world, a pattern had appeared where customers sought out Handelsbanken due to the bank’s stability, a pattern CEO Boman anticipated would be re-peating again285. The regional manager in Great Britain, Uggla, later validat-ed Boman’s predictions: “We have taken customers we under normal cir-cumstances would not”286. Great Britain was, as mentioned, hit hard by the ongoing financial crisis, and Uggla noted that Handelsbanken experienced beneficial effects from this. Not only did the bank get new customers, Uggla also commented that: “[Great Britain] has become a cheap country [to man-age investments in]”, and, although he admitted that this could change later on, he disclosed, “but in the meantime one man’s loss is another man’s gain”.287 Most of the losses suffered were inherited from bankrupted busi-nesses such as Plastal with USD 233.3 million in debts to the bank288. How-ever, according to Handelsbanken there was no particular pattern in where the losses were incurred289. Though the losses were higher so were the profits and the bank was able to continue being profitable. In 2009 the bank, as shown in Table 4, slightly slowed down its internation-alization pace. However, in 2010 the bank was back on track and deployed more than twenty new offices in Great Britain as well as opening a regional office and a HQ. In a press release the CEO Boman was quoted as saying:
282 Ibid. 283 Ibid. 284 Joons, A. (2009). SHB: Ser fortsatt störst möjligheter växa organiskt I UK – VD. Nyhets-byrån Direkt, 21 July 285 Cervenka, A. (2009). Handelsbanken är på offensiven. Svenska Dagbladet, 22 July 286 Lucas, D. (2009). Storbritanniens finanskris Handelsbankens chans. Dagens Nyheter, 17 August; Dagens PS (2009). Inget trolleri att SHB gör succé i Storbriannien. Dagens PS, 17 August 287 Ibid. 288 Joons, A. (2009). SHB: Gått igenom Plastal-engagemang var 90:e dag – VD. Nyhetsbyrån Direkt, 28 April; Affärsvärlden 24 (2009). SHB: Lånat ut 2 mdr kr till Plastal som går i kon-kurs – DI (ny). Affärsvärlden 24, 5 March 289 Nyhetsbyrån Direkt (2009). SHB: Inget mönster i fåtal större förlust-engagemang – VD. Nyhetsbyrån Direkt, 28 April
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“We also think that there will be good growth in the future. Our decentralized model – where almost all important business decisions are taken close to the costumer at our branches – requires direct, effective, and rapid contact with the central support functions. In order to retain and reinforce this working method we will be opening another regional bank and simultaneously setting up a separate head office for Great Britain. […] The alternative – where only the head office in Stockholm would grow to meet the expanded needs in Great Britain is considered to have less impact, cost more and actually go against our idea of being a bank where all business decisions are taken as close as possible to the customer.”290
Acting close to the market and expanding organically region by region was obviously of great importance. More so regional manager Bouvin explained his assured belief in Handelsbanken’s way of growing, and why opening local offices on the bank’s own initiative in Great Britain was of interest:
“Of course it costs to grow organically in the short term. On the other hand, we know almost with the precision and regularity of a Swiss clock that it will not be that long until we get a positive cash flow. I think we have a very good growth model. Definitely better than the alternative – to go away to countries one may not understand as well as Great Britain and acquire banks”291
As indicated Handelsbanken’s decision to grow in Great Britain continued during year 2010, when a new regional office was unwrapped. The current two regional banks covered the northern and southern parts of Great Britain. With a third one, the middle region was covered too. Work started on estab-lishing a HQ in London to support the three regional offices, and Anders Bouvin was selected to manage it.292 The expansion would continue organi-cally, and Boman stated, as seen below, that there was no interest in making any major acquisitions in other regions.
“Our strategy is to grow organically. We are not open to large acquisitions. It is not important to be big. The focus is on having the most satisfied custom-ers. […] There are no budgets or timetables for growth. But the potential in Great Britain is huge. I cannot see any limitations to our growth.”293
According to CEO Boman the future shone brightly and expansion would run its own pace. In comparison to the three regional offices established in Great Britain, Sweden had six regional offices, Denmark, Finland and Nor-
290 Handelsbanken. Press release (2010). Handelsbanken expands in Great Britain. 18 Febru-ary 291 Joons, A. (2009). SHB: Ser enorm tillväxtpotential unga kontor UK – Vice VD. Nyhetsby-rån Direkt, 5 June 292 Kiepels, C. (2010). Handelsbanken tar för sig i London. Dagens Industri, 5 March; An-dersson, P. (2010). Handelsbanken: Forts växa i UK, öppnar tredje regionbank. Nyhetsbyrån SIX, 18 February 293 Joons, A. (2010). SHB: Ser enorm potential för organisk tillväxt UK, enl VD – FT. Ny-hetsbyrån Direkt, 18 February
76
way one each. For establishing an office, Bouvin affirmed in an interview, “If someone can convince us to come and open an office, we will do it”294. Moreover, as of the early 21st century the aim in the annual reports of Han-delsbanken was to establish 60 offices in Great Britain. By 2010 the new goal was to strive for 150-200 offices295. According to Boman this was in order to increase competitiveness in the region, and he goes on to say:
“There is no timetable for this but it is rational to presume that our opportuni-ties will increase. […] There is a value in start to build nationwide. The kind of high-quality customer we are seeking, medium-sized family businesses, should not have longer to travel to a Handelsbanken-office than to a competi-tive office… this is where geography plays a part. […] We grow organically. Office by office, district by district, customer by customer. But we do not want to exclude the possibility of making a minor acquisition within the framework of our established offices. It could be the way in occasional in-stances. However we do not have any wish list of such banks in Great Brit-ain, so it is not part of our prediction.”296
Henceforth the goal was to become more locally embedded in the foreign markets. To make it happen, a minor acquisition could help. But as usual establishing offices of its own was still the main objective. The head of es-tablishment in Great Britain, Bouvin, also discussed the subject:
“The organization in Great Britain is working well today. But we have reached a point where we feel that the bank would be more effective and work more naturally as ours in a decentralized organization, where our three regional offices can be supported by only one HQ in London.”297
Thus Bouvin aimed to make the establishment in Great Britain more similar to how the organization was run in Sweden. This, according to Bouvin, was important in order to gain customers’ trust. Bouvin believed the decentral-ized organization played a great role in this matter298. CEO Boman was later on asked about the financial worries in the world and commented, “every 15 years or so a financial crisis arises because the bank-ing and financial sector is trying to grow faster than the remaining econo-mies”299. For the loop of growth and crisis Boman ensured that the bank had no plans to withdraw offices that are facing problems. Instead he was a bit 294 Lundegårdh, P. (2010). SHB: Expanderar i Storbritannien. Dagens Industri, 1 November 295 Walsgård, J. C. (2010). SHB: Siktar på 150 kontor i Storbritannien enl VD – DI. Nyhets-byrån Direkt, 22 November 296 Joons, A. (2010). SHB: 150-200 kontor optimalt UK för konkurrera fullt ut – VD (ny). Nyhetsbyrån Direkt, 18 February 297 Schmidt, H. (2010). SHB:s nya chef i London om den nya etableringen av huvudkontor. Fond & Bank Online, 19 February 298 Ibid. 299 Zachrison, O. (2010). Handelsbanken vill bredda kontorsnätet. E24, 29 April
77
critical of how some organizations were run in the banking and financial sector, which had led to the financial struggles of recent years. Before the year ended Boman raised concerns that the worst of the financial crisis might be yet to come and preparations were being made300. Finally, the bank continued its operations in the Netherlands by opening two new offices. Preparations to open more offices in the Netherlands were also made301. Boman found similarities between the expansion in Great Britain and the possibilities in Netherlands. These possibilities looked “exciting” according to Boman. The manager of expansion in the Netherlands, Mikael Sörensen, wanted to replicate the expansion implemented in Great Britain in the Netherlands, as usual: “finding a good manager with local knowledge. The question is how many suitable people we can find”.302 In China Han-delsbanken opened one new office with the intention of following Handels-banken’s current customers303.
4.5 A brief summary This summary is illustrated below in Figure 8, which is a timeline of im-portant events in Handelsbanken’s internationalization. The following text will provide a more comprehensive summary regarding the case of Handels-banken. The fundamental aspect driving the entry and expansion was organic growth. This strategy became adapted and gained strength after the bank’s 1960s-1970s crisis concerning its foreign investments. Gradual growth in foreign markets became one crucial policy all along in the periods discussed above. Another key aspect has been the decentralization of the organization-al structure. This was to get closer to the local customers and adapt the units towards meeting their needs in each country. Decentralization was to assist and manage the bank’s growth. Since the 1970s the bank has operated with three different management lev-els (executive management, regional managers and branch managers). But in the last few years a new management level became established. Although the road from the branch manager to executive management grew longer, it was
300 Dagens PS (2010). Bankchefen varnar: ”Det värsta är inte bakom oss”. Dagens PS, 23 November 301 Svensson, K. (2010). SHB är störst på utlåning till företag. Dagens Industri, 23 October 302 Lind, J. (2010). Handelsbanken: Goda förutsättningar för Hollandsexpansion – VD. Ny-hetsbyrån SIX, 20 July; Schmidt, H. (2010). Handelsbanken redo för nästa steg i Nederländer-na. Fond & Bank Online, 17 August; Andersson, P. (2010). Handelsbanken: Vill växa org i Holland, har snart 9 kontor. Nyhetsbyrån SIX, 26 November 303 Svensson, K. (2010). SHB är störst på utlåning till företag. Dagens Industri, 23 October
76
way one each. For establishing an office, Bouvin affirmed in an interview, “If someone can convince us to come and open an office, we will do it”294. Moreover, as of the early 21st century the aim in the annual reports of Han-delsbanken was to establish 60 offices in Great Britain. By 2010 the new goal was to strive for 150-200 offices295. According to Boman this was in order to increase competitiveness in the region, and he goes on to say:
“There is no timetable for this but it is rational to presume that our opportuni-ties will increase. […] There is a value in start to build nationwide. The kind of high-quality customer we are seeking, medium-sized family businesses, should not have longer to travel to a Handelsbanken-office than to a competi-tive office… this is where geography plays a part. […] We grow organically. Office by office, district by district, customer by customer. But we do not want to exclude the possibility of making a minor acquisition within the framework of our established offices. It could be the way in occasional in-stances. However we do not have any wish list of such banks in Great Brit-ain, so it is not part of our prediction.”296
Henceforth the goal was to become more locally embedded in the foreign markets. To make it happen, a minor acquisition could help. But as usual establishing offices of its own was still the main objective. The head of es-tablishment in Great Britain, Bouvin, also discussed the subject:
“The organization in Great Britain is working well today. But we have reached a point where we feel that the bank would be more effective and work more naturally as ours in a decentralized organization, where our three regional offices can be supported by only one HQ in London.”297
Thus Bouvin aimed to make the establishment in Great Britain more similar to how the organization was run in Sweden. This, according to Bouvin, was important in order to gain customers’ trust. Bouvin believed the decentral-ized organization played a great role in this matter298. CEO Boman was later on asked about the financial worries in the world and commented, “every 15 years or so a financial crisis arises because the bank-ing and financial sector is trying to grow faster than the remaining econo-mies”299. For the loop of growth and crisis Boman ensured that the bank had no plans to withdraw offices that are facing problems. Instead he was a bit 294 Lundegårdh, P. (2010). SHB: Expanderar i Storbritannien. Dagens Industri, 1 November 295 Walsgård, J. C. (2010). SHB: Siktar på 150 kontor i Storbritannien enl VD – DI. Nyhets-byrån Direkt, 22 November 296 Joons, A. (2010). SHB: 150-200 kontor optimalt UK för konkurrera fullt ut – VD (ny). Nyhetsbyrån Direkt, 18 February 297 Schmidt, H. (2010). SHB:s nya chef i London om den nya etableringen av huvudkontor. Fond & Bank Online, 19 February 298 Ibid. 299 Zachrison, O. (2010). Handelsbanken vill bredda kontorsnätet. E24, 29 April
77
critical of how some organizations were run in the banking and financial sector, which had led to the financial struggles of recent years. Before the year ended Boman raised concerns that the worst of the financial crisis might be yet to come and preparations were being made300. Finally, the bank continued its operations in the Netherlands by opening two new offices. Preparations to open more offices in the Netherlands were also made301. Boman found similarities between the expansion in Great Britain and the possibilities in Netherlands. These possibilities looked “exciting” according to Boman. The manager of expansion in the Netherlands, Mikael Sörensen, wanted to replicate the expansion implemented in Great Britain in the Netherlands, as usual: “finding a good manager with local knowledge. The question is how many suitable people we can find”.302 In China Han-delsbanken opened one new office with the intention of following Handels-banken’s current customers303.
4.5 A brief summary This summary is illustrated below in Figure 8, which is a timeline of im-portant events in Handelsbanken’s internationalization. The following text will provide a more comprehensive summary regarding the case of Handels-banken. The fundamental aspect driving the entry and expansion was organic growth. This strategy became adapted and gained strength after the bank’s 1960s-1970s crisis concerning its foreign investments. Gradual growth in foreign markets became one crucial policy all along in the periods discussed above. Another key aspect has been the decentralization of the organization-al structure. This was to get closer to the local customers and adapt the units towards meeting their needs in each country. Decentralization was to assist and manage the bank’s growth. Since the 1970s the bank has operated with three different management lev-els (executive management, regional managers and branch managers). But in the last few years a new management level became established. Although the road from the branch manager to executive management grew longer, it was
300 Dagens PS (2010). Bankchefen varnar: ”Det värsta är inte bakom oss”. Dagens PS, 23 November 301 Svensson, K. (2010). SHB är störst på utlåning till företag. Dagens Industri, 23 October 302 Lind, J. (2010). Handelsbanken: Goda förutsättningar för Hollandsexpansion – VD. Ny-hetsbyrån SIX, 20 July; Schmidt, H. (2010). Handelsbanken redo för nästa steg i Nederländer-na. Fond & Bank Online, 17 August; Andersson, P. (2010). Handelsbanken: Vill växa org i Holland, har snart 9 kontor. Nyhetsbyrån SIX, 26 November 303 Svensson, K. (2010). SHB är störst på utlåning till företag. Dagens Industri, 23 October
78
still argued to increase the decentralization in the working model304. Decen-tralization and organic growth developed the notion of not making large acquisitions. Expansion grew first with ownership of small banks and then expanded. This strategy was accompanied by the knowledge and experience of the bank. Instead of large acquisitions and access to the customers of ac-quired firms, the strategy held that the bank stressed to building on its own. Further, the policy of only having business customers changed to also in-clude private customers. Adaption of these policies increased the flexibility of the bank towards customers and more importantly in terms of the matter of stability and change. These became fundamental principles that dominat-ed the whole organization throughout these years after the 1970s. Instead of large acquisitions, the bank took small steps in its internationalization pro-cess. The bank was a pure follower of the business customers. Entry and expansion in several countries was based on following their customers. The-se customers did not only come from Sweden. The entry and expansion in countries like China and India was mostly in the service of customers in Great Britain.
304 Hugin (2008). Förändringar i Handelsbankens ledningsorganisation. Hugin, 17 June; Öh-lin, H. (2010). Handelsbanken: VD har infört ny ledningsnivå i banken – Afv. Nyhetsbyrån SIX, 19 October
Figu
re 8
. Sum
mar
y [t
imel
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of i
mpo
rtan
t eve
nts
for
Han
dels
bank
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Peri
od 3
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riod
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od 2
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Figu
re 8
. Sum
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78
still argued to increase the decentralization in the working model304. Decen-tralization and organic growth developed the notion of not making large acquisitions. Expansion grew first with ownership of small banks and then expanded. This strategy was accompanied by the knowledge and experience of the bank. Instead of large acquisitions and access to the customers of ac-quired firms, the strategy held that the bank stressed to building on its own. Further, the policy of only having business customers changed to also in-clude private customers. Adaption of these policies increased the flexibility of the bank towards customers and more importantly in terms of the matter of stability and change. These became fundamental principles that dominat-ed the whole organization throughout these years after the 1970s. Instead of large acquisitions, the bank took small steps in its internationalization pro-cess. The bank was a pure follower of the business customers. Entry and expansion in several countries was based on following their customers. The-se customers did not only come from Sweden. The entry and expansion in countries like China and India was mostly in the service of customers in Great Britain.
304 Hugin (2008). Förändringar i Handelsbankens ledningsorganisation. Hugin, 17 June; Öh-lin, H. (2010). Handelsbanken: VD har infört ny ledningsnivå i banken – Afv. Nyhetsbyrån SIX, 19 October
Figu
re 8
. Sum
mar
y [t
imel
ine]
of i
mpo
rtan
t eve
nts
for
Han
dels
bank
en
Peri
od 3
Pe
riod
1
Peri
od 2
Gre
at B
rita
in
2009
-201
0:
Vas
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ses
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ce
Est
onia
19
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80
The empirical description aligns rather well with what the table shows. In particular as it shows that the bank’s main ambitions were in Great Britain. During these three periods the bank’s foreign-market entry and expansion were organic. In some markets the bank entered and expanded its foreign investment in a period and ceased and exited in another period. Sometimes the exit from countries in the first period was not because of the financial crisis. It rather was because of the range of competition and losses in the market. Seemingly, the level of prediction did not match what the real busi-nesses were. The strategy of organic growth, taking low and long-term in-vestments guided the bank to focus its expansion on specific countries like Great Britain and avoided, in the beginning, countries like Russia and Baltic region. This was mainly because of what the bank anticipated from these markets. While the bank projected increasing growth and profit in the first country, it estimated the other countries to involve excessively high risks. The bank’s later entry and expansion in these countries was limited and fol-lowed the principle of low-level organic growth. However, as discussed, the bank’s international activities were drastically affected by the crisis. Despite organic growth, the financial crisis dramatical-ly impacted the bank’s business. The bank lost millions of USD in invest-ments in different countries. The bank exited markets like the US with a high level of losses and chose waiting strategies in some other countries. Cautious investment, however, enabled the firm to weather the crisis and all economic losses with its strong cash flow, and unlike other Swedish banks, Handels-banken did not need governmental support. One observation that might be interesting to reflect upon is the rate of opening offices abroad. In 2007 the bank opened an office roughly every ninth day, and the next year they opened one every eight day. After the break-out of the financial crisis and continued instabilities in the market, the bank slowed down drastically. The bank opened a new office every 45th day in 2009. However, during year 2010 the bank was back on track, opening an office every 20th day. What is more noticeable is that the bank earlier stated that around 50 offices in each Nordic country would be enough. This goal had been reached in 2010 and no more offices in the Nordic countries were opened. Instead the bank shut down three offices in other foreign markets, but in Great Britain it accom-plished its biggest expansion ever.
81
5 Case 2: Swedbank
In this chapter the study deals with the case of Swedbank’s internationaliza-tion, which is completely different than Handelsbanken’s. While Handels-banken is striving for organic growth, decentralization and a low level of foreign acquisition, it can be interesting to study how Swedbank managed its internationalization. As with Handelsbanken, the aim is not to consider the bank’s internationalization in one or few foreign markets. Instead the study will cover the bank’s internationalization in all important countries. The chapter follows the same structure of historical chronological order. The process of the bank’s foreign business activities covers the years 1995-2010. This process is divided into three phases and the discussion is how the firm conducted its foreign business in these phases. These periods are as follows: (1) 1995 to 2000, which are the beginning years of Swedbank’s expansion abroad; in the next period (2) 2001 to 2007 Swedbank highly increases its expansion, and in the third period (3), 2008-2010, the bank is facing a worldwide financial crisis that affects the bank’s expansion. As with the first case study, before presenting the facts about these periods, the study will initiate by providing background information about the bank.
5.1 Background This chapter aim to provide a short background of Swedbank. Swedbank originates from the two former banks Sparbanken and Föreningsbanken, who merged in 1997. Sparbanken has its roots in 1820, and in the beginning it was a non-profit organization. The first Föreningsbanken was founded in 1915 and in the 1930s there were about 800 Föreningsbankens located in Sweden. In 1928 the number of independent Sparbanken was about 500. During the 1960s these small units of Sparbanken merged to become more competitive. According to Carl G. Thunman and Kent Eriksson, this oc-curred because of urbanization effects when the small town banks received fewer customers and greater need to cooperate with banks in bigger towns305. In year 1992 Sparbanken was officially announced as being united, when all but 60 independent Sparbanks merged. 305 Thunman, C. G. & Eriksson, K. (1990). Bankmarknader i förvandling, p. 37. Lund: Stu-dentlitteratur
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The empirical description aligns rather well with what the table shows. In particular as it shows that the bank’s main ambitions were in Great Britain. During these three periods the bank’s foreign-market entry and expansion were organic. In some markets the bank entered and expanded its foreign investment in a period and ceased and exited in another period. Sometimes the exit from countries in the first period was not because of the financial crisis. It rather was because of the range of competition and losses in the market. Seemingly, the level of prediction did not match what the real busi-nesses were. The strategy of organic growth, taking low and long-term in-vestments guided the bank to focus its expansion on specific countries like Great Britain and avoided, in the beginning, countries like Russia and Baltic region. This was mainly because of what the bank anticipated from these markets. While the bank projected increasing growth and profit in the first country, it estimated the other countries to involve excessively high risks. The bank’s later entry and expansion in these countries was limited and fol-lowed the principle of low-level organic growth. However, as discussed, the bank’s international activities were drastically affected by the crisis. Despite organic growth, the financial crisis dramatical-ly impacted the bank’s business. The bank lost millions of USD in invest-ments in different countries. The bank exited markets like the US with a high level of losses and chose waiting strategies in some other countries. Cautious investment, however, enabled the firm to weather the crisis and all economic losses with its strong cash flow, and unlike other Swedish banks, Handels-banken did not need governmental support. One observation that might be interesting to reflect upon is the rate of opening offices abroad. In 2007 the bank opened an office roughly every ninth day, and the next year they opened one every eight day. After the break-out of the financial crisis and continued instabilities in the market, the bank slowed down drastically. The bank opened a new office every 45th day in 2009. However, during year 2010 the bank was back on track, opening an office every 20th day. What is more noticeable is that the bank earlier stated that around 50 offices in each Nordic country would be enough. This goal had been reached in 2010 and no more offices in the Nordic countries were opened. Instead the bank shut down three offices in other foreign markets, but in Great Britain it accom-plished its biggest expansion ever.
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5 Case 2: Swedbank
In this chapter the study deals with the case of Swedbank’s internationaliza-tion, which is completely different than Handelsbanken’s. While Handels-banken is striving for organic growth, decentralization and a low level of foreign acquisition, it can be interesting to study how Swedbank managed its internationalization. As with Handelsbanken, the aim is not to consider the bank’s internationalization in one or few foreign markets. Instead the study will cover the bank’s internationalization in all important countries. The chapter follows the same structure of historical chronological order. The process of the bank’s foreign business activities covers the years 1995-2010. This process is divided into three phases and the discussion is how the firm conducted its foreign business in these phases. These periods are as follows: (1) 1995 to 2000, which are the beginning years of Swedbank’s expansion abroad; in the next period (2) 2001 to 2007 Swedbank highly increases its expansion, and in the third period (3), 2008-2010, the bank is facing a worldwide financial crisis that affects the bank’s expansion. As with the first case study, before presenting the facts about these periods, the study will initiate by providing background information about the bank.
5.1 Background This chapter aim to provide a short background of Swedbank. Swedbank originates from the two former banks Sparbanken and Föreningsbanken, who merged in 1997. Sparbanken has its roots in 1820, and in the beginning it was a non-profit organization. The first Föreningsbanken was founded in 1915 and in the 1930s there were about 800 Föreningsbankens located in Sweden. In 1928 the number of independent Sparbanken was about 500. During the 1960s these small units of Sparbanken merged to become more competitive. According to Carl G. Thunman and Kent Eriksson, this oc-curred because of urbanization effects when the small town banks received fewer customers and greater need to cooperate with banks in bigger towns305. In year 1992 Sparbanken was officially announced as being united, when all but 60 independent Sparbanks merged. 305 Thunman, C. G. & Eriksson, K. (1990). Bankmarknader i förvandling, p. 37. Lund: Stu-dentlitteratur
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Initially, Sparbanken had little international experience and compared to the other large Swedish banks (Handelsbanken, Nordea and SEB) and began its expansion abroad rather late306. In 1974, the first contact abroad was made and Sparbanken established in Luxembourg via a consortium, with 12.5 per-cent ownership. In 1981 the next step was taken: the bank opened a repre-sentative office in London. Two years later foreign market expansion accel-erated. With a merger of 50 ownership units in the Sparbanken another con-sortium was established in London, and that replaced the earlier representa-tive office. The ownership in Luxembourg was advanced to 43.5 percent during 1984 and representative offices were opened in Moscow, Helsinki, Copenhagen, Oslo, and New York. Although the bank was trying to catch up with its competitors it was always a couple of years behind. Four years later, in 1988, the bank completed a full ownership of a bank in Luxembourg. In 1990 Sparbanken left the consortium in London and a year later opened a representative office there instead. The representative office in New York was developed into a branch, and representative offices were opened in Pe-king, Marbella, and Nice. Staff recruitment usually was through other Swe-dish banks that where further down the line in their internationalization pro-gress.307 The financial crisis that emerged in the early 1990s severely affected Fören-ingsbanken but especially Sparbanken308. The latter, which had continuously been showing improved business results for the previous twelve years, re-ceived a setback of 20 percent in comparison to past years business earnings. In the 1990 annual report Sparbanken held the apparently uncontrollable Swedish credit expansion through the 1980s accountable for the crisis309. Between 1979 and 1989 the credit expansion increased with about 13 per-cent each year (from USD 114 billion to 261.1), thus creating an imbalance, at least according to CEO Göran Collert. A consequence besides businesses going bankrupt was the plummeting of housing valuations at the same time as interest rates hit the ceiling. In 1997 the two banks Föreningsbanken and Sparbanken joined together as FöreningsSparbanken AB and nine years later (2006) switched the name to Swedbank. FöreningsSparbanken had been known internationally as Swedbank, and with the bank’s increased expan-sion abroad it became only natural to assume the same name universally. As the case presentation will disclose, one bank, Hansabank, has a vital role in the Swedbank’s foreign market expansion, especially in the Baltic region. Hansabank was founded in Estonia in 1991 and grew fast. Four years later
306 Marquardt, R. (1994). Internationalisering av svenska banker – En process i fem faser. Uppsala Papers in Financial History 307 Ibid. 308 Furusten, K. (2009). Det förändrade kontraktet. Banker och företagskunder under 1990-talets finanskris. Uppsala Universitet: Företagsekonomiska Institutionen 309 Sparbanken Sverige Annual Report 1990, p. 3
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the bank’s total assets amounted to USD 166.7 million. Profit before appro-priations and taxes were more than USD 6.2 million. By the time Swedbank showed an interest in the Baltic region and Hansabank around 1995, in the first six months of the year 1995 Hansabank had profits of USD 6.2 mil-lion.310 In the same period negotiations on a merger with Eesti Hoiupank were already underway311. While these discussions were continuing Hansa-bank simultaneously acquired Latvian Bank and Deutsche Lettische Bank and became the seventh largest bank in the country. During year 1996 Hansabank increased its profits by 54 percent (USD 19.2 million)312. Early in 1997 Hansabank’s CEO Jüri Mõis revealed that the bank would not mind being part of a larger bank and that it might be a ‘resourceful solution’313.
5.2 1995-2000 Slowly expands abroad There was a high degree of contingency in the Swedish banking market fol-lowing the recent financial crisis, and together the Swedish banks, namely Nordbanken, Sparbanken, and Göta Bank, suffered credit losses estimated at USD 31.4 billion. The financial system was about to collapse. For their sur-vival the three banks mentioned had to seek governmental support.314 The market was uncertain and the banks struggled with high financial losses and low profitability. Around this time Swedish banks were largely inactive abroad. There were units in Föreningsbanken specifically working with for-eign customers, but investments abroad were few and the average number of staff abroad was none. Sparbanken introduced its new name Swedbank Mar-kets for foreign countries and had about 50 staff members in Luxembourg, but other than that Sparbanken’s activity abroad was practically non-existent315. In the 1996 annual report new hopes were shown as Sparbanken expressed a desire to strengthen its position in the Nordic region and the Baltic Sea region316. This was to be accomplished by making acquisitions, alliances, and partnerships in each country. 310 Wallén, M. (1995). Estländsk bank börsnoteras i Helsingfors. Dagens Industri, 11 Novem-ber; Svensson, K. (1997). Rekordvinster för Hansabank. Dagens Industri, 26 May 311 Belfrage, S. (1998). FöreningsSparbanken öppnar kontor i öst. FinansTidningen, 10 March 312 Johansson, G. & Tomberg, H. (1998). Fusionsförslag ritar om Baltikums bankkarta. Da-gens Industri, 15 January 313 Svensson, K. (1997). Fondfavoriten i Baltikum. Dagens Industri, 26 May 314 Furusten, K. (2009). Det förändrade kontraktet. Banker och företagskunder under 1990-talets finanskris. Uppsala Universitet: Företagsekonomiska Institutionen, p. 1-5 315 Sparbanken Sverige Annual Report 1995, p. 50 316 Sparbanken Sverige Annual Report 1996, p. 8
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Initially, Sparbanken had little international experience and compared to the other large Swedish banks (Handelsbanken, Nordea and SEB) and began its expansion abroad rather late306. In 1974, the first contact abroad was made and Sparbanken established in Luxembourg via a consortium, with 12.5 per-cent ownership. In 1981 the next step was taken: the bank opened a repre-sentative office in London. Two years later foreign market expansion accel-erated. With a merger of 50 ownership units in the Sparbanken another con-sortium was established in London, and that replaced the earlier representa-tive office. The ownership in Luxembourg was advanced to 43.5 percent during 1984 and representative offices were opened in Moscow, Helsinki, Copenhagen, Oslo, and New York. Although the bank was trying to catch up with its competitors it was always a couple of years behind. Four years later, in 1988, the bank completed a full ownership of a bank in Luxembourg. In 1990 Sparbanken left the consortium in London and a year later opened a representative office there instead. The representative office in New York was developed into a branch, and representative offices were opened in Pe-king, Marbella, and Nice. Staff recruitment usually was through other Swe-dish banks that where further down the line in their internationalization pro-gress.307 The financial crisis that emerged in the early 1990s severely affected Fören-ingsbanken but especially Sparbanken308. The latter, which had continuously been showing improved business results for the previous twelve years, re-ceived a setback of 20 percent in comparison to past years business earnings. In the 1990 annual report Sparbanken held the apparently uncontrollable Swedish credit expansion through the 1980s accountable for the crisis309. Between 1979 and 1989 the credit expansion increased with about 13 per-cent each year (from USD 114 billion to 261.1), thus creating an imbalance, at least according to CEO Göran Collert. A consequence besides businesses going bankrupt was the plummeting of housing valuations at the same time as interest rates hit the ceiling. In 1997 the two banks Föreningsbanken and Sparbanken joined together as FöreningsSparbanken AB and nine years later (2006) switched the name to Swedbank. FöreningsSparbanken had been known internationally as Swedbank, and with the bank’s increased expan-sion abroad it became only natural to assume the same name universally. As the case presentation will disclose, one bank, Hansabank, has a vital role in the Swedbank’s foreign market expansion, especially in the Baltic region. Hansabank was founded in Estonia in 1991 and grew fast. Four years later
306 Marquardt, R. (1994). Internationalisering av svenska banker – En process i fem faser. Uppsala Papers in Financial History 307 Ibid. 308 Furusten, K. (2009). Det förändrade kontraktet. Banker och företagskunder under 1990-talets finanskris. Uppsala Universitet: Företagsekonomiska Institutionen 309 Sparbanken Sverige Annual Report 1990, p. 3
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the bank’s total assets amounted to USD 166.7 million. Profit before appro-priations and taxes were more than USD 6.2 million. By the time Swedbank showed an interest in the Baltic region and Hansabank around 1995, in the first six months of the year 1995 Hansabank had profits of USD 6.2 mil-lion.310 In the same period negotiations on a merger with Eesti Hoiupank were already underway311. While these discussions were continuing Hansa-bank simultaneously acquired Latvian Bank and Deutsche Lettische Bank and became the seventh largest bank in the country. During year 1996 Hansabank increased its profits by 54 percent (USD 19.2 million)312. Early in 1997 Hansabank’s CEO Jüri Mõis revealed that the bank would not mind being part of a larger bank and that it might be a ‘resourceful solution’313.
5.2 1995-2000 Slowly expands abroad There was a high degree of contingency in the Swedish banking market fol-lowing the recent financial crisis, and together the Swedish banks, namely Nordbanken, Sparbanken, and Göta Bank, suffered credit losses estimated at USD 31.4 billion. The financial system was about to collapse. For their sur-vival the three banks mentioned had to seek governmental support.314 The market was uncertain and the banks struggled with high financial losses and low profitability. Around this time Swedish banks were largely inactive abroad. There were units in Föreningsbanken specifically working with for-eign customers, but investments abroad were few and the average number of staff abroad was none. Sparbanken introduced its new name Swedbank Mar-kets for foreign countries and had about 50 staff members in Luxembourg, but other than that Sparbanken’s activity abroad was practically non-existent315. In the 1996 annual report new hopes were shown as Sparbanken expressed a desire to strengthen its position in the Nordic region and the Baltic Sea region316. This was to be accomplished by making acquisitions, alliances, and partnerships in each country. 310 Wallén, M. (1995). Estländsk bank börsnoteras i Helsingfors. Dagens Industri, 11 Novem-ber; Svensson, K. (1997). Rekordvinster för Hansabank. Dagens Industri, 26 May 311 Belfrage, S. (1998). FöreningsSparbanken öppnar kontor i öst. FinansTidningen, 10 March 312 Johansson, G. & Tomberg, H. (1998). Fusionsförslag ritar om Baltikums bankkarta. Da-gens Industri, 15 January 313 Svensson, K. (1997). Fondfavoriten i Baltikum. Dagens Industri, 26 May 314 Furusten, K. (2009). Det förändrade kontraktet. Banker och företagskunder under 1990-talets finanskris. Uppsala Universitet: Företagsekonomiska Institutionen, p. 1-5 315 Sparbanken Sverige Annual Report 1995, p. 50 316 Sparbanken Sverige Annual Report 1996, p. 8
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FöreningsSparbanken slowly moves abroad Year 1995 1996 1997 1998 1999 2000
Sweden 1 114 - 1 093 1 077 695 649 591 13 613 - 13 202 12 939 12 127 11 363 9 991
Baltic region 0 - 25 31 163 164 165 - - 806 1 051 2 527 3 252 3 770
Denmark 1 - 6 6 6 6 4 - - 127 130 139 144 140
Finland 1 - 65 64 69 68 68 - - 640 678 727 769 818
Norway 1 - 1 1 1 1 11 - - 73 120 170 8 8
Poland 0 - 0 - 0 - 64 81 0 - - - - - - - - - - - -
Others combined
9 - 9 10 6 6 8 - - - - - - - - - - - -
Bold = Offices, Italic = Staff
Table 5. FöreningsSparbanken expansion in 1995-2000
As mentioned, Föreningsbanken and Sparbanken was internationally rather inactive in comparison with other large Swedish banks. This is particularly evident in Table 5 above. But throughout this following period the two banks increased their foreign investments and entered new foreign markets, which will be shown in this subchapter.
“Although there are shortcomings in the legal and financial systems such as in Russia, we must act today in order to exploit the commercial opportunities offered. If we let other countries test markets first, we might never get a se-cond chance.”317
As the CEO state above, the desire to enter Eastern Europe was clear, and it was stressed that moves would be made soon, most likely by entering the Baltic region first, followed by purchasing banks in Russia and Ukraine. Otherwise the bank would, as the CEO explained, lose a great opportunity. Sparbanken’s greatest concern regarded the political system in Russia, which seemed incapable of dealing with the necessary market reforms since the Soviet era.318 By 1996 some expansion plans had already materialized. This
317 Kovasna, A. (1996). Dialog: Sverige måste öka takten i Öst- och Centraleuropa. Dagens Industri, 27 December 318 Ibid.; Dagens Industri (1997). Ledare: Ekonomierna runt Östersjön formas i dag – och eftersläntrarna missar skördetiden. 22 April; Hansson, R. (1998). Fortsatt ras för rubeln. Da-gens Industri, 4 September; Svensson, K. (1997). Rekordvinster för Hansapank. Dagens Industri, 26 May
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was achieved by increased ownership in the Finnish bank Aktia Sparbank from 7.4 to 25 percent through a new issue of USD 20.4 million319. Aktia Sparbank at the time was a rather small bank with high debts and low profit-ability in recent years320. The interest in the Baltic Sea region substantialized as Sparbanken acquired 12.5 percent of Estonia’s third largest bank Eesti Hoiupank (later merged with Hansabank) at a cost of USD 91.1 million321. Eesti Hoiupank had about 200 offices and 1,300 in staff, which made it the largest network of offices in Estonia322. Since Sparbanken’s customers were looking more and more to the Baltic region Sparbanken wanted to follow323. Håkan Källåker, a vice CEO at Sparbanken, noted that more investments could come. But prior to this the bank needed to assess the new market be-fore making further investments.324 The following year Sparbanken increased its ownership in Eesti Hoiupank to 19.9 percent325. Since long ago Sparbank-en had long cooperated with Bikuben Girobank from Denmark, Sparebank Nor in Norway and Aktia Sparbank in Finland. In 1996 Sparbanken made a minor investment in Bikuben Girobank, 3.4-percent ownership.326 Early in 1997 proposals to merge Föreningsbanken and Sparbanken in order to enhance their competitiveness and better meet customers’ needs327. Con-sidering both banks history none of them were stranger to mergers. Spar-banken could bring some international experience to the table, and Fören-ingsbanken had a stable economy. Preparations were made, and once the merger was finalized, the banks became FöreningsSparbanken. Together they developed a successful Internet bank that quickly became one of the largest Internet banks in the 1990s328. Due to the merger, 144 offices in Swe-den were sold, bringing in USD 385.3 million and additionally another 250 properties worth USD 231.2 million329. Reviewing the number of offices in Table 5 shows that they were reduced by almost 400 offices. Parts of this might be explained by the 250 offices that were colligated330. The reduced 319 Sparbanken Sverige Annual Report 1996, p. 29; Nyhetsbyrån Direkt (1996). Sparbanken: Ökar ägandet i Aktia Sparbank. Nyhetsbyrån Direkt, 19 June; Wallén, M. (1996). Finlands-svensk bank blir svenskare. Dagens Industri, 20 June 320 Ibid. 321 Sparbanken Sverige Annual Report 1996, p. 8 322 Wrede, G. (1996). Han gör första svenska bankköpet i Baltikum. Dagens Industri, 21 December; Wallén, M. (1995). Baltisk rusning till Helsingfors. Dagens Industri, 17 Novem-ber 323 Sparbanken Sverige Annual Report 1996, p. 8; FöreningsSparbanken Annual Report 1997, p. 8, 20 324 Wrede, G. (1996). Han gör första svenska bankköpet i Baltikum. Dagens Industri, 21 December 325 Belfrage, S. (1998). FöreningsSparbanken öppnar kontor i öst. FinansTidningen, 10 March 326 Sparbanken Sverige Annual Report 1996, p. 24; Waikla, R. (1998). Hansabank positiv till FS-bankens nya invit. Dagens Industri, 18 September 327 Sparbanken Sverige Annual Report 1996, p. 9; 1997, p. 10 328 FöreningsSparbanken Annual Report 1997, p. 12 329 FöreningsSparbanken Annual Report 1997, p. 3, 29 330 FöreningsSparbanken Annual Report 1998, p. 13
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FöreningsSparbanken slowly moves abroad Year 1995 1996 1997 1998 1999 2000
Sweden 1 114 - 1 093 1 077 695 649 591 13 613 - 13 202 12 939 12 127 11 363 9 991
Baltic region 0 - 25 31 163 164 165 - - 806 1 051 2 527 3 252 3 770
Denmark 1 - 6 6 6 6 4 - - 127 130 139 144 140
Finland 1 - 65 64 69 68 68 - - 640 678 727 769 818
Norway 1 - 1 1 1 1 11 - - 73 120 170 8 8
Poland 0 - 0 - 0 - 64 81 0 - - - - - - - - - - - -
Others combined
9 - 9 10 6 6 8 - - - - - - - - - - - -
Bold = Offices, Italic = Staff
Table 5. FöreningsSparbanken expansion in 1995-2000
As mentioned, Föreningsbanken and Sparbanken was internationally rather inactive in comparison with other large Swedish banks. This is particularly evident in Table 5 above. But throughout this following period the two banks increased their foreign investments and entered new foreign markets, which will be shown in this subchapter.
“Although there are shortcomings in the legal and financial systems such as in Russia, we must act today in order to exploit the commercial opportunities offered. If we let other countries test markets first, we might never get a se-cond chance.”317
As the CEO state above, the desire to enter Eastern Europe was clear, and it was stressed that moves would be made soon, most likely by entering the Baltic region first, followed by purchasing banks in Russia and Ukraine. Otherwise the bank would, as the CEO explained, lose a great opportunity. Sparbanken’s greatest concern regarded the political system in Russia, which seemed incapable of dealing with the necessary market reforms since the Soviet era.318 By 1996 some expansion plans had already materialized. This
317 Kovasna, A. (1996). Dialog: Sverige måste öka takten i Öst- och Centraleuropa. Dagens Industri, 27 December 318 Ibid.; Dagens Industri (1997). Ledare: Ekonomierna runt Östersjön formas i dag – och eftersläntrarna missar skördetiden. 22 April; Hansson, R. (1998). Fortsatt ras för rubeln. Da-gens Industri, 4 September; Svensson, K. (1997). Rekordvinster för Hansapank. Dagens Industri, 26 May
85
was achieved by increased ownership in the Finnish bank Aktia Sparbank from 7.4 to 25 percent through a new issue of USD 20.4 million319. Aktia Sparbank at the time was a rather small bank with high debts and low profit-ability in recent years320. The interest in the Baltic Sea region substantialized as Sparbanken acquired 12.5 percent of Estonia’s third largest bank Eesti Hoiupank (later merged with Hansabank) at a cost of USD 91.1 million321. Eesti Hoiupank had about 200 offices and 1,300 in staff, which made it the largest network of offices in Estonia322. Since Sparbanken’s customers were looking more and more to the Baltic region Sparbanken wanted to follow323. Håkan Källåker, a vice CEO at Sparbanken, noted that more investments could come. But prior to this the bank needed to assess the new market be-fore making further investments.324 The following year Sparbanken increased its ownership in Eesti Hoiupank to 19.9 percent325. Since long ago Sparbank-en had long cooperated with Bikuben Girobank from Denmark, Sparebank Nor in Norway and Aktia Sparbank in Finland. In 1996 Sparbanken made a minor investment in Bikuben Girobank, 3.4-percent ownership.326 Early in 1997 proposals to merge Föreningsbanken and Sparbanken in order to enhance their competitiveness and better meet customers’ needs327. Con-sidering both banks history none of them were stranger to mergers. Spar-banken could bring some international experience to the table, and Fören-ingsbanken had a stable economy. Preparations were made, and once the merger was finalized, the banks became FöreningsSparbanken. Together they developed a successful Internet bank that quickly became one of the largest Internet banks in the 1990s328. Due to the merger, 144 offices in Swe-den were sold, bringing in USD 385.3 million and additionally another 250 properties worth USD 231.2 million329. Reviewing the number of offices in Table 5 shows that they were reduced by almost 400 offices. Parts of this might be explained by the 250 offices that were colligated330. The reduced 319 Sparbanken Sverige Annual Report 1996, p. 29; Nyhetsbyrån Direkt (1996). Sparbanken: Ökar ägandet i Aktia Sparbank. Nyhetsbyrån Direkt, 19 June; Wallén, M. (1996). Finlands-svensk bank blir svenskare. Dagens Industri, 20 June 320 Ibid. 321 Sparbanken Sverige Annual Report 1996, p. 8 322 Wrede, G. (1996). Han gör första svenska bankköpet i Baltikum. Dagens Industri, 21 December; Wallén, M. (1995). Baltisk rusning till Helsingfors. Dagens Industri, 17 Novem-ber 323 Sparbanken Sverige Annual Report 1996, p. 8; FöreningsSparbanken Annual Report 1997, p. 8, 20 324 Wrede, G. (1996). Han gör första svenska bankköpet i Baltikum. Dagens Industri, 21 December 325 Belfrage, S. (1998). FöreningsSparbanken öppnar kontor i öst. FinansTidningen, 10 March 326 Sparbanken Sverige Annual Report 1996, p. 24; Waikla, R. (1998). Hansabank positiv till FS-bankens nya invit. Dagens Industri, 18 September 327 Sparbanken Sverige Annual Report 1996, p. 9; 1997, p. 10 328 FöreningsSparbanken Annual Report 1997, p. 12 329 FöreningsSparbanken Annual Report 1997, p. 3, 29 330 FöreningsSparbanken Annual Report 1998, p. 13
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number of offices was not only due to the merger but also to a long-term plan to cut costs. To cut costs the bank decided to shed non-related customer activities331. FöreningsSparbanken’s typical customer was a private consumer or a small business332, which also fits the description of how the two merged banks worked earlier by serving mostly private customers along with small businesses and farmers. With investments abroad the number of offices and staff generally swelled in number throughout this period. For the Danish market, the ownership in Bikuben Girobank was advanced from 3.4 percent to 5333. To gain more experience in the Nordic region an option was arranged to acquire 50 percent of the Norwegian Sparebank’s affiliate ODIN Forvaltning AS (fund management)334. Before the end of 1997, the bank also invested in 3.5-percent ownership of the Polish bank Bank Handlowy335. Reports estimated the investment to be about USD 52 million336. Being the first Swedish bank to enter Poland, the CEO of Swedbank Markets Källåker stated: “Poland is an interesting country, many of our customers do business there”337 and added later, “thus Sparbanken takes the lead in the Eastern Europe”338. This was the beginning of Fören-ingsSparbanken’s ambition to control the Baltic Sea region. Källåker further addressed the advantages of this deal for the bank’s Swedish business cus-tomers339. The bank knew that Polish Bank Handlowy was owned by the Polish government and had recently become privatized but that the Polish state still retained a 30-percent share340. Bank Handlowy was one of the lead-ing banks in Eastern Europe at the time, valued at around USD one billion with a turnover of USD 5.2 billion and 4,500 in staff341. Poland had about 700 Swedish subsidiaries, and the business exchange between Sweden and Poland was increasing342. “The idea is that we are going to build that side from scratch”343, Källåker’s statement refers to Bank Handlowy, which was a commercial bank that did not have any established private banking. This was something that FöreningsSparbanken figured it knew well and wanted to
331 FöreningsSparbanken Annual Report 1997, p. 8-9, 31 332 FöreningsSparbanken Annual Report 1999, p. 16 333 FöreningsSparbanken Annual Report 1997, p. 3, 30 334 FöreningsSparbanken Annual Report 1997, p. 30 335 FöreningsSparbanken Annual Report 1997, p. 70; Sandbäck, M. (1998). FS-banken in i norsk storbank. Dagens Industri, 28 August 336 Ehlin, B. (1997). 400 Mkr för Polens kronjuvel. Dagens Industri, 11 September 337 Belfrage, S. (1998). FöreningsSparbanken öppnar kontor i öst. FinansTidningen, 10 March 338 Lundin, T. (1997). Bankköp: Sparbanken först i Polen. Svenska Dagbladet, 31 May 339 Ibid. 340 FöreningsSparbanken Annual Report 1997, p. 3, 30 341 Lundin, T. (1997). Bankköp: Sparbanken först i Polen. Svenska Dagbladet, 31 May; Wrede, G. (1997). Sparbanken köper in sig i polska Bank Handlowy. Dagens Industri, 30 May 342 Lundin, T. (1997). Bankköp: Sparbanken först i Polen. Svenska Dagbladet, 31 May 343 Wrede, G. (1997). Sparbanken köper in sig i polska Bank Handlowy. Dagens Industri, 30 May
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develop on its own in Poland344. Källåker also recognized that there were no specific goals for how much business would be generated in the long term345. In a press release the bank enthusiastically spoke about its partnerships after the success of an earlier increase in ownership of Bikuben Girobank and ODIN Forvaltning AS. Furthermore the bank wrote that this was the bank’s main strategy, to avoid establishing on its own but instead collaborating with established local banks, and this was anticipated to bring the bank closer to foreign markets and customers346. In early 1998 the upcoming merger between Hansabank and Eesti Hoiupank was announced, revoked, revived and finally decided four months later347. Both banks aimed towards expansion in the Baltic region and Russia348. To-gether they would own 50 percent of the very scattered Estonian market349. At the end of the year 49.98-percent ownership of Hansabank was record-ed350. However, this was not an easy deal to accomplish. FöreningsSparbank-en fought SEB (a Swedish bank) fiercely to gain control over Hansabank351. At first the bank increased its ownership to 10.3 percent followed by an ag-gressive move on the Estonian stock exchange, buying all available shares, consequently driving up the price of the share by 60 percent and acquiring 25-percent ownership. For a short time the bank lay low and awaited its next opportunity. Yet in late 1998 the bank acquired all new shares issued by Hansabank for USD 109.3 million352. This was followed by a war with SEB for the remaining shares and assuring control. Both banks desperately want-ed the bank, and Källåker spoke about FöreningsSparbanken’s expectations for the bank, “We see this investment as a forward-looking plan in the Nor-dic and Baltic region as our local market. We want to become better service 344 Ibid. 345 Belfrage, S. (1998). FöreningsSparbanken öppnar kontor i öst. FinansTidningen, 10 March 346 Press release (1997). Sparbanken Sverige utvecklar samarbetet i Norge. Sparbanken, 9 June 347 Wikla, R. (1998). Därför ökar FS-banken i estniska Hansapank. Dagens Industri, 20 Au-gust; Waikla, R. (1998). Tredje försöket för estnisk bankfusion. Dagens Industri, 30 April; Dagens Industri (1998). Hansapanka och Hoiupank skrinlägger fusionen. Dagens Industri, 21 April; Johansson, G. & Tomberg, H. (1998). Fusionsförslag ritar om Baltikums bankkarta. Dagens Industri, 15 January; Dagens Industri (1998). Grus i maskineriet fördröjer bankfusion. Dagens Indsutri, 7 February 348 Johansson, G. & Tomberg, H. (1998). Fusionsförslag ritar om Baltikums bankkarta. Da-gens Industri, 15 January 349 Ibid.; Svensson, K. (1997). Fondfavoriten i Baltikum. Dagens Industri, 26 May 350 FöreningsSparbanken Annual Report 1998, p. 4, 34; Nyhetsbyrån Direkt (1998). FS-banken: Säljer del i Hansapank till bank Handlowy. Nyhetsbyrån Direkt, 22 December 351 Waikla, R. (1998). Extrem dragkamp om Hansapank. Dagens Industri, 11 September; Waikla, R. (1998). Kampen om Hansapank kan avgöras i helgen. Dagens Industri, 19 Sep-tember; Waikla, R. (1998). Tre friare anmälda hos Hansapank. Dagens Industri, 15 Septem-ber; Nyhetsbyrån Direkt (1998). FS-banken: Ökar till över 20 % i estniska Hansapank. Ny-hetsbyrån Direkt, 28 August; Waikla, R. (1998). Bankrally i Estland. Dagens Industri, 27 August 352 Belfrage, S. (1998). Föreningssparbanken får majoriteten i Hansapank. FinansTidningen, 20 November
86
number of offices was not only due to the merger but also to a long-term plan to cut costs. To cut costs the bank decided to shed non-related customer activities331. FöreningsSparbanken’s typical customer was a private consumer or a small business332, which also fits the description of how the two merged banks worked earlier by serving mostly private customers along with small businesses and farmers. With investments abroad the number of offices and staff generally swelled in number throughout this period. For the Danish market, the ownership in Bikuben Girobank was advanced from 3.4 percent to 5333. To gain more experience in the Nordic region an option was arranged to acquire 50 percent of the Norwegian Sparebank’s affiliate ODIN Forvaltning AS (fund management)334. Before the end of 1997, the bank also invested in 3.5-percent ownership of the Polish bank Bank Handlowy335. Reports estimated the investment to be about USD 52 million336. Being the first Swedish bank to enter Poland, the CEO of Swedbank Markets Källåker stated: “Poland is an interesting country, many of our customers do business there”337 and added later, “thus Sparbanken takes the lead in the Eastern Europe”338. This was the beginning of Fören-ingsSparbanken’s ambition to control the Baltic Sea region. Källåker further addressed the advantages of this deal for the bank’s Swedish business cus-tomers339. The bank knew that Polish Bank Handlowy was owned by the Polish government and had recently become privatized but that the Polish state still retained a 30-percent share340. Bank Handlowy was one of the lead-ing banks in Eastern Europe at the time, valued at around USD one billion with a turnover of USD 5.2 billion and 4,500 in staff341. Poland had about 700 Swedish subsidiaries, and the business exchange between Sweden and Poland was increasing342. “The idea is that we are going to build that side from scratch”343, Källåker’s statement refers to Bank Handlowy, which was a commercial bank that did not have any established private banking. This was something that FöreningsSparbanken figured it knew well and wanted to
331 FöreningsSparbanken Annual Report 1997, p. 8-9, 31 332 FöreningsSparbanken Annual Report 1999, p. 16 333 FöreningsSparbanken Annual Report 1997, p. 3, 30 334 FöreningsSparbanken Annual Report 1997, p. 30 335 FöreningsSparbanken Annual Report 1997, p. 70; Sandbäck, M. (1998). FS-banken in i norsk storbank. Dagens Industri, 28 August 336 Ehlin, B. (1997). 400 Mkr för Polens kronjuvel. Dagens Industri, 11 September 337 Belfrage, S. (1998). FöreningsSparbanken öppnar kontor i öst. FinansTidningen, 10 March 338 Lundin, T. (1997). Bankköp: Sparbanken först i Polen. Svenska Dagbladet, 31 May 339 Ibid. 340 FöreningsSparbanken Annual Report 1997, p. 3, 30 341 Lundin, T. (1997). Bankköp: Sparbanken först i Polen. Svenska Dagbladet, 31 May; Wrede, G. (1997). Sparbanken köper in sig i polska Bank Handlowy. Dagens Industri, 30 May 342 Lundin, T. (1997). Bankköp: Sparbanken först i Polen. Svenska Dagbladet, 31 May 343 Wrede, G. (1997). Sparbanken köper in sig i polska Bank Handlowy. Dagens Industri, 30 May
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develop on its own in Poland344. Källåker also recognized that there were no specific goals for how much business would be generated in the long term345. In a press release the bank enthusiastically spoke about its partnerships after the success of an earlier increase in ownership of Bikuben Girobank and ODIN Forvaltning AS. Furthermore the bank wrote that this was the bank’s main strategy, to avoid establishing on its own but instead collaborating with established local banks, and this was anticipated to bring the bank closer to foreign markets and customers346. In early 1998 the upcoming merger between Hansabank and Eesti Hoiupank was announced, revoked, revived and finally decided four months later347. Both banks aimed towards expansion in the Baltic region and Russia348. To-gether they would own 50 percent of the very scattered Estonian market349. At the end of the year 49.98-percent ownership of Hansabank was record-ed350. However, this was not an easy deal to accomplish. FöreningsSparbank-en fought SEB (a Swedish bank) fiercely to gain control over Hansabank351. At first the bank increased its ownership to 10.3 percent followed by an ag-gressive move on the Estonian stock exchange, buying all available shares, consequently driving up the price of the share by 60 percent and acquiring 25-percent ownership. For a short time the bank lay low and awaited its next opportunity. Yet in late 1998 the bank acquired all new shares issued by Hansabank for USD 109.3 million352. This was followed by a war with SEB for the remaining shares and assuring control. Both banks desperately want-ed the bank, and Källåker spoke about FöreningsSparbanken’s expectations for the bank, “We see this investment as a forward-looking plan in the Nor-dic and Baltic region as our local market. We want to become better service 344 Ibid. 345 Belfrage, S. (1998). FöreningsSparbanken öppnar kontor i öst. FinansTidningen, 10 March 346 Press release (1997). Sparbanken Sverige utvecklar samarbetet i Norge. Sparbanken, 9 June 347 Wikla, R. (1998). Därför ökar FS-banken i estniska Hansapank. Dagens Industri, 20 Au-gust; Waikla, R. (1998). Tredje försöket för estnisk bankfusion. Dagens Industri, 30 April; Dagens Industri (1998). Hansapanka och Hoiupank skrinlägger fusionen. Dagens Industri, 21 April; Johansson, G. & Tomberg, H. (1998). Fusionsförslag ritar om Baltikums bankkarta. Dagens Industri, 15 January; Dagens Industri (1998). Grus i maskineriet fördröjer bankfusion. Dagens Indsutri, 7 February 348 Johansson, G. & Tomberg, H. (1998). Fusionsförslag ritar om Baltikums bankkarta. Da-gens Industri, 15 January 349 Ibid.; Svensson, K. (1997). Fondfavoriten i Baltikum. Dagens Industri, 26 May 350 FöreningsSparbanken Annual Report 1998, p. 4, 34; Nyhetsbyrån Direkt (1998). FS-banken: Säljer del i Hansapank till bank Handlowy. Nyhetsbyrån Direkt, 22 December 351 Waikla, R. (1998). Extrem dragkamp om Hansapank. Dagens Industri, 11 September; Waikla, R. (1998). Kampen om Hansapank kan avgöras i helgen. Dagens Industri, 19 Sep-tember; Waikla, R. (1998). Tre friare anmälda hos Hansapank. Dagens Industri, 15 Septem-ber; Nyhetsbyrån Direkt (1998). FS-banken: Ökar till över 20 % i estniska Hansapank. Ny-hetsbyrån Direkt, 28 August; Waikla, R. (1998). Bankrally i Estland. Dagens Industri, 27 August 352 Belfrage, S. (1998). Föreningssparbanken får majoriteten i Hansapank. FinansTidningen, 20 November
88
providers to our private customers and our business customers”353. Special advisor Lars-Olof Ödlund explained why FöreningsSparbanken was interest-ed in Hansabank.
“Because we see our venture in Hansabank as a strategic investment, this was too little [Referring to earlier investments in the bank] […] we have many small and mid-sized Swedish businesses conducting business in Estonia and we can now refer them to Hansabank”354
The two banks raced to attain the largest ownership. SEB finally withdrew and sold its remaining shares to FöreningsSparbanken, making a USD 25.3 million profit.355 Initially FöreningsSparbanken received 55-percent owner-ship, but shortly afterwards the bank sold 5.07 percent of the ownership to Hansabank, which in turn sold it to Bank Handlowy. Money made from the sale was intended to be reinvested in the Nordic region and the Baltic Sea region356. Hansabank was happy and found it to be a good deal as it opened new possibilities while recovering a solid capital cover ratio357. Ironically as soon as FöreningsSparbanken had won the race the bank immediately put Hansabank up for sale, “Together with Hansabank we are searching for long-term and serious owners”358. Communication manager Einar Frydén and the bank intended to find new majority owners yet retain 25-35-percent ownership359. It was however not to be sold to any Nordic competitor, and the bank figured the most likely new owner would be from Germany360. Nonetheless nothing ever materialized and Hansabank remained with Fören-ingsSparbanken. In all, FöreningsSparbanken spent around USD 500 million on foreign ac-quisitions during 1998, most of which was spent on Hansabank (USD 294.3 million)361. At the time Hansabank was one of the largest banks in the Baltic region, especially in Estonia. FöreningsSparbanken’s interest in Hansabank
353 Waikla, R. (1998). Extrem dragkamp om Hansapank. Dagens Industri, 11 September 354 Waikla, R. (1998). Därför ökar FS-banken i estniska Hansapank. Dagens Industri, 20 August 355 Waikla, R. (1998). Hansapank positiv till FS-bankens nya invit. Dagens Industri, 18 Sep-tember; Belfrage, S. (1998). Föreningssparbanken får majoriteten i Hansapank. FinansTid-ningen, 20 November; TT (1998). FöreningsSparbanken tar över Hansapank. TT, 29 Septem-ber 356 TT (1998). FöreningsSparbanken stärker Östersjöallians. TT, 22 December; Nyhetsbyrån Direkt (1998). FS-banken säljer del i Hansapank till Bank Handlowy. Nyhetsbyrån Direkt, 22 December 357 Belfrage, S. (1998). Föreningssparbanken får majoriteten i Hansapank. FinansTidningen, 20 November 358 Ibid. 359 Ibid. 360 Waikla, R. (1998). Tallinn dök efter SEBs uttåg ur Hansapank. Dagens Industri, 1 October 361 FöreningsSparbanken Annual Report 1998, p. 17
89
was mainly due to its size. With the new deals in place, Hansabank, together with Eesti Hoiupank, now controlled 50 percent of the market362. The earlier 3.5-percent share in the Polish bank Bank Handlowy increased to 6 percent with a USD 48.4 million investment363. FöreningsSparbanken was impressed with the size of the Polish market and foresaw a bright future for it.364 Moreover, concerning the Nordic region, the bank expressed, “We are following the trade flows and businessmen in the Baltic region to become their bank. […] We are striving to become the most local bank in the Nordic region.”365. Reinhold Geijer (CEO of FöreningsSparbanken at the time) de-scribed the future as positive and stressed the bank’s ambitions by stating, “Through a much bigger customer base than what the Swedish market ena-bles […] to create a strong regional bank in a Europe perspective”366. By, “developing our local presence in the Nordic and Baltic regions, primarily through alliances and part ownerships,” because the bank saw this strategy as less risky367. As mentioned, the bank’s motive to internationalize was partly to follow its business customers and partly to acquire more private customers. Vice CEO Källåker argued that the bank needed access to Central Europe’s network, which was to be enabled by an investment of USD 50.2 million in 1.7-percent ownership of the Austrian bank Erste Bank368. Erste bank was Aus-tria’s second largest bank after a recent merger with the Girocredit bank. Erste bank in turn owned the Hungarian bank Mezö Bank369. Further, its ownership in Norwegian Sparebank 1 (third largest bank in Norway) was by the end of the year up to 25 percent after a directed emission at a cost of USD 86.3 million370. In total the investments of the 25-percent ownership acquired during the year in Sparebank 1 were so far up to USD 185.4 mil-
362 Johansson, G. & Tomberg, H. (1998). Fusionsförslag ritar om Baltikums bankkarta. Da-gens Industri. 15 January 363 FöreningsSparbanken Annual Report 1998, p. 17 364 FöreningsSparbanken Annual Report 1998, p. 18; Nyhetsbyrån Direkt (1998). FS-banken: Säljer del i Hansapank till bank Handlowy. Nyhetsbyrån Direkt, 22 December; Meynert, C. (2000). Amerikanska Citigroup vill köpa polsk bank. Svenska Dagbladet, 27 January 365 Roijer, P. (1998). Belåtenhet i FöreningsSparbanken. Svenska Dagbladet, 22 October 366 FöreningsSparbanken Annual Report 1998, p. 6-7 367 FöreningsSparbanken Annual Report 1998, p. 7, 17 368 Belfrage, S. (1998). FöreningsSparbanken öppnar kontor i öst. FinansTidningen, 10 March; FöreningsSparbanken Annual Report 1998, p. 18; Linnala, T. (2009). Erste fel ägare för Swedbank. Svenska Dagbladet, 11 March; Öhlin, H. (2003). FS-Banken: Säljer aktiepost i Erste Bank, reavinst 489 Mkr. Nyhetsbyrån Ticker, 18 June; FöreningsSparbanken Annual Report 1997, p. 71 369 Belfrage, S. (1998). FöreningsSparbanken öppnar kontor i öst. FinansTidningen, 10 March 370 Sandbäck, M. (1998). FS-banken in i norsk storbank. Dagens Industri, 28 August; Roijer, P. (1998). Belåtenhet i FöreningsSparbanken. Sydsvenska Dagbladet, 22 October; Steneberg, K. (1998). FS-banken går in i norsk bank – Köper 25 procent av Sparebank 1 – Betalning med egna aktier. FinansTidningen, 28 August; Lundin, K. (2004). Brakförlust för FSB i Norge. Dagens Industri, 16 August
88
providers to our private customers and our business customers”353. Special advisor Lars-Olof Ödlund explained why FöreningsSparbanken was interest-ed in Hansabank.
“Because we see our venture in Hansabank as a strategic investment, this was too little [Referring to earlier investments in the bank] […] we have many small and mid-sized Swedish businesses conducting business in Estonia and we can now refer them to Hansabank”354
The two banks raced to attain the largest ownership. SEB finally withdrew and sold its remaining shares to FöreningsSparbanken, making a USD 25.3 million profit.355 Initially FöreningsSparbanken received 55-percent owner-ship, but shortly afterwards the bank sold 5.07 percent of the ownership to Hansabank, which in turn sold it to Bank Handlowy. Money made from the sale was intended to be reinvested in the Nordic region and the Baltic Sea region356. Hansabank was happy and found it to be a good deal as it opened new possibilities while recovering a solid capital cover ratio357. Ironically as soon as FöreningsSparbanken had won the race the bank immediately put Hansabank up for sale, “Together with Hansabank we are searching for long-term and serious owners”358. Communication manager Einar Frydén and the bank intended to find new majority owners yet retain 25-35-percent ownership359. It was however not to be sold to any Nordic competitor, and the bank figured the most likely new owner would be from Germany360. Nonetheless nothing ever materialized and Hansabank remained with Fören-ingsSparbanken. In all, FöreningsSparbanken spent around USD 500 million on foreign ac-quisitions during 1998, most of which was spent on Hansabank (USD 294.3 million)361. At the time Hansabank was one of the largest banks in the Baltic region, especially in Estonia. FöreningsSparbanken’s interest in Hansabank
353 Waikla, R. (1998). Extrem dragkamp om Hansapank. Dagens Industri, 11 September 354 Waikla, R. (1998). Därför ökar FS-banken i estniska Hansapank. Dagens Industri, 20 August 355 Waikla, R. (1998). Hansapank positiv till FS-bankens nya invit. Dagens Industri, 18 Sep-tember; Belfrage, S. (1998). Föreningssparbanken får majoriteten i Hansapank. FinansTid-ningen, 20 November; TT (1998). FöreningsSparbanken tar över Hansapank. TT, 29 Septem-ber 356 TT (1998). FöreningsSparbanken stärker Östersjöallians. TT, 22 December; Nyhetsbyrån Direkt (1998). FS-banken säljer del i Hansapank till Bank Handlowy. Nyhetsbyrån Direkt, 22 December 357 Belfrage, S. (1998). Föreningssparbanken får majoriteten i Hansapank. FinansTidningen, 20 November 358 Ibid. 359 Ibid. 360 Waikla, R. (1998). Tallinn dök efter SEBs uttåg ur Hansapank. Dagens Industri, 1 October 361 FöreningsSparbanken Annual Report 1998, p. 17
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was mainly due to its size. With the new deals in place, Hansabank, together with Eesti Hoiupank, now controlled 50 percent of the market362. The earlier 3.5-percent share in the Polish bank Bank Handlowy increased to 6 percent with a USD 48.4 million investment363. FöreningsSparbanken was impressed with the size of the Polish market and foresaw a bright future for it.364 Moreover, concerning the Nordic region, the bank expressed, “We are following the trade flows and businessmen in the Baltic region to become their bank. […] We are striving to become the most local bank in the Nordic region.”365. Reinhold Geijer (CEO of FöreningsSparbanken at the time) de-scribed the future as positive and stressed the bank’s ambitions by stating, “Through a much bigger customer base than what the Swedish market ena-bles […] to create a strong regional bank in a Europe perspective”366. By, “developing our local presence in the Nordic and Baltic regions, primarily through alliances and part ownerships,” because the bank saw this strategy as less risky367. As mentioned, the bank’s motive to internationalize was partly to follow its business customers and partly to acquire more private customers. Vice CEO Källåker argued that the bank needed access to Central Europe’s network, which was to be enabled by an investment of USD 50.2 million in 1.7-percent ownership of the Austrian bank Erste Bank368. Erste bank was Aus-tria’s second largest bank after a recent merger with the Girocredit bank. Erste bank in turn owned the Hungarian bank Mezö Bank369. Further, its ownership in Norwegian Sparebank 1 (third largest bank in Norway) was by the end of the year up to 25 percent after a directed emission at a cost of USD 86.3 million370. In total the investments of the 25-percent ownership acquired during the year in Sparebank 1 were so far up to USD 185.4 mil-
362 Johansson, G. & Tomberg, H. (1998). Fusionsförslag ritar om Baltikums bankkarta. Da-gens Industri. 15 January 363 FöreningsSparbanken Annual Report 1998, p. 17 364 FöreningsSparbanken Annual Report 1998, p. 18; Nyhetsbyrån Direkt (1998). FS-banken: Säljer del i Hansapank till bank Handlowy. Nyhetsbyrån Direkt, 22 December; Meynert, C. (2000). Amerikanska Citigroup vill köpa polsk bank. Svenska Dagbladet, 27 January 365 Roijer, P. (1998). Belåtenhet i FöreningsSparbanken. Svenska Dagbladet, 22 October 366 FöreningsSparbanken Annual Report 1998, p. 6-7 367 FöreningsSparbanken Annual Report 1998, p. 7, 17 368 Belfrage, S. (1998). FöreningsSparbanken öppnar kontor i öst. FinansTidningen, 10 March; FöreningsSparbanken Annual Report 1998, p. 18; Linnala, T. (2009). Erste fel ägare för Swedbank. Svenska Dagbladet, 11 March; Öhlin, H. (2003). FS-Banken: Säljer aktiepost i Erste Bank, reavinst 489 Mkr. Nyhetsbyrån Ticker, 18 June; FöreningsSparbanken Annual Report 1997, p. 71 369 Belfrage, S. (1998). FöreningsSparbanken öppnar kontor i öst. FinansTidningen, 10 March 370 Sandbäck, M. (1998). FS-banken in i norsk storbank. Dagens Industri, 28 August; Roijer, P. (1998). Belåtenhet i FöreningsSparbanken. Sydsvenska Dagbladet, 22 October; Steneberg, K. (1998). FS-banken går in i norsk bank – Köper 25 procent av Sparebank 1 – Betalning med egna aktier. FinansTidningen, 28 August; Lundin, K. (2004). Brakförlust för FSB i Norge. Dagens Industri, 16 August
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lion. Sparebank 1 had four regional and 16 local savings banks with 1.2 mil-lion private and 100,000 corporate customers serviced through 380 offices.371 One new office opened in Oslo (Norway) that focused on international busi-ness, capital and money-market services. CFO Nils-Fredrik Nyblaeus was evidently happy with the investments in Norway as he declared: “Above all there is great potential in savings, in Norway saving in banks averages 50 percent of the portfolio while in Sweden the proportion is 25 percent”.372 The board chairman, Göran Collert, argued that there were no further plans to acquire Norwegian banks. Instead there was an interest in re-entering Den-mark since the bank had sold all of its shares in Bikuben Girobank earlier in the year for a capital gain of USD 28.8 million.373 Bikuben Girobank had left the Nordic Banking Group and no longer cooperated with other Nordic banks, having other plans, which prompted FöreningsSparbanken’s depar-ture374. Communication manager Frydén accompanied Collert’s announce-ment by saying that the investments in Sparebank 1 felt right and, “we have no ambition to enter the Norwegian banking market through major acquisi-tions. Norway is of interest to our Nordic networking”375. In the long term, however, the ambition was to merge with Norwegian Sparebank 1 and Finn-ish Aktia Sparbank376. By 1999 the merger between Föreningsbanken and Sparbanken had been finalized. CEO Geijer celebrated that the fusion was already yielding im-proved profits377. The very same year FöreningsSparbanken re-entered Den-mark by investing USD 906 million after a bidding war with Danish bank Kapital Holding to acquire 60-percent ownership of the Danish bank FIH. Interestingly, FIH’s main focus was on business customers in comparison to FöreningsSparbanken, which focused on private banking.378 The plan was to attain full ownership within a few years379. But before the decade came to the
371 Ibid. 372 Ibid. 373 Ibid.; Roijer, P. (1998). Belåtenhet i FöreningsSparbanken. Svenska Dagbladet, 22 Octo-ber; FöreningsSparbanken Press Release (1998). FöreningsSparbanken har sålt alla sina aktier i danska BG Bank. 19 February 374 Andersson, J. (1998). Förenings Sparbanken satsar danskt. Sydsvenska Dagbladet, 20 February 375 Belfrage, S. (1998). Svenska banker tar norsk fusion med ro. FinansTidningen, 17 Sep-tember 376 Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 Mars 377 Roijer, P. (1998). Belåtenhet i FöreningsSparbanken. Svenska Dagbladet, 22 October 378 Braconier, F. (2008). FSB vill sälja av dansk affärsbank. Svenska Dagbladet, 30 March; CNN (1999). Swedbank eyes Danish buy. CNN, 13 September; Latour, A. (1999). Swed-bank’s $906m bid to buy Denmark’s FIH topples plans of Kapital Holding. The Financial Express, 15 September; Dagens Industri (1999). Unibank gör 500 Mkr i reavinst. Dagens Industri, 13 October; Anderson, J. (1999). FS-Banken i bud på dansk bank. FinansTidningen, 14 September 379 Öhlin, H. (2002). FöreningsSparbanken: Nöjd med 60 % ägande i Hansabank – CFO. Nyhetsbyrån Ticker, 27 August
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end Geijer was released from duty as CEO, and Göran Ahlström temporarily replaced him. Carl Erik Stålberg was proposed to replace Geijer, but he was regarded as not being up to the job at the time, while Geijer was released from duty as he was deemed to lack the right qualities to pilot the bank into the new millennium. Although the bank had previously praised his work, the board felt that they and Geijer no longer shared the same ideas.380
“Together we have built a foundation to be able to become the leading uni-versal bank in the Nordic and Baltic Sea region into the 21st century. All the hard work will now bring prosperity to us and our customers, and the groundwork has been laid for long term increased value to our sharehold-ers.”381
As Ahlström had only a temporary replacement position, most of his efforts were based on the board’s will and recommendations. He conceded that there were no plans for making any acquisitions, even though the bank’s interest in northern Germany increased382. The previous vision to become a leading bank in the Baltic Sea region continued under Ahlström’s leadership. To get there, Hansabank would be one of the more important assets. Conse-quently FöreningsSparbanken became the majority shareholder in Hansa-bank, with 52.64-percent ownership after an investment of USD 177 mil-lion383. Only a few months later Hansabank purchased full ownership of the Baltic regional bank Ventspils apvienota Baltijas bank384. At the time Hansa-bank controlled 50 percent of the market share in Estonia, while Hansa-bank’s subsidiary in Latvia increased its market share to approximately 15 percent. The operation in Lithuania was predicted to prosper.385 Fören-ingsSparbanken’s cooperation with Bank Handlowy continued, and its own-ership was now about eight percent. Involvement in the Baltic region was not welcomed by everyone at home, as the investments were regarded too risky. For example, the Swedish newspaper FinansTidningen compared the size of economy in the region to that of the Swedish county of Uppsala386. FöreningsSparbanken was nevertheless aware of the risks it was exposed to and therefore worked on decentralizing the organization, and local offices was consistently reporting to HQ about risks387.
380 Bjäringer, R. (1999). Börs & Finans: FS-banken på jakt efter ny VD. Dagens Industri, 3 December; Gimbe, P. (1999). Många huvuden fick rulla. FinansTidningen, 30 December; Björk, S. (1999). Special: FöreningsSparbanken – Göran Collerts bank. Veckans Affärer, 6 December 381 FöreningsSparbanken Annual Report 1999, p. 4 382 Haskel, A. (1999). Visionslös VD håller fortet efter Geijer. FinansTidningen, 27 October 383 FöreningsSparbanken Annual Report 1999, p. 35; Nyhetsbyrån Direkt (1999). FS-Banken: Inga planer i dagsläget köpa hela Hansabank – VD. Nyhetsbyrån Direkt, 20 October 384 Dagens Industri (1999). Swedbankdotter köper lettisk bank. Dagens Industri, 7 December 385 FöreningsSparbanken Annual Report 1999, p. 46-47 386 Haskel, A. (1999). Meritanordbanken bygger kontorsnät i Baltikum. FinansTidningen, 18 June 387 FöreningsSparbanken Annual Report 1999, p. 56-58
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lion. Sparebank 1 had four regional and 16 local savings banks with 1.2 mil-lion private and 100,000 corporate customers serviced through 380 offices.371 One new office opened in Oslo (Norway) that focused on international busi-ness, capital and money-market services. CFO Nils-Fredrik Nyblaeus was evidently happy with the investments in Norway as he declared: “Above all there is great potential in savings, in Norway saving in banks averages 50 percent of the portfolio while in Sweden the proportion is 25 percent”.372 The board chairman, Göran Collert, argued that there were no further plans to acquire Norwegian banks. Instead there was an interest in re-entering Den-mark since the bank had sold all of its shares in Bikuben Girobank earlier in the year for a capital gain of USD 28.8 million.373 Bikuben Girobank had left the Nordic Banking Group and no longer cooperated with other Nordic banks, having other plans, which prompted FöreningsSparbanken’s depar-ture374. Communication manager Frydén accompanied Collert’s announce-ment by saying that the investments in Sparebank 1 felt right and, “we have no ambition to enter the Norwegian banking market through major acquisi-tions. Norway is of interest to our Nordic networking”375. In the long term, however, the ambition was to merge with Norwegian Sparebank 1 and Finn-ish Aktia Sparbank376. By 1999 the merger between Föreningsbanken and Sparbanken had been finalized. CEO Geijer celebrated that the fusion was already yielding im-proved profits377. The very same year FöreningsSparbanken re-entered Den-mark by investing USD 906 million after a bidding war with Danish bank Kapital Holding to acquire 60-percent ownership of the Danish bank FIH. Interestingly, FIH’s main focus was on business customers in comparison to FöreningsSparbanken, which focused on private banking.378 The plan was to attain full ownership within a few years379. But before the decade came to the
371 Ibid. 372 Ibid. 373 Ibid.; Roijer, P. (1998). Belåtenhet i FöreningsSparbanken. Svenska Dagbladet, 22 Octo-ber; FöreningsSparbanken Press Release (1998). FöreningsSparbanken har sålt alla sina aktier i danska BG Bank. 19 February 374 Andersson, J. (1998). Förenings Sparbanken satsar danskt. Sydsvenska Dagbladet, 20 February 375 Belfrage, S. (1998). Svenska banker tar norsk fusion med ro. FinansTidningen, 17 Sep-tember 376 Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 Mars 377 Roijer, P. (1998). Belåtenhet i FöreningsSparbanken. Svenska Dagbladet, 22 October 378 Braconier, F. (2008). FSB vill sälja av dansk affärsbank. Svenska Dagbladet, 30 March; CNN (1999). Swedbank eyes Danish buy. CNN, 13 September; Latour, A. (1999). Swed-bank’s $906m bid to buy Denmark’s FIH topples plans of Kapital Holding. The Financial Express, 15 September; Dagens Industri (1999). Unibank gör 500 Mkr i reavinst. Dagens Industri, 13 October; Anderson, J. (1999). FS-Banken i bud på dansk bank. FinansTidningen, 14 September 379 Öhlin, H. (2002). FöreningsSparbanken: Nöjd med 60 % ägande i Hansabank – CFO. Nyhetsbyrån Ticker, 27 August
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end Geijer was released from duty as CEO, and Göran Ahlström temporarily replaced him. Carl Erik Stålberg was proposed to replace Geijer, but he was regarded as not being up to the job at the time, while Geijer was released from duty as he was deemed to lack the right qualities to pilot the bank into the new millennium. Although the bank had previously praised his work, the board felt that they and Geijer no longer shared the same ideas.380
“Together we have built a foundation to be able to become the leading uni-versal bank in the Nordic and Baltic Sea region into the 21st century. All the hard work will now bring prosperity to us and our customers, and the groundwork has been laid for long term increased value to our sharehold-ers.”381
As Ahlström had only a temporary replacement position, most of his efforts were based on the board’s will and recommendations. He conceded that there were no plans for making any acquisitions, even though the bank’s interest in northern Germany increased382. The previous vision to become a leading bank in the Baltic Sea region continued under Ahlström’s leadership. To get there, Hansabank would be one of the more important assets. Conse-quently FöreningsSparbanken became the majority shareholder in Hansa-bank, with 52.64-percent ownership after an investment of USD 177 mil-lion383. Only a few months later Hansabank purchased full ownership of the Baltic regional bank Ventspils apvienota Baltijas bank384. At the time Hansa-bank controlled 50 percent of the market share in Estonia, while Hansa-bank’s subsidiary in Latvia increased its market share to approximately 15 percent. The operation in Lithuania was predicted to prosper.385 Fören-ingsSparbanken’s cooperation with Bank Handlowy continued, and its own-ership was now about eight percent. Involvement in the Baltic region was not welcomed by everyone at home, as the investments were regarded too risky. For example, the Swedish newspaper FinansTidningen compared the size of economy in the region to that of the Swedish county of Uppsala386. FöreningsSparbanken was nevertheless aware of the risks it was exposed to and therefore worked on decentralizing the organization, and local offices was consistently reporting to HQ about risks387.
380 Bjäringer, R. (1999). Börs & Finans: FS-banken på jakt efter ny VD. Dagens Industri, 3 December; Gimbe, P. (1999). Många huvuden fick rulla. FinansTidningen, 30 December; Björk, S. (1999). Special: FöreningsSparbanken – Göran Collerts bank. Veckans Affärer, 6 December 381 FöreningsSparbanken Annual Report 1999, p. 4 382 Haskel, A. (1999). Visionslös VD håller fortet efter Geijer. FinansTidningen, 27 October 383 FöreningsSparbanken Annual Report 1999, p. 35; Nyhetsbyrån Direkt (1999). FS-Banken: Inga planer i dagsläget köpa hela Hansabank – VD. Nyhetsbyrån Direkt, 20 October 384 Dagens Industri (1999). Swedbankdotter köper lettisk bank. Dagens Industri, 7 December 385 FöreningsSparbanken Annual Report 1999, p. 46-47 386 Haskel, A. (1999). Meritanordbanken bygger kontorsnät i Baltikum. FinansTidningen, 18 June 387 FöreningsSparbanken Annual Report 1999, p. 56-58
92
The year 2000 ended in success as the bank made its best earnings ever (USD 1 098.7 million, an enhancement of 45 percent over the previous year) and finished the year with a return on equity of almost 20 percent. But before this, a number of other interesting activities transpired during the year. In March the bank opened a branch in Oslo (Norway) and when the month had passed a new CEO was named, Birgitta Johansson-Hedberg with a bache-lor’s degree in psychology.388 But the media were skeptical due to Johans-son-Hedberg’s limited experience in banking and the fact that she had never held a managing position with a bank. The chairman of the board, Göran Collert, defended the decision by saying that, “it is not about ‘banking’, it is about leading people and having a knowledge of the new IT technologies”389. Before the year ended FöreningsSparbanken sold all its shares in the Polish Bank Handlowy. Citibank invested 50 percent ownership in Bank Hand-lowy, which in turn prompted FöreningsSparbanken to drop its interest in the bank. However, it was able to make a profit of USD 49.7 million for its shares.390 The exit from Poland was nevertheless not intended as a farewell according to communication manager Einar Frydén:
“Poland is an important and prioritized market. The sale of our possessions does not change this. We are planning an advanced collaboration with Citi-bank Handlowy. […] We are looking at how we can increase our presence ra-ther than reduce it. […] Selling Bank Handlowy was part of a complete own-ership restructuring that we think is good for the Polish bank. For our part, the possessions were merely a strategic demonstration and not decisive re-garding our long-sightedness in Poland. It was not a bad deal for our share-holders either.”391
Frydén also said that the bank was inventorying the situation in the Polish market and the bank would need to find another way to expand in Poland. Fortunately the deal struck with Citibank was profitable, and the bank was able to attain experience from Poland392. All the same CEO Johansson-Hedberg formulated a different vision: “The capital gains will primarily be invested in the development of new business to further enhance Swedbank’s
388 FöreningsSparbanken Annual Report 1999; 2000 389 Gustafsson, A. (2000). Småländska tar över FöreningsSparbanken. Förenade Landsorts Tidningar, 10 February 390 TT (2000). FöreningsSparbanken säljer innehav i polsk bank. TT, 31 May; Nyhetsbyrån Direkt (2000). FS-banken: Säljer innehavet bank Handlowy, reavinst 450 mkr. Nyhetsbyrån Direkt, 31 May; Meynert, C. (2000). Amerikanska Citigroup vill köpa polsk bank. Svenska Dagbladet, 27 January; Nyhetsbyrån Direkt (2000). FS-Banken: Säljer andel i Bank Hand-lowy till Citigroup. Nyhetsbyrån Direkt, 9 March; Sönne, A. (2000). FS-banken på väg att lämna polsk allians. Dagens Industri, 23 May 391 Gianuzzi, M. (2000). FS-Banken letar åter i Polen. Dagens Industri, 22 July 392 FöreningsSparbanken Annual Report 2000, p. 50-51
93
investment in e-business”393. From the sale of Bank Handlowy USD 20.3 million was used to invest in an Internet banking expansion in Denmark (Firstviewbank)394, although the CEO seven years later painted a different picture:
“In Poland we had 4 percent of a bank, but we had absolutely no control over operations. So when the U.S. Citigroup bought 75 percent of the shares and offered to take over our share, we simply had to say yes”395
Meanwhile FöreningsSparbanken increased its ownership in Hansabank to 57.72 percent by exchanging ownerships in Bank Handlowy to Hansabank, which by that time had 205 000 Internet customers396. The bank also bid USD 36.8 million for Lithuania’s second largest bank Lietuvos Taupomasis Bankas (LTB) for complete ownership397. LTB had 1.5 million customers in its daily business, mostly private customers398. By investing in LTB, Hansa-bank’s affiliates in Lithuania and Latvia were anticipated to improve busi-ness earnings by 47 percent and strengthen their position in the region. Hansabank/FöreningsSparbanken was not the only one chasing LTB. Instead FöreningsSparbanken once again found itself racing for a bank against SEB399. Together the two Swedish banks dominated 90 percent of the bank-ing market in Estonia, and the two competed for the remaining market share as well as for control over the financial markets in Latvia and Lithuania. After losing the battle over Hansabank SEB turned towards the next largest bank in the region and bought Vilniaus Bankas, but once again the two banks contended for the same bank.400 Vice president Wijkström told:
393 Nyhetsbyrån Direkt (2000). FS-banken: Säljer innehavet bank Handlowy, reavinst 450 mkr. Nyhetsbyrån Direkt, 31 May 394 Edling, L. (2000). FS-banken öppnar för fusion. Veckans Affärer, 11 December; Lindstedt, T. (2001). FöreningsSparbanken startar dansk nätbank. Sydsvenskan, 14 February 395 Törnwall, M. (2007). Swedbank ökar takten i Ryssland och Ukraina. Dagens Industri, 23 April 396 FöreningsSparbanken press release (2000). FöreningsSparbanken förvärvar ytterligare drygt 5% av aktierna i estniska Hansapank. 28 December; Nyhetsbyrån Direkt (2001). FS-Sparbanken: Hansabank köper litauiska LTB för ca 375 mkr. Nyhetsbyrån Direkt, 23 April 397 FöreningsSparbanken (2001). Press release. Hansabank köper litauiska sparbanken LTB. 23 April; Nyhetsbyrån Direkt (2001). FS-Sparbanken: Hansabank köper litauiska LTB för ca 375 mkr. Nyhetsbyrån Direkt, 23 April; Dagens Industri (2001). Svenskt bankköp klart i Litauen. Dagens Industri, 24 April; Håstad, D. (2000). FS-banken vill köpa litauisk bank. Dagens Nyheter, 30 December; Dagens Industri (2001). Nordiska bankrivaler kämpar om Litauen. Dagens Industri, 18 January 398 FöreningsSparbanken Annual Report 2001, p. 50; Waikla, R. (2001). Nordiska bankrivaler kämpar om Litauen. Dagens Industri, 19 January; Nyhetsbyrån Direkt (2000). FS-Banken: Hansapank förhandlar om köp av litauisk bank. Nyhetsbyrån Direkt, 29 December 399 Waikla, R. (2001). Nordiska bankrivaler kämpar om Litauen. Dagens Industri, 19 January 400 Ibid.; Håstad, D. (2000). FS-banken vill köpa litauisk bank. Dagens Nyheter, 30 Decem-ber; Dagens Industri (2001). Nordiska bankrivaler kämpar om Litauen. Dagens Industri, 18 January; Dagens Industri (2001). Svenskt bankköp klart i Litauen. Dagens Industri, 24 April; TT (2001). Klartecken för bankköp i Litauen. TT, 24 May
92
The year 2000 ended in success as the bank made its best earnings ever (USD 1 098.7 million, an enhancement of 45 percent over the previous year) and finished the year with a return on equity of almost 20 percent. But before this, a number of other interesting activities transpired during the year. In March the bank opened a branch in Oslo (Norway) and when the month had passed a new CEO was named, Birgitta Johansson-Hedberg with a bache-lor’s degree in psychology.388 But the media were skeptical due to Johans-son-Hedberg’s limited experience in banking and the fact that she had never held a managing position with a bank. The chairman of the board, Göran Collert, defended the decision by saying that, “it is not about ‘banking’, it is about leading people and having a knowledge of the new IT technologies”389. Before the year ended FöreningsSparbanken sold all its shares in the Polish Bank Handlowy. Citibank invested 50 percent ownership in Bank Hand-lowy, which in turn prompted FöreningsSparbanken to drop its interest in the bank. However, it was able to make a profit of USD 49.7 million for its shares.390 The exit from Poland was nevertheless not intended as a farewell according to communication manager Einar Frydén:
“Poland is an important and prioritized market. The sale of our possessions does not change this. We are planning an advanced collaboration with Citi-bank Handlowy. […] We are looking at how we can increase our presence ra-ther than reduce it. […] Selling Bank Handlowy was part of a complete own-ership restructuring that we think is good for the Polish bank. For our part, the possessions were merely a strategic demonstration and not decisive re-garding our long-sightedness in Poland. It was not a bad deal for our share-holders either.”391
Frydén also said that the bank was inventorying the situation in the Polish market and the bank would need to find another way to expand in Poland. Fortunately the deal struck with Citibank was profitable, and the bank was able to attain experience from Poland392. All the same CEO Johansson-Hedberg formulated a different vision: “The capital gains will primarily be invested in the development of new business to further enhance Swedbank’s
388 FöreningsSparbanken Annual Report 1999; 2000 389 Gustafsson, A. (2000). Småländska tar över FöreningsSparbanken. Förenade Landsorts Tidningar, 10 February 390 TT (2000). FöreningsSparbanken säljer innehav i polsk bank. TT, 31 May; Nyhetsbyrån Direkt (2000). FS-banken: Säljer innehavet bank Handlowy, reavinst 450 mkr. Nyhetsbyrån Direkt, 31 May; Meynert, C. (2000). Amerikanska Citigroup vill köpa polsk bank. Svenska Dagbladet, 27 January; Nyhetsbyrån Direkt (2000). FS-Banken: Säljer andel i Bank Hand-lowy till Citigroup. Nyhetsbyrån Direkt, 9 March; Sönne, A. (2000). FS-banken på väg att lämna polsk allians. Dagens Industri, 23 May 391 Gianuzzi, M. (2000). FS-Banken letar åter i Polen. Dagens Industri, 22 July 392 FöreningsSparbanken Annual Report 2000, p. 50-51
93
investment in e-business”393. From the sale of Bank Handlowy USD 20.3 million was used to invest in an Internet banking expansion in Denmark (Firstviewbank)394, although the CEO seven years later painted a different picture:
“In Poland we had 4 percent of a bank, but we had absolutely no control over operations. So when the U.S. Citigroup bought 75 percent of the shares and offered to take over our share, we simply had to say yes”395
Meanwhile FöreningsSparbanken increased its ownership in Hansabank to 57.72 percent by exchanging ownerships in Bank Handlowy to Hansabank, which by that time had 205 000 Internet customers396. The bank also bid USD 36.8 million for Lithuania’s second largest bank Lietuvos Taupomasis Bankas (LTB) for complete ownership397. LTB had 1.5 million customers in its daily business, mostly private customers398. By investing in LTB, Hansa-bank’s affiliates in Lithuania and Latvia were anticipated to improve busi-ness earnings by 47 percent and strengthen their position in the region. Hansabank/FöreningsSparbanken was not the only one chasing LTB. Instead FöreningsSparbanken once again found itself racing for a bank against SEB399. Together the two Swedish banks dominated 90 percent of the bank-ing market in Estonia, and the two competed for the remaining market share as well as for control over the financial markets in Latvia and Lithuania. After losing the battle over Hansabank SEB turned towards the next largest bank in the region and bought Vilniaus Bankas, but once again the two banks contended for the same bank.400 Vice president Wijkström told:
393 Nyhetsbyrån Direkt (2000). FS-banken: Säljer innehavet bank Handlowy, reavinst 450 mkr. Nyhetsbyrån Direkt, 31 May 394 Edling, L. (2000). FS-banken öppnar för fusion. Veckans Affärer, 11 December; Lindstedt, T. (2001). FöreningsSparbanken startar dansk nätbank. Sydsvenskan, 14 February 395 Törnwall, M. (2007). Swedbank ökar takten i Ryssland och Ukraina. Dagens Industri, 23 April 396 FöreningsSparbanken press release (2000). FöreningsSparbanken förvärvar ytterligare drygt 5% av aktierna i estniska Hansapank. 28 December; Nyhetsbyrån Direkt (2001). FS-Sparbanken: Hansabank köper litauiska LTB för ca 375 mkr. Nyhetsbyrån Direkt, 23 April 397 FöreningsSparbanken (2001). Press release. Hansabank köper litauiska sparbanken LTB. 23 April; Nyhetsbyrån Direkt (2001). FS-Sparbanken: Hansabank köper litauiska LTB för ca 375 mkr. Nyhetsbyrån Direkt, 23 April; Dagens Industri (2001). Svenskt bankköp klart i Litauen. Dagens Industri, 24 April; Håstad, D. (2000). FS-banken vill köpa litauisk bank. Dagens Nyheter, 30 December; Dagens Industri (2001). Nordiska bankrivaler kämpar om Litauen. Dagens Industri, 18 January 398 FöreningsSparbanken Annual Report 2001, p. 50; Waikla, R. (2001). Nordiska bankrivaler kämpar om Litauen. Dagens Industri, 19 January; Nyhetsbyrån Direkt (2000). FS-Banken: Hansapank förhandlar om köp av litauisk bank. Nyhetsbyrån Direkt, 29 December 399 Waikla, R. (2001). Nordiska bankrivaler kämpar om Litauen. Dagens Industri, 19 January 400 Ibid.; Håstad, D. (2000). FS-banken vill köpa litauisk bank. Dagens Nyheter, 30 Decem-ber; Dagens Industri (2001). Nordiska bankrivaler kämpar om Litauen. Dagens Industri, 18 January; Dagens Industri (2001). Svenskt bankköp klart i Litauen. Dagens Industri, 24 April; TT (2001). Klartecken för bankköp i Litauen. TT, 24 May
94
“If this goes through it will be an enormous expansion. With this acquisition Hansabank becomes the second largest bank in Lithuania. Today, private de-posits in Lithuanian Hansapank are two percent, [but] after the acquisition [they will be] 35 percent […] the acquisition would double our number of customers and employees”401
As in previous years FöreningsSparbanken’s interest in northern Germany continued, though no investments were made402. Branches in London and New York received new friends as the bank started up branches in Tokyo and Oslo403, and to coordinate all the bank’s activities on foreign ground the bank established a new strategic unit named ‘Allianser’404. Regarding the ownership in Norwegian bank Sparebank 1 Gruppen FöreningsSparbanken was dissatisfied with its progress. As with its ownership of Aktia Sparbank in Finland, FöreningsSparbanken noted that the ownership was too small.405
5.3 2001-2007 Increases expansion in the Baltic region In the following period FöreningsSparbanken increased its investments in a number of foreign markets but foremost in the Baltic region, as Table 6 il-luminates below. Early reports indicated a possible merger between Fören-ingsSparbanken and Swedish bank SEB, rumors that never materialized406. FöreningsSparbanken expands in the Baltic region
! !Year 2001 2002 2003 2004 2005 2006 2007
Sweden 553 538 516 492 476 477 459
9763 9484 9255 9164 8979 8891 8892
Baltic region
393 306 280 283 287 298 299
7989 5744 6728 6619 7330 8746 9916
Bold = Offices, Italic = Staff
Table 6. FöreningsSparbanken’s expansion in 2001-2007
In the previous year an Internet banking campaign was introduced into Denmark, and to expand this effort FöreningsSparbanken promoted Firstviewbank in Denmark. Firstviewbank was an Internet bank in Denmark initiated with the purpose of testing new ideas, mainly targeting young fami-
401 Waikla, R. (2001). Nordiska bankrivaler kämpar om Litauen. Dagens Industri, 19 January 402 FöreningsSparbanken Annual Report 2000, p. 50-51 403 FöreningsSparbanken Annual Report 2000, p. 43 404 FöreningsSparbanken Annual Report 2000, p. 50 405 Öhlin, H. (2002). FöreningsSparbanken: Nöjd med 60 % ägande i Hansabank – CFO. Nyhetsbyrån Ticker, 27 August 406 FöreningsSparbanken Annual Report 2001, p. 5-6; Djuphammar, D. (2001). FS-banken: Resultat 6.385 mkr väntas 9 mån – sme direkt. Nyhetsbyrån Direkt, 19 October; Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March
95
lies407. If it was to be successful it would be introduced onto other markets408. CEO Johansson-Hedberg argued that the choice of Denmark was logical. Internet banking in the country was not as advanced as in other Scandinavian countries, which made it an interesting and open market, although SEB had made a similar but unsuccessful attempt409. In the long term the goal was to arrange 150 000 new customers within three years410. Six months later the vice CEO of FöreningsSparbanken (Gert Engman) stressed issues of finding customers and that short-term profitability was less than anticipated:
“Firstviewbank started as a pilot project in February this year. However, rap-idly changing market conditions have led a point where it would be more dif-ficult than we estimated to recruit new customers in the Danish market. The road to profitability would be too long, which we now take the consequences of.”411
Six months after initiation of Firstviewbank the establishment was shut down due to negative experience, as FöreningsSparbanken faced an undesir-able future412. The costs of the unsuccessful experience were USD 34.5 mil-lion413. Worth noting about the experiment is that the bank focused on private customers despite the fact the bank had no prior operations targeting private consumers in the country414. But Peter Nordblad, CEO of Firstviewbank, said that the money was not all wasted: “A big part of the money was to build a new platform that we in turn might reuse or sell. Besides, we have gained valuable experience from this adventure”415. He also added, as others before him, that the road to profitability would have been too long and harder than the bank had predicted. Likewise Einar Frydén, the communication manager, reported struggles in finding customers and that it had been tougher than
407 Edling, L. (2000). FS-banken öppnar för fusion. Veckans Affärer, 11 December; Lindstedt, T. (2001). FöreningsSparbanken startar dansk nätbank. Sydsvenskan, 14 February; Förenings-Sparbanken Annual Report 2000, p. 17; Thorngren, N. (2000). FS-banken döper sin danska sajt. Dagens Industri, 12 Decemeber 408 Edling, L. (2000). FS-banken öppnar för fusion. Veckans Affärer, 11 December; Carlbom, T. (2000). Special: Årets välgörare – Nu måste hon upp till bevis. Veckans Affärer, 18 De-cember 409 Ibid. 410 Press release (2001). Firstviewbank FöreningsSparbankens Internetbank i Danmark. Före-ningsSparbanken, 14 February; TT (2001). FöreningsSparbanken startar dansk internetbank. TT, 14 February; Nyhetsbyrån Direkt (2001). FS-banken: Inviger internetbank i Danmark. Nyhetsbyrån Direkt, 14 February 411 Press release (2001). FöreningsSparbanken avvecklar dansk Internetsatsning. Förenings-Sparbanken, 29 August 412 FöreningsSparbanken Annual Report 2001, p. 5; TT (2001). FöreningsSparbanken avveck-lar dansk internetbank. TT, 29 August; Hagström, M. (2001). FöreningsSparbanken / Dansk e-bank läggs ner efter ett halvår. Svenska Dagbladet, 30 August 413 Hagström, M. (2001). FöreningsSparbanken / Dansk e-bank läggs ner efter ett halvår. Svenska Dagbladet, 30 August 414 Ibid. 415 Svedbom, A. (2001). FS-banken lägger ned danska internetbanken Firstviewbank. Dagens Industri, 30 August
94
“If this goes through it will be an enormous expansion. With this acquisition Hansabank becomes the second largest bank in Lithuania. Today, private de-posits in Lithuanian Hansapank are two percent, [but] after the acquisition [they will be] 35 percent […] the acquisition would double our number of customers and employees”401
As in previous years FöreningsSparbanken’s interest in northern Germany continued, though no investments were made402. Branches in London and New York received new friends as the bank started up branches in Tokyo and Oslo403, and to coordinate all the bank’s activities on foreign ground the bank established a new strategic unit named ‘Allianser’404. Regarding the ownership in Norwegian bank Sparebank 1 Gruppen FöreningsSparbanken was dissatisfied with its progress. As with its ownership of Aktia Sparbank in Finland, FöreningsSparbanken noted that the ownership was too small.405
5.3 2001-2007 Increases expansion in the Baltic region In the following period FöreningsSparbanken increased its investments in a number of foreign markets but foremost in the Baltic region, as Table 6 il-luminates below. Early reports indicated a possible merger between Fören-ingsSparbanken and Swedish bank SEB, rumors that never materialized406. FöreningsSparbanken expands in the Baltic region
! !Year 2001 2002 2003 2004 2005 2006 2007
Sweden 553 538 516 492 476 477 459
9763 9484 9255 9164 8979 8891 8892
Baltic region
393 306 280 283 287 298 299
7989 5744 6728 6619 7330 8746 9916
Bold = Offices, Italic = Staff
Table 6. FöreningsSparbanken’s expansion in 2001-2007
In the previous year an Internet banking campaign was introduced into Denmark, and to expand this effort FöreningsSparbanken promoted Firstviewbank in Denmark. Firstviewbank was an Internet bank in Denmark initiated with the purpose of testing new ideas, mainly targeting young fami-
401 Waikla, R. (2001). Nordiska bankrivaler kämpar om Litauen. Dagens Industri, 19 January 402 FöreningsSparbanken Annual Report 2000, p. 50-51 403 FöreningsSparbanken Annual Report 2000, p. 43 404 FöreningsSparbanken Annual Report 2000, p. 50 405 Öhlin, H. (2002). FöreningsSparbanken: Nöjd med 60 % ägande i Hansabank – CFO. Nyhetsbyrån Ticker, 27 August 406 FöreningsSparbanken Annual Report 2001, p. 5-6; Djuphammar, D. (2001). FS-banken: Resultat 6.385 mkr väntas 9 mån – sme direkt. Nyhetsbyrån Direkt, 19 October; Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March
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lies407. If it was to be successful it would be introduced onto other markets408. CEO Johansson-Hedberg argued that the choice of Denmark was logical. Internet banking in the country was not as advanced as in other Scandinavian countries, which made it an interesting and open market, although SEB had made a similar but unsuccessful attempt409. In the long term the goal was to arrange 150 000 new customers within three years410. Six months later the vice CEO of FöreningsSparbanken (Gert Engman) stressed issues of finding customers and that short-term profitability was less than anticipated:
“Firstviewbank started as a pilot project in February this year. However, rap-idly changing market conditions have led a point where it would be more dif-ficult than we estimated to recruit new customers in the Danish market. The road to profitability would be too long, which we now take the consequences of.”411
Six months after initiation of Firstviewbank the establishment was shut down due to negative experience, as FöreningsSparbanken faced an undesir-able future412. The costs of the unsuccessful experience were USD 34.5 mil-lion413. Worth noting about the experiment is that the bank focused on private customers despite the fact the bank had no prior operations targeting private consumers in the country414. But Peter Nordblad, CEO of Firstviewbank, said that the money was not all wasted: “A big part of the money was to build a new platform that we in turn might reuse or sell. Besides, we have gained valuable experience from this adventure”415. He also added, as others before him, that the road to profitability would have been too long and harder than the bank had predicted. Likewise Einar Frydén, the communication manager, reported struggles in finding customers and that it had been tougher than
407 Edling, L. (2000). FS-banken öppnar för fusion. Veckans Affärer, 11 December; Lindstedt, T. (2001). FöreningsSparbanken startar dansk nätbank. Sydsvenskan, 14 February; Förenings-Sparbanken Annual Report 2000, p. 17; Thorngren, N. (2000). FS-banken döper sin danska sajt. Dagens Industri, 12 Decemeber 408 Edling, L. (2000). FS-banken öppnar för fusion. Veckans Affärer, 11 December; Carlbom, T. (2000). Special: Årets välgörare – Nu måste hon upp till bevis. Veckans Affärer, 18 De-cember 409 Ibid. 410 Press release (2001). Firstviewbank FöreningsSparbankens Internetbank i Danmark. Före-ningsSparbanken, 14 February; TT (2001). FöreningsSparbanken startar dansk internetbank. TT, 14 February; Nyhetsbyrån Direkt (2001). FS-banken: Inviger internetbank i Danmark. Nyhetsbyrån Direkt, 14 February 411 Press release (2001). FöreningsSparbanken avvecklar dansk Internetsatsning. Förenings-Sparbanken, 29 August 412 FöreningsSparbanken Annual Report 2001, p. 5; TT (2001). FöreningsSparbanken avveck-lar dansk internetbank. TT, 29 August; Hagström, M. (2001). FöreningsSparbanken / Dansk e-bank läggs ner efter ett halvår. Svenska Dagbladet, 30 August 413 Hagström, M. (2001). FöreningsSparbanken / Dansk e-bank läggs ner efter ett halvår. Svenska Dagbladet, 30 August 414 Ibid. 415 Svedbom, A. (2001). FS-banken lägger ned danska internetbanken Firstviewbank. Dagens Industri, 30 August
96
predicted416. Board chairman, Göran Collert, later suggested that this deal was the bank’s contribution to the ‘IT bubble’417. Despite the disappointment the bank continued to expand in Denmark via increased the ownership of FIH from 62.5 to 65 percent at a cost of USD 20.9 million418. Staff reductions in Sweden continued although staff abroad rose (notably in Hansabank). In May a branch opened in Shanghai and a month earlier Hansabank celebrated its tenth anniversary by having its bid for LTB accept-ed419. The previous year LTB had made profits about USD four million420. According to Anders Sahlén, senior adviser in FöreningsSparbanken and chairman of the board in Hansabank, this was a big step forward:
“It is very gratifying for Hansabank as well as FöreningsSparbanken that this purchase comes about. It means that Hansabank group now has a strong posi-tion in all three Baltic States and for the use of those customers the bank now is the only real Baltic bank in the world. For FöreningsSparbanken this is an-other leap towards realizing the bank’s Baltic strategy.”421
Annika Wijkström, the vice CEO of FöreningsSparbanken and responsible for international bank alliances, agreed:
“With LTB in Lithuania and Hansabank’s already strong position in Estonia and Latvia we will strengthen our network even further in the Nordic and Baltic Sea region which our customers, mostly small and medium-sized busi-ness, can benefit from.”422
Vice CEO Wijkström declared that this would be a valuable resource for FöreningsSparbanken and its customers. LTB changed its name to Hansa-LTB, and over the coming 18 months USD 14.7 million was spent to inject capital into the business and modernize the IT systems in LTB423. These in-vestments can explain some of the losses that LTB made during year 2001;
416 Hagström, M. (2001). FöreningsSparbanken/Dansk e-bank läggs ner efter halvår. Svenska Dagbladet, 30 August 417 Braconier, F. (2004). FSB vill sälja av dansk affärsbank. Svenska Dagbladet, 24 March 418 Nyhetsbyrån Direkt (2001). FS-Banken 9 mån: Bättre resultat i Danmark och Estland. Nyhetsbyrån Direkt, 23 October; Press release (2001). Swedbank acquiring an additional 2.5 per cent of FI-Holding. FöreningsSparbanken, 14 February 419 FöreningsSparbanken Annual Report 2001, p. 5; TT (2001). Hansabank köper litauiska LTB. TT, 23 April; Press release (2001). Hansabank köper litauiska sparbanken LTB. Före-ningsSparbanken, 23 April; Nyhetsbyrån Direkt (2001). FS-Sparbanken: Hansabank köper litauiska LTB för ca 375 mkr. Nyhetsbyrån Direkt, 23 April 420 Dagens Industri (2001). Svenskt bankköp klart i Litauen. Dagens Industri, 24 April 421 Press release (2001). Hansabank köper litauiska sparbanken LTB. FöreningsSparbanken, 23 April 422 Ibid. 423 FöreningsSparbanken Annual Report 2002, p. 8; TT (2001). Hansabank köper litauiska LTB. TT, 23 April
97
after the first nine months LTB lost almost USD 33.1 million, in comparison to previous year when the bank’s losses were about USD 9.5 million424. On September 11, 2001, the World Trade Center was attacked. One impact of this act was great uncertainty on the international market in the coming years. FöreningsSparbanken’s vision for the future was cut back, but the number of foreign customers continued to increase. Via Hansabank, Fören-ingsSparbanken opened a limited operation of leasing and export financing in Russia. Talks of the countries in the Baltic region entering the EU infused optimism into FöreningsSparbanken425. At the time FöreningsSparbanken’s investment of USD 20.3 million increased ownership in Hansabank to 60 percent and CFO Nils-Erik Nyblaeus stated that, “60-percent is pretty opti-mal and provides good control and influence”426. The bank also seemed de-lighted with its development in Denmark as its ownership in FIH increased to 70 percent through an investment of USD 20.6 million427. FIH and Hansa-bank were at the time the parts of FöreningsSparbanken that accounted for the largest portion of the increase in deposits by customers. Nonetheless, FöreningsSparbanken felt although FIH and Hansabank did well, they need-ed to be better. The bank was also unhappy with investments in Norway and Finland,428 effectively resulting in an investment of USD 21.6 million for 33.3-percent ownership of Norwegian First Securities429. Three years after the appointment of Johansson-Hedberg as CEO, she left her position; Jan Lidén (former head of Swedbank Markets) replaced her. Behind her back, board chairman Göran Collert, handpicked his protégé Carl Eric Stålberg as his successor. Collert chose him in 2001 but Stålberg had to be tested first, which is why he served as vice president for two years. Jo-hansson-Hedberg was different from Stålberg and Collert, and these differ-ences soon led to her departure.430 Despite a worried global market the size of the activities in the Baltic region were approaching activities in Sweden. Though resources available and generated in Sweden were far greater than in the Baltic region, the number of customers was closing in. In Sweden Fören-ingsSparbanken had approximately 4.3 million private customers in 2003 424 Dagens Industri (2001). Litauisk bankförlust i FöreningsSparbanken. Dagens Industri, 16 October 425 FöreningsSparbanken Annual Report 2002, p. 44 426 Öhlin, H. (2002). FöreningsSparbanken: Nöjd med 60 % ägande i Hansabank – CFO. Nyhetsbyrån Ticker, 27 August; FöreningsSparbanken Annual Report 2002, p. 59 427 Press release (2002). FöreningsSparbanken: FöreningsSparbanken förvärvar ytterligare 2,5 procent av aktierna I FI-Holding. FöreningsSparbanken, 8 February 428 Ibid.; Ström, C. G. & TT (2002). Sämre än väntat för FöreningsSparbanken. TT, 14 Febru-ary 429 Press release (2002). FöreningsSparbanken: FöreningsSparbanken går in som storägare. FöreningsSparbanken, 27 June; Nyhetsbyrån Direkt (2002). FS-Banken: Köper 33,3 procent i First Securities. Nyhetsbyrån Direkt, 27 June 430 Forsberg, B. (2008). Storyn som skakar Swedbank. Affärsvärlden, 14 November; Sved-bom, A. & Lundell, S. (2009). Expansionen hotar fälla Stålberg. Dagens Industri, 14 March
96
predicted416. Board chairman, Göran Collert, later suggested that this deal was the bank’s contribution to the ‘IT bubble’417. Despite the disappointment the bank continued to expand in Denmark via increased the ownership of FIH from 62.5 to 65 percent at a cost of USD 20.9 million418. Staff reductions in Sweden continued although staff abroad rose (notably in Hansabank). In May a branch opened in Shanghai and a month earlier Hansabank celebrated its tenth anniversary by having its bid for LTB accept-ed419. The previous year LTB had made profits about USD four million420. According to Anders Sahlén, senior adviser in FöreningsSparbanken and chairman of the board in Hansabank, this was a big step forward:
“It is very gratifying for Hansabank as well as FöreningsSparbanken that this purchase comes about. It means that Hansabank group now has a strong posi-tion in all three Baltic States and for the use of those customers the bank now is the only real Baltic bank in the world. For FöreningsSparbanken this is an-other leap towards realizing the bank’s Baltic strategy.”421
Annika Wijkström, the vice CEO of FöreningsSparbanken and responsible for international bank alliances, agreed:
“With LTB in Lithuania and Hansabank’s already strong position in Estonia and Latvia we will strengthen our network even further in the Nordic and Baltic Sea region which our customers, mostly small and medium-sized busi-ness, can benefit from.”422
Vice CEO Wijkström declared that this would be a valuable resource for FöreningsSparbanken and its customers. LTB changed its name to Hansa-LTB, and over the coming 18 months USD 14.7 million was spent to inject capital into the business and modernize the IT systems in LTB423. These in-vestments can explain some of the losses that LTB made during year 2001;
416 Hagström, M. (2001). FöreningsSparbanken/Dansk e-bank läggs ner efter halvår. Svenska Dagbladet, 30 August 417 Braconier, F. (2004). FSB vill sälja av dansk affärsbank. Svenska Dagbladet, 24 March 418 Nyhetsbyrån Direkt (2001). FS-Banken 9 mån: Bättre resultat i Danmark och Estland. Nyhetsbyrån Direkt, 23 October; Press release (2001). Swedbank acquiring an additional 2.5 per cent of FI-Holding. FöreningsSparbanken, 14 February 419 FöreningsSparbanken Annual Report 2001, p. 5; TT (2001). Hansabank köper litauiska LTB. TT, 23 April; Press release (2001). Hansabank köper litauiska sparbanken LTB. Före-ningsSparbanken, 23 April; Nyhetsbyrån Direkt (2001). FS-Sparbanken: Hansabank köper litauiska LTB för ca 375 mkr. Nyhetsbyrån Direkt, 23 April 420 Dagens Industri (2001). Svenskt bankköp klart i Litauen. Dagens Industri, 24 April 421 Press release (2001). Hansabank köper litauiska sparbanken LTB. FöreningsSparbanken, 23 April 422 Ibid. 423 FöreningsSparbanken Annual Report 2002, p. 8; TT (2001). Hansabank köper litauiska LTB. TT, 23 April
97
after the first nine months LTB lost almost USD 33.1 million, in comparison to previous year when the bank’s losses were about USD 9.5 million424. On September 11, 2001, the World Trade Center was attacked. One impact of this act was great uncertainty on the international market in the coming years. FöreningsSparbanken’s vision for the future was cut back, but the number of foreign customers continued to increase. Via Hansabank, Fören-ingsSparbanken opened a limited operation of leasing and export financing in Russia. Talks of the countries in the Baltic region entering the EU infused optimism into FöreningsSparbanken425. At the time FöreningsSparbanken’s investment of USD 20.3 million increased ownership in Hansabank to 60 percent and CFO Nils-Erik Nyblaeus stated that, “60-percent is pretty opti-mal and provides good control and influence”426. The bank also seemed de-lighted with its development in Denmark as its ownership in FIH increased to 70 percent through an investment of USD 20.6 million427. FIH and Hansa-bank were at the time the parts of FöreningsSparbanken that accounted for the largest portion of the increase in deposits by customers. Nonetheless, FöreningsSparbanken felt although FIH and Hansabank did well, they need-ed to be better. The bank was also unhappy with investments in Norway and Finland,428 effectively resulting in an investment of USD 21.6 million for 33.3-percent ownership of Norwegian First Securities429. Three years after the appointment of Johansson-Hedberg as CEO, she left her position; Jan Lidén (former head of Swedbank Markets) replaced her. Behind her back, board chairman Göran Collert, handpicked his protégé Carl Eric Stålberg as his successor. Collert chose him in 2001 but Stålberg had to be tested first, which is why he served as vice president for two years. Jo-hansson-Hedberg was different from Stålberg and Collert, and these differ-ences soon led to her departure.430 Despite a worried global market the size of the activities in the Baltic region were approaching activities in Sweden. Though resources available and generated in Sweden were far greater than in the Baltic region, the number of customers was closing in. In Sweden Fören-ingsSparbanken had approximately 4.3 million private customers in 2003 424 Dagens Industri (2001). Litauisk bankförlust i FöreningsSparbanken. Dagens Industri, 16 October 425 FöreningsSparbanken Annual Report 2002, p. 44 426 Öhlin, H. (2002). FöreningsSparbanken: Nöjd med 60 % ägande i Hansabank – CFO. Nyhetsbyrån Ticker, 27 August; FöreningsSparbanken Annual Report 2002, p. 59 427 Press release (2002). FöreningsSparbanken: FöreningsSparbanken förvärvar ytterligare 2,5 procent av aktierna I FI-Holding. FöreningsSparbanken, 8 February 428 Ibid.; Ström, C. G. & TT (2002). Sämre än väntat för FöreningsSparbanken. TT, 14 Febru-ary 429 Press release (2002). FöreningsSparbanken: FöreningsSparbanken går in som storägare. FöreningsSparbanken, 27 June; Nyhetsbyrån Direkt (2002). FS-Banken: Köper 33,3 procent i First Securities. Nyhetsbyrån Direkt, 27 June 430 Forsberg, B. (2008). Storyn som skakar Swedbank. Affärsvärlden, 14 November; Sved-bom, A. & Lundell, S. (2009). Expansionen hotar fälla Stålberg. Dagens Industri, 14 March
98
while there were about 4 million in the Baltic region431. The bank had 243,000 business customers in Sweden and 150,000 in the Baltic region432. Even though the number of customers increased, the bank decreased its staff and offices (see Table 6). Mostly due to cutbacks and efficiency improve-ments. A shift was also made from 2003 and forward, as the bank aimed to increase its number of large business customers. Investment in FIH (Den-mark) continued as the bank spent USD 55 million to increase its ownership to 74.7 percent433. At the end of 2003 another interesting event occurred. FöreningsSparbanken sold its 3.9-percent ownership in Erste Bank, located in Austria, for USD 192.9 million, a profit of about USD 63.5 million over what the bank had paid434. According to the newly appointed CEO, FöreningsSparbanken’s good relationship with Erste Bank meant that there was no need to maintain ownership435. Instead FöreningsSparbanken exploited an opportunity to make profits from its investment. Rumors also arose that Swedbank was about to sell 60 percent of its ownership in FIH even though FöreningsSparbanken only months earlier stated that it was happy that lending in Denmark had increased and was progressing well436. Meanwhile, investments in Sparebank 1 in Norway were criticized as CEO Johansson-Hedberg deemed the product platform too small and not sufficiently independent437. This criticism was leveled after the bank had invested USD 25.5 million in the previous year to cover losses in Sparebank 1, a bank that had been showing losses since year 1999438. This was followed by a USD 27.4 million investment for full owner-ship of Norwegian Entercard AS439. 431 FöreningsSparbanken Annual Report 2003, p. ii 432 FöreningsSparbanken Annual Report 2003, p. ii 433 FöreningsSparbanken Annual Report 2003, p. 41; Nyhetsbyrån Direkt (2003). FS-banken: FIH ska bli heltäckande företagsbank – Tidn. Nyhetsbyrån Direkt, 17 November; Press rele-ase (2003). FöreningsSparbanken förvärvar ytterligare 5 procent av aktierna i FI-Holding. FöreningsSparbanken, 5 March 434 FöreningsSparbanken Annual Report 2003, p. 57; TT (2003). FöreningsSparbanken säljer andel i Erste Bank. TT, 18 June; Djuphammar, D. (2003). FS-Banken: Bekräftar försäljning innehav Erste Bank – PC. Nyhetsbyrån Direkt, 18 June; Öhlin, H. (2003). FS-Banken: Trolig reavinst fsg Erste Bank 500-600 Mkr – IR. Nyhetsbyrån Ticker, 18 June; Ström, C.G. & TT (2003). FS-Bankens vinst högre än väntat. Dagens Nyheter, 22 August; Ström, C.G. & TT (2003). FS-Bankens lönsamhet bättre än väntat. TT, 22 August 435 Öhlin, H. (2003). FS-Banken: Säljer aktiepost i Erste Bank, reavinst 489 Mkr. Nyhetsbyrån Ticker, 18 June 436 Nyhetsbyrån Direkt (2003). FS-banken planerar sälja andel i danska FIH. Dagens Industri, 19 December; Nyhetsbyrån Direkt (2003). FS-Banken: Tror ökningstakt utlåning kan fortsätta – VD. Nyhetsbyrån Direkt, 22 August 437 Nyhetsbyrån Direkt (2003). FS-Banken: Tror ökningstakt utlåning kan fortsätta – VD. Nyhetsbyrån Direkt, 22 August 438 FöreningsSparbanken Annual Report 2002, p. 59; Haskel, A. (2003). Analys: Förenings-Sparbanken – Flörtar med företagen. Veckans Affärer, 16 September 439 Press release (2003). FöreningsSparbanken köper hela Entercard AS i Norge. Förenings-Sparbanken, 19 September
99
In general the international market remained rather uncertain, but for Fören-ingsSparbanken the market in the Eastern European was prospering. During 2004 a number of interesting episodes panned out. Among other things the bank reduced its ownership in Sparebank 1 Gruppen (Norway) from 25 to 19.5 percent and in Aktia Sparbank (Finland) to 19.9 percent. The ownership in Sparebank 1 brought substantial losses during the previous years, such as in 2001 when the bank cost FöreningsSparbanken USD 24.4 million in loss-es, USD 25.5 million the succeeding year and USD 3.7 million in the final quarter of 2003. The sale of Sparebank 1 brought in USD 16.1 million, mak-ing a profit of about USD 1.5 million, although in all the ownership in Sparebank 1 had cost FöreningsSparbanken so far USD 132.4 million. Yet the bank went on record as saying that its partnership would continue with Sparebank 1 even if the bank reduced its ownership. From the sale of Aktia Sparbank the bank made USD 14.9 million, USD 2.2 million of which was in profit. Early in the year the bank’s ownership of Danish bank FIH was announced for sale, in accordance with the above-mentioned rumors, and later sold for about USD 1.6 billion to Icelandic Kaupthing440, to be com-pared to the USD 816.8 million the bank had paid for the ownership. Board chairman Stålberg later explained: “We understood that we would not be able to make the bank as ours. It was an intermediary institution that lent money to businesses.”441. Apparently FöreningsSparbanken wanted to define its international activities and lay the foundation for a Nordic-Baltic home market442. In connection with the sale of FIH, FöreningsSparbanken estab-lished an office in Copenhagen. Money made from the sale of FIH was therefore used to invest in the Baltic region443. Anders Ek, the newly ap-pointed manager of foreign activities, was more than happy with Hansabank as he stated:
440 Nyhetsbyrån Direkt (2003). FS-banken planerar sälja andel i danska FIH. Di.se, 19 De-cember; Svedbom, A. & Lundell, S. (2009). Expansionen hotar fälla Stålberg. Dagens Indu-stri, 14 March; Engzell-Larsson, L. (2002). Svagare än väntat FS-banken. Ekonomi24, 14 February; Öhlin, H. (2004). FS-Banken: Minskar ägarandel i finska Aktia Sparbank. Nyhets-byrån Ticker, 21 December; Nyhetsbyrån Direkt (2004). FöreningsSparbanken: Minskar innehav i Aktia Sparbank. Nyhetsbyrån Direkt, 21 December; TT (2002). Norsk förlust tynger FöreningsSparbanken. TT, 3 October; Öhlin, H. (2004). FS-Banken: Minskar ägandet i norska Sparebank 1 Gruppen. Nyhetsbyrån Ticker, 7 May; Hård, M. (2004). FS-Banken: Danska FIH är till salu, pris 8-9 Mdr dkk – Tidn. Nyhetsbyrån Ticker, 23 March; Svensson, D. (2004). FöreningsSparbanken i dansk miljardaffär. Dagens Industri, 15 June; FöreningsSparbanken Annual Report 2004, p. 1, 5; Nyhetsbyrån Direkt (2004). FöreningsSparbanken minskar sitt ägande i nor… Dagens Industri, 7 May; Lundin, K. (2004). Brakförlust för FSB i Norge. Dagens Industri, 16 August; Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March; Forsberg, B. (2008). Storyn som skakar Swedbank. Affärs-världen, 14 November 441 Ibid. 442 Ibid. 443 Ibid.
98
while there were about 4 million in the Baltic region431. The bank had 243,000 business customers in Sweden and 150,000 in the Baltic region432. Even though the number of customers increased, the bank decreased its staff and offices (see Table 6). Mostly due to cutbacks and efficiency improve-ments. A shift was also made from 2003 and forward, as the bank aimed to increase its number of large business customers. Investment in FIH (Den-mark) continued as the bank spent USD 55 million to increase its ownership to 74.7 percent433. At the end of 2003 another interesting event occurred. FöreningsSparbanken sold its 3.9-percent ownership in Erste Bank, located in Austria, for USD 192.9 million, a profit of about USD 63.5 million over what the bank had paid434. According to the newly appointed CEO, FöreningsSparbanken’s good relationship with Erste Bank meant that there was no need to maintain ownership435. Instead FöreningsSparbanken exploited an opportunity to make profits from its investment. Rumors also arose that Swedbank was about to sell 60 percent of its ownership in FIH even though FöreningsSparbanken only months earlier stated that it was happy that lending in Denmark had increased and was progressing well436. Meanwhile, investments in Sparebank 1 in Norway were criticized as CEO Johansson-Hedberg deemed the product platform too small and not sufficiently independent437. This criticism was leveled after the bank had invested USD 25.5 million in the previous year to cover losses in Sparebank 1, a bank that had been showing losses since year 1999438. This was followed by a USD 27.4 million investment for full owner-ship of Norwegian Entercard AS439. 431 FöreningsSparbanken Annual Report 2003, p. ii 432 FöreningsSparbanken Annual Report 2003, p. ii 433 FöreningsSparbanken Annual Report 2003, p. 41; Nyhetsbyrån Direkt (2003). FS-banken: FIH ska bli heltäckande företagsbank – Tidn. Nyhetsbyrån Direkt, 17 November; Press rele-ase (2003). FöreningsSparbanken förvärvar ytterligare 5 procent av aktierna i FI-Holding. FöreningsSparbanken, 5 March 434 FöreningsSparbanken Annual Report 2003, p. 57; TT (2003). FöreningsSparbanken säljer andel i Erste Bank. TT, 18 June; Djuphammar, D. (2003). FS-Banken: Bekräftar försäljning innehav Erste Bank – PC. Nyhetsbyrån Direkt, 18 June; Öhlin, H. (2003). FS-Banken: Trolig reavinst fsg Erste Bank 500-600 Mkr – IR. Nyhetsbyrån Ticker, 18 June; Ström, C.G. & TT (2003). FS-Bankens vinst högre än väntat. Dagens Nyheter, 22 August; Ström, C.G. & TT (2003). FS-Bankens lönsamhet bättre än väntat. TT, 22 August 435 Öhlin, H. (2003). FS-Banken: Säljer aktiepost i Erste Bank, reavinst 489 Mkr. Nyhetsbyrån Ticker, 18 June 436 Nyhetsbyrån Direkt (2003). FS-banken planerar sälja andel i danska FIH. Dagens Industri, 19 December; Nyhetsbyrån Direkt (2003). FS-Banken: Tror ökningstakt utlåning kan fortsätta – VD. Nyhetsbyrån Direkt, 22 August 437 Nyhetsbyrån Direkt (2003). FS-Banken: Tror ökningstakt utlåning kan fortsätta – VD. Nyhetsbyrån Direkt, 22 August 438 FöreningsSparbanken Annual Report 2002, p. 59; Haskel, A. (2003). Analys: Förenings-Sparbanken – Flörtar med företagen. Veckans Affärer, 16 September 439 Press release (2003). FöreningsSparbanken köper hela Entercard AS i Norge. Förenings-Sparbanken, 19 September
99
In general the international market remained rather uncertain, but for Fören-ingsSparbanken the market in the Eastern European was prospering. During 2004 a number of interesting episodes panned out. Among other things the bank reduced its ownership in Sparebank 1 Gruppen (Norway) from 25 to 19.5 percent and in Aktia Sparbank (Finland) to 19.9 percent. The ownership in Sparebank 1 brought substantial losses during the previous years, such as in 2001 when the bank cost FöreningsSparbanken USD 24.4 million in loss-es, USD 25.5 million the succeeding year and USD 3.7 million in the final quarter of 2003. The sale of Sparebank 1 brought in USD 16.1 million, mak-ing a profit of about USD 1.5 million, although in all the ownership in Sparebank 1 had cost FöreningsSparbanken so far USD 132.4 million. Yet the bank went on record as saying that its partnership would continue with Sparebank 1 even if the bank reduced its ownership. From the sale of Aktia Sparbank the bank made USD 14.9 million, USD 2.2 million of which was in profit. Early in the year the bank’s ownership of Danish bank FIH was announced for sale, in accordance with the above-mentioned rumors, and later sold for about USD 1.6 billion to Icelandic Kaupthing440, to be com-pared to the USD 816.8 million the bank had paid for the ownership. Board chairman Stålberg later explained: “We understood that we would not be able to make the bank as ours. It was an intermediary institution that lent money to businesses.”441. Apparently FöreningsSparbanken wanted to define its international activities and lay the foundation for a Nordic-Baltic home market442. In connection with the sale of FIH, FöreningsSparbanken estab-lished an office in Copenhagen. Money made from the sale of FIH was therefore used to invest in the Baltic region443. Anders Ek, the newly ap-pointed manager of foreign activities, was more than happy with Hansabank as he stated:
440 Nyhetsbyrån Direkt (2003). FS-banken planerar sälja andel i danska FIH. Di.se, 19 De-cember; Svedbom, A. & Lundell, S. (2009). Expansionen hotar fälla Stålberg. Dagens Indu-stri, 14 March; Engzell-Larsson, L. (2002). Svagare än väntat FS-banken. Ekonomi24, 14 February; Öhlin, H. (2004). FS-Banken: Minskar ägarandel i finska Aktia Sparbank. Nyhets-byrån Ticker, 21 December; Nyhetsbyrån Direkt (2004). FöreningsSparbanken: Minskar innehav i Aktia Sparbank. Nyhetsbyrån Direkt, 21 December; TT (2002). Norsk förlust tynger FöreningsSparbanken. TT, 3 October; Öhlin, H. (2004). FS-Banken: Minskar ägandet i norska Sparebank 1 Gruppen. Nyhetsbyrån Ticker, 7 May; Hård, M. (2004). FS-Banken: Danska FIH är till salu, pris 8-9 Mdr dkk – Tidn. Nyhetsbyrån Ticker, 23 March; Svensson, D. (2004). FöreningsSparbanken i dansk miljardaffär. Dagens Industri, 15 June; FöreningsSparbanken Annual Report 2004, p. 1, 5; Nyhetsbyrån Direkt (2004). FöreningsSparbanken minskar sitt ägande i nor… Dagens Industri, 7 May; Lundin, K. (2004). Brakförlust för FSB i Norge. Dagens Industri, 16 August; Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March; Forsberg, B. (2008). Storyn som skakar Swedbank. Affärs-världen, 14 November 441 Ibid. 442 Ibid. 443 Ibid.
100
“Hansabank has proven to be a very good deal for FöreningsSparbanken both from an economic and from a strategic point of view. […] The corporation has a very strong position in the Baltic countries and a great potential to con-tinue to grow there, but also on the Russian market in the future, which we believe in very strongly. Despite the sales in Denmark and the rest in the Nordic region, the Nordic region is still an important market to us where we can make acquisitions and/or establish on our own in the future.”444
According to Ek, with Hansabank the bank would most likely enter Russia but with the Nordic region still in mind. The sales of the three ownerships mentioned above increased the profits substantially and CEO Lidén declared his lack of faith in minor ownerships as he said: “In the future we want to be majority owners in the companies where we have ownership”445; thus Lidén made it very clear that in the future Swedbank wanted complete ownership. When asked about the bank’s foreign activities Lidén answered:
“Every Nordic country is interesting but our success has varied considerably in different parts. Denmark and the Baltic region have done very well while Norway has not gone well and Finland never really took off.”446
Although the bank seemed enthusiastic about the efforts in the Baltic region, CEO Lidén and FöreningsSparbanken were less content with what had been accomplished in the Nordic region. After the earlier sale of FIH, the bank searched for possibilities to expand with the profits made. For expansion abroad, different strategies were discussed, most of which included some form of acquisition. Another way discussed was doing the same as in Den-mark (after FIH) and try to establish the bank on its own. This strategy would work combined with the other strategies but the best thing would be to find expanded office-based banking, as CEO Lidén explained447:
”Especially in Denmark there are quite a number of exceptionally well-run banking businesses. Should we get an opportunity for cooperation, which al-so entails ownership, I think we would see it as a good thing.”448
Suffice it to say that the bank and the CEO Lidén were looking more to-wards a flexible strategy in expanding in Denmark but of primary interest was direct investment. It also seemed that Denmark was of a particular inter-est compared to Finland and Norway. In this connection Lidén dismissed the suggestion of merging with Aktia Sparbank by stating: 444 Nyhetsbyrån Direkt (2004). FS-Banken: Hansabank styrka i utlandsverksamhet – DI. Nyhetsbyrån Direkt, 1 September 445 Svedbom, A. (2004). Han vill ta makten i fristående sparbanker. Dagens Industri, 25 October 446 Djuphammar, D. (2004). FS-Banken: Alla nordiska länder fortfarande intressanta. Nyhets-byrån Direkt, 21 January 447 Sjöberg, L. (2005). FS-Banken: Ska ta ställning expansionsmöjl inom 6 mån-VD. Nyhets-byrån Direkt, 21 January 448 Ibid.
101
“Too small a bank to be able to play a significant role. […] We do not really think that it is a strategic investment and therefore we agreed to sell the shares so that we got below 20 percent. But we are actively looking to find another foothold in Finland.”449
Apparently FöreningsSparbanken had bigger plans than what Aktia Spar-bank would be able to fulfill. Furthermore, CEO Lidén expressed high hopes that the Baltic countries would continue to grow financially, particularly in Lithuania, as Hansabank’s CEO (Indrek Neivelt) said450. Lidén was confident that Hansabank had a very bright future. Lastly he praised the bank’s pro-gress abroad in recent years:
“There is a significant amount that we already earn on the non-Swedish oper-ations and they are growing faster than the Swedish. I find it difficult to comment on when the lines will cross each other. But I can say that we have calculated a theoretical point in our future scenarios. And we usually do not do very long projections.”451
So far the expansion was moving forward, according to Lidén, even though some efforts had been reduced. FöreningsSparbanken’s main profit came from Sweden, but the investments abroad had already begun to bear fruit. In the previous year Hansabank had entered Russia with the opening of a small branch. This year (2005) Hansabank arranged the acquisition of Kvest Bank in Moscow for USD 3.4 million452. Hansabank reported that the Russian market contributed five percent of the profits at the time. This was projected to increase to ten percent in the future, and Kvest Bank was expected to help this transpire. Kvest Bank’s main focus was on corporate customers in the Moscow region, but Swedbank soon changed this direction to include private banking.453 Hansabank’s CEO commented on the purchase as following:
449 Ibid. 450 Ibid.; Hård, M. (2004). FS-Banken: Hansabank skall växa i Ryssland. Nyhetsbyrån Ticker, 29 September 451 Sjöberg, L. (2005). FS-Banken: Ska ta ställning expansionsmöjl inom 6 mån-VD. Nyhets-byrån Direkt, 21 January 452 Nyhetsbyrån Direkt (2005). FS-Banken: Hansabank fullföljer köp av ryska Kvest Bank. Nyhetsbyrån Direkt, 11 March; Nyhetsbyrån Direkt (2005). FS-Banken: Hansabank får Ryskt godkännande för Kvest-köp. Nyhetsbyrån Direkt, 18 February; TT (2005). Hansabank får grönt ljus för rysk investering. TT, 18 February 453 Banknytt Online (2005). Ryssland godkände Hansabank satsning på Kvest bank. Banknytt Online, 28 June; Östlund, A. (2005). FSB satsar på ryska privatkunder. Realtid.se, 4 August
100
“Hansabank has proven to be a very good deal for FöreningsSparbanken both from an economic and from a strategic point of view. […] The corporation has a very strong position in the Baltic countries and a great potential to con-tinue to grow there, but also on the Russian market in the future, which we believe in very strongly. Despite the sales in Denmark and the rest in the Nordic region, the Nordic region is still an important market to us where we can make acquisitions and/or establish on our own in the future.”444
According to Ek, with Hansabank the bank would most likely enter Russia but with the Nordic region still in mind. The sales of the three ownerships mentioned above increased the profits substantially and CEO Lidén declared his lack of faith in minor ownerships as he said: “In the future we want to be majority owners in the companies where we have ownership”445; thus Lidén made it very clear that in the future Swedbank wanted complete ownership. When asked about the bank’s foreign activities Lidén answered:
“Every Nordic country is interesting but our success has varied considerably in different parts. Denmark and the Baltic region have done very well while Norway has not gone well and Finland never really took off.”446
Although the bank seemed enthusiastic about the efforts in the Baltic region, CEO Lidén and FöreningsSparbanken were less content with what had been accomplished in the Nordic region. After the earlier sale of FIH, the bank searched for possibilities to expand with the profits made. For expansion abroad, different strategies were discussed, most of which included some form of acquisition. Another way discussed was doing the same as in Den-mark (after FIH) and try to establish the bank on its own. This strategy would work combined with the other strategies but the best thing would be to find expanded office-based banking, as CEO Lidén explained447:
”Especially in Denmark there are quite a number of exceptionally well-run banking businesses. Should we get an opportunity for cooperation, which al-so entails ownership, I think we would see it as a good thing.”448
Suffice it to say that the bank and the CEO Lidén were looking more to-wards a flexible strategy in expanding in Denmark but of primary interest was direct investment. It also seemed that Denmark was of a particular inter-est compared to Finland and Norway. In this connection Lidén dismissed the suggestion of merging with Aktia Sparbank by stating: 444 Nyhetsbyrån Direkt (2004). FS-Banken: Hansabank styrka i utlandsverksamhet – DI. Nyhetsbyrån Direkt, 1 September 445 Svedbom, A. (2004). Han vill ta makten i fristående sparbanker. Dagens Industri, 25 October 446 Djuphammar, D. (2004). FS-Banken: Alla nordiska länder fortfarande intressanta. Nyhets-byrån Direkt, 21 January 447 Sjöberg, L. (2005). FS-Banken: Ska ta ställning expansionsmöjl inom 6 mån-VD. Nyhets-byrån Direkt, 21 January 448 Ibid.
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“Too small a bank to be able to play a significant role. […] We do not really think that it is a strategic investment and therefore we agreed to sell the shares so that we got below 20 percent. But we are actively looking to find another foothold in Finland.”449
Apparently FöreningsSparbanken had bigger plans than what Aktia Spar-bank would be able to fulfill. Furthermore, CEO Lidén expressed high hopes that the Baltic countries would continue to grow financially, particularly in Lithuania, as Hansabank’s CEO (Indrek Neivelt) said450. Lidén was confident that Hansabank had a very bright future. Lastly he praised the bank’s pro-gress abroad in recent years:
“There is a significant amount that we already earn on the non-Swedish oper-ations and they are growing faster than the Swedish. I find it difficult to comment on when the lines will cross each other. But I can say that we have calculated a theoretical point in our future scenarios. And we usually do not do very long projections.”451
So far the expansion was moving forward, according to Lidén, even though some efforts had been reduced. FöreningsSparbanken’s main profit came from Sweden, but the investments abroad had already begun to bear fruit. In the previous year Hansabank had entered Russia with the opening of a small branch. This year (2005) Hansabank arranged the acquisition of Kvest Bank in Moscow for USD 3.4 million452. Hansabank reported that the Russian market contributed five percent of the profits at the time. This was projected to increase to ten percent in the future, and Kvest Bank was expected to help this transpire. Kvest Bank’s main focus was on corporate customers in the Moscow region, but Swedbank soon changed this direction to include private banking.453 Hansabank’s CEO commented on the purchase as following:
449 Ibid. 450 Ibid.; Hård, M. (2004). FS-Banken: Hansabank skall växa i Ryssland. Nyhetsbyrån Ticker, 29 September 451 Sjöberg, L. (2005). FS-Banken: Ska ta ställning expansionsmöjl inom 6 mån-VD. Nyhets-byrån Direkt, 21 January 452 Nyhetsbyrån Direkt (2005). FS-Banken: Hansabank fullföljer köp av ryska Kvest Bank. Nyhetsbyrån Direkt, 11 March; Nyhetsbyrån Direkt (2005). FS-Banken: Hansabank får Ryskt godkännande för Kvest-köp. Nyhetsbyrån Direkt, 18 February; TT (2005). Hansabank får grönt ljus för rysk investering. TT, 18 February 453 Banknytt Online (2005). Ryssland godkände Hansabank satsning på Kvest bank. Banknytt Online, 28 June; Östlund, A. (2005). FSB satsar på ryska privatkunder. Realtid.se, 4 August
102
“We started this process half a year ago and everything has gone according to our plans. Entering the Russian banking market is an important strategic step for Hansabank Group. We are a rapidly developing organisation and see many growth opportunities in the Russian financial sector. I am very happy with the developments and the excellent job that our Russian team has done. […] Acquisition of Kvest Bank allows us to offer our customers a complete range of corporate banking services in Russia. We have already completed most of the preparatory work for opening our first bank branch and in a few months will be ready to offer our customers in Russia the same high-quality service that they have become used to in our other banks.”454
FöreningsSparbanken was delighted with the purchase of Kvest Bank, which had USD 3.8 million in total assets and USD 1.7 million in shareholder equi-ty. Once the purchase was finalized, FöreningsSparbanken increased the bank’s equity to USD 107.4 million.455 According to Jonas Blomberg, Head of Investor Relations at FöreningsSparbanken, Russia was a market that the bank intended to invest in:
“Hansabank’s investment in Russia is obviously something we are doing in line with our wishes. To acquire an existing bank like Kvest bank makes it significantly easier than to go in and ‘start from scratch’.”456
From the beginning of 2005 FöreningsSparbanken successfully pushed to-wards a goal of reaching at least 20 percent in return on equity and was able to reach 24.6 percent. Furthermore, it is interesting to note that according to the annual report the bank had 4.1 million private customers in Sweden and 4.6 million in the Baltic countries. The number of offices increased in the Baltic region. Most notable is the total number of staff, which increased by around 1,000. The number of staff in Russia grew dramatically (from 20 to 140) because of Kvest Bank, which later changed name to Hansabank OAO in 2005 and to OAO Swedbank in 2007457. By this time beyond establish-ments of Hansabank OAO there was also leasing offices in Moscow, Kali-ningrad, and Saint Petersburg. One branch also opened in Marbella (Spain), most likely as many Nordic people live and visit there.458 Moreover the bank had 7,226 staff members in the Baltic region and 8,922 in Sweden (see Table 6). Hence from the looks of it the Baltic region was catching up.
454 Hugin – Finland (2005). Hansabank succesfully completes Kvest Bank acquisition. Hugin – Finland, 11 March 455 Ibid.; Nyhetsbyrån Direkt (2005). FS-Banken: Hansabank tillåts öka Kvests aktiekapital. Nyhetsbyrån Direkt, 27 June; Banknytt Online (2005). Ryssland godkände Hansabanks sats-ning på Kvest bank. Banknytt Online, 28 June; Östlund, A. (2005). FSB satsar på ryska pri-vatkunder. Realtid.se, 4 August 456 Östlund, A. (2005). FSB satsar på ryska privatkunder. Realtid.se, 4 August 457 Newsdesk (2007). Hansabank i Ryssland byter namn till Swedbank. Newsdesk, 15 May 458 Jönköpings nytt (2007). Hansabank i Ryssland byter namn till Swedbank. Jönköpings nytt, 15 May; Press release (2007). Hansabank i Ryssland byter namn till Swedbank. Swedbank, 15 May; Dagens Industri (2005). FS-banken på solkusten. Dagens Industri, 24 September; Ban-knytt Online (2005). FSB öppnar nytt kontor i Spanien. Banknytt Online, 6 October
103
CEO Lidén stated that for the first six months of year 2005 the bank was to evaluate its possibilities of expanding and which current foreign activities were to continue or be sold. Lidén explained that so far the possibilities of expanding were to acquire a foreign bank that resembled FöreningsSpar-banken, or to acquire a bank that was specialized in a particular product, or finally to open an office on its own, as it had done the previous year in Den-mark. When discussing expansion in the Nordic countries Lidén, as stated, declared that the bank sought to grow through acquisitions as a compliment to organic growth459. The aim was to open a few new offices in Denmark and Finland. Although its ownership in Aktia Sparbank was reduced to 9.6 per-cent, the bank made a profit of USD 24.8 million from the sale estimated at USD 31.7 million. A few months later most of the bank’s ownership in Aktia Sparbank was sold for USD 25.2 million, and all that remained was a 1.1-percent ownership. FöreningsSparbanken increased its ownership in the Norwegian investment bank First Securities to 51 percent at a cost of USD 12.9 million. Lidén also reported that the bank was looking for a company working with cards or funds and even retail banking.460 Finally he in con-tempt commented on the bank’s reduced ownership in Norwegian Sparbank 1: “We shall be a leading actor in the Nordic countries, but not together with them”461. In March 2005 the remainder of Hansabank was acquired at a cost of around USD 2.2 billion, 28 percent above the market valuation462. The board chair-man, Stålberg, argued that 60 percent ownership was not enough, claiming that the bank carried all the potential problems but not all the benefits463. 459 Hedelius, P. (2005). FS-Banken: Vill öka närvaron i övriga nordiska länder – VD. Nyhets-byrån Direkt, 7 September; Sjöberg, L. (2005). FS-Banken ska ta ställning expansionsmöjl inom 6 mån – VD. Nyhetsbyrån Direkt, 21 January; TT (2005). FöreningsSparbanken säljer aktier i Aktia Sparbank. TT, 7 July; Nyhetsbyrån Direkt (2005). FS-Banken säljer finskt inne-hav. Dagens Industri, 7 July; TT (2005). FöreningsSparbanken minskar i Aktia. TT, 30 Sep-tember; Nyhetsbyrån Direkt (2005). FS-Banken: Säljer 3 mln aktier i Aktia för 21 mln eur. Nyhetsbyrån Direkt, 30 September; Nyhetsbyrån Direkt (2005). Föreningssparbanken har sålt 3 miljoner aktier i Aktia. Dagens Industri, 1 October 460 Ibid. 461 Ibid. 462 Lindberg, S. (2005). Estnisk bank blir dyrköpt storaffär. FöreningsSparbanken tvingas höja budet på Hansabank. Dagens Nyheter, 23 March; Nyhetsbyrån Direkt (2005). FS-Banken: Har nått över 90% i Hansabank. Nyhetsbyrån Direkt, 30 March; Press release (2005). Före-ningsSparbanken köper 5,1 procent av aktierna i Hansabank. FöreningsSparbanken, 23 March; Nyhetsbyrån Direkt (2005). FS-Banken: För samtal med minioritetsägare i Hansa-bank. Nyhetsbyrån Direkt, 22 March; Press release (2005). FöreningsSparbanken uppnår 84,3 procent i Hansabank efter köp av aktier och genom stöd från aktieägare. FöreningsSparban-ken, 22 March; Nyhetsbyrån Direkt (2005). Analytiker: Högt bud på Hansabank. Dagens Industri, 22 March; Öhlin, H. (2005). FS-Banken: Har över 98 % i Hansabank. Nyhetsbyrån Ticker, 6 April; Braconier, F. (2005). FSB tar över Hansapank. Svenska Dagbladet, 7 April; Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March; Forsberg, B. (2008). Storyn som skakar Swedbank. Affärsvärlden, 14 November 463 Ibid.
102
“We started this process half a year ago and everything has gone according to our plans. Entering the Russian banking market is an important strategic step for Hansabank Group. We are a rapidly developing organisation and see many growth opportunities in the Russian financial sector. I am very happy with the developments and the excellent job that our Russian team has done. […] Acquisition of Kvest Bank allows us to offer our customers a complete range of corporate banking services in Russia. We have already completed most of the preparatory work for opening our first bank branch and in a few months will be ready to offer our customers in Russia the same high-quality service that they have become used to in our other banks.”454
FöreningsSparbanken was delighted with the purchase of Kvest Bank, which had USD 3.8 million in total assets and USD 1.7 million in shareholder equi-ty. Once the purchase was finalized, FöreningsSparbanken increased the bank’s equity to USD 107.4 million.455 According to Jonas Blomberg, Head of Investor Relations at FöreningsSparbanken, Russia was a market that the bank intended to invest in:
“Hansabank’s investment in Russia is obviously something we are doing in line with our wishes. To acquire an existing bank like Kvest bank makes it significantly easier than to go in and ‘start from scratch’.”456
From the beginning of 2005 FöreningsSparbanken successfully pushed to-wards a goal of reaching at least 20 percent in return on equity and was able to reach 24.6 percent. Furthermore, it is interesting to note that according to the annual report the bank had 4.1 million private customers in Sweden and 4.6 million in the Baltic countries. The number of offices increased in the Baltic region. Most notable is the total number of staff, which increased by around 1,000. The number of staff in Russia grew dramatically (from 20 to 140) because of Kvest Bank, which later changed name to Hansabank OAO in 2005 and to OAO Swedbank in 2007457. By this time beyond establish-ments of Hansabank OAO there was also leasing offices in Moscow, Kali-ningrad, and Saint Petersburg. One branch also opened in Marbella (Spain), most likely as many Nordic people live and visit there.458 Moreover the bank had 7,226 staff members in the Baltic region and 8,922 in Sweden (see Table 6). Hence from the looks of it the Baltic region was catching up.
454 Hugin – Finland (2005). Hansabank succesfully completes Kvest Bank acquisition. Hugin – Finland, 11 March 455 Ibid.; Nyhetsbyrån Direkt (2005). FS-Banken: Hansabank tillåts öka Kvests aktiekapital. Nyhetsbyrån Direkt, 27 June; Banknytt Online (2005). Ryssland godkände Hansabanks sats-ning på Kvest bank. Banknytt Online, 28 June; Östlund, A. (2005). FSB satsar på ryska pri-vatkunder. Realtid.se, 4 August 456 Östlund, A. (2005). FSB satsar på ryska privatkunder. Realtid.se, 4 August 457 Newsdesk (2007). Hansabank i Ryssland byter namn till Swedbank. Newsdesk, 15 May 458 Jönköpings nytt (2007). Hansabank i Ryssland byter namn till Swedbank. Jönköpings nytt, 15 May; Press release (2007). Hansabank i Ryssland byter namn till Swedbank. Swedbank, 15 May; Dagens Industri (2005). FS-banken på solkusten. Dagens Industri, 24 September; Ban-knytt Online (2005). FSB öppnar nytt kontor i Spanien. Banknytt Online, 6 October
103
CEO Lidén stated that for the first six months of year 2005 the bank was to evaluate its possibilities of expanding and which current foreign activities were to continue or be sold. Lidén explained that so far the possibilities of expanding were to acquire a foreign bank that resembled FöreningsSpar-banken, or to acquire a bank that was specialized in a particular product, or finally to open an office on its own, as it had done the previous year in Den-mark. When discussing expansion in the Nordic countries Lidén, as stated, declared that the bank sought to grow through acquisitions as a compliment to organic growth459. The aim was to open a few new offices in Denmark and Finland. Although its ownership in Aktia Sparbank was reduced to 9.6 per-cent, the bank made a profit of USD 24.8 million from the sale estimated at USD 31.7 million. A few months later most of the bank’s ownership in Aktia Sparbank was sold for USD 25.2 million, and all that remained was a 1.1-percent ownership. FöreningsSparbanken increased its ownership in the Norwegian investment bank First Securities to 51 percent at a cost of USD 12.9 million. Lidén also reported that the bank was looking for a company working with cards or funds and even retail banking.460 Finally he in con-tempt commented on the bank’s reduced ownership in Norwegian Sparbank 1: “We shall be a leading actor in the Nordic countries, but not together with them”461. In March 2005 the remainder of Hansabank was acquired at a cost of around USD 2.2 billion, 28 percent above the market valuation462. The board chair-man, Stålberg, argued that 60 percent ownership was not enough, claiming that the bank carried all the potential problems but not all the benefits463. 459 Hedelius, P. (2005). FS-Banken: Vill öka närvaron i övriga nordiska länder – VD. Nyhets-byrån Direkt, 7 September; Sjöberg, L. (2005). FS-Banken ska ta ställning expansionsmöjl inom 6 mån – VD. Nyhetsbyrån Direkt, 21 January; TT (2005). FöreningsSparbanken säljer aktier i Aktia Sparbank. TT, 7 July; Nyhetsbyrån Direkt (2005). FS-Banken säljer finskt inne-hav. Dagens Industri, 7 July; TT (2005). FöreningsSparbanken minskar i Aktia. TT, 30 Sep-tember; Nyhetsbyrån Direkt (2005). FS-Banken: Säljer 3 mln aktier i Aktia för 21 mln eur. Nyhetsbyrån Direkt, 30 September; Nyhetsbyrån Direkt (2005). Föreningssparbanken har sålt 3 miljoner aktier i Aktia. Dagens Industri, 1 October 460 Ibid. 461 Ibid. 462 Lindberg, S. (2005). Estnisk bank blir dyrköpt storaffär. FöreningsSparbanken tvingas höja budet på Hansabank. Dagens Nyheter, 23 March; Nyhetsbyrån Direkt (2005). FS-Banken: Har nått över 90% i Hansabank. Nyhetsbyrån Direkt, 30 March; Press release (2005). Före-ningsSparbanken köper 5,1 procent av aktierna i Hansabank. FöreningsSparbanken, 23 March; Nyhetsbyrån Direkt (2005). FS-Banken: För samtal med minioritetsägare i Hansa-bank. Nyhetsbyrån Direkt, 22 March; Press release (2005). FöreningsSparbanken uppnår 84,3 procent i Hansabank efter köp av aktier och genom stöd från aktieägare. FöreningsSparban-ken, 22 March; Nyhetsbyrån Direkt (2005). Analytiker: Högt bud på Hansabank. Dagens Industri, 22 March; Öhlin, H. (2005). FS-Banken: Har över 98 % i Hansabank. Nyhetsbyrån Ticker, 6 April; Braconier, F. (2005). FSB tar över Hansapank. Svenska Dagbladet, 7 April; Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March; Forsberg, B. (2008). Storyn som skakar Swedbank. Affärsvärlden, 14 November 463 Ibid.
104
Immediately after the purchase Hansabank’s CEO and Vice CEO left. Some believed FöreningsSparbanken paid more than it was worth.464 Stålberg an-swered:
“Short term, one might think so. But the Baltic States and Russia are key el-ements of our future growth. In a longer term this will be a profitable invest-ment. […] I think that the market is drawing a sigh of relief that Fören-ingsSparbanken is investing in Hansabank and not another more risky alter-native”465
In the annual report the board chairman, Stålberg, wrote: “We are now a very strong banking alternative on the Nordic-Baltic banking market”466. The review of annual reports indicates, in line with what Stålberg wrote, that the bank divided its business activities into three categories, 1) Sweden, 2) the Baltic region and 3) the rest of the world. Stålberg further pointed out that about half of the staff and customers were localized in the Baltic region yet only accounted for ten percent of the total business467. Why the bank had even more staff in the Baltic region than in Sweden was commented on by the CEO, Lidén: “I hope that people will recognize us as a bank that operates locally”468. The number of offices increased by a few during year 2006. But the number of staff grew extensively for the second year in a row, with more than thou-sand new associates (see Table 6). Involvement in the Baltic market in-creased remarkably as the number of staff in the Baltic operations increased from 7,226 to 8,209. In the autumn of 2006 FöreningsSparbanken changed its name to Swedbank. In the 2006 annual report, Stålberg declared that the entry of the Baltic countries into the EU two years earlier had advanced those countries’ economies but caused small disturbances on the market that one had to be aware of469. According to Anders Ek, manager of foreign activ-ities, the bank was looking for opportunities to make acquisition in Denmark and Norway. In most of the cases, he stated, the ones available did not fit the price. He also thought the prices in Ukraine and Russia were bit too steep at the time.470 The long-term plan was to gradually invest the experience and profits gained from the Baltic region in Ukraine and Russia471. 464 Ibid. 465 Ibid. 466 FöreningsSparbanken Annual Report 2005, p. 4 467 FöreningsSparbanken Annual Report 2005, p. 4-5 468 Palutko Macéus, K. (2007). Kostnaderna satte press på Swedbank. Dagens Industri, 17 February 469 Swedbank Annual Report 2006, p. 6 470 Nyhetsbyrån Direkt (2006). Swedbank: Begränsade möjligheter göra köp i Norge och Danmark. Nyhetsbyrån Direkt, 16 November 471 Swedbank Annual Report 2006, p. 6, 21; 2007, p. 2, 4-7, 21, 27; Grundberg, K. (2006). Swedbank skriver upp Rysslandsprognosen. DI.se, 11 October
105
Norwegian Sparebank 1 made a record profit in 2005472. Yet in June 2006 all remaining shares (19.5 percent) in Sparebank 1 were sold for USD 110.2 million, making a profit of USD 47.5 million473. In a press release Swedbank wrote: “Being [merely] a shareholder is not in line with the strategy that the board has laid down. The strategy is to refine the bank’s majority ownership, but this was not possible”474. This is line with previous statements by the bank in past years. But now Swedbank felt that it was a matter of either seiz-ing control or getting out. When the only option was to leave, the bank left. Between 2006 and 2007 the number of private customers went up more than usual, by about 0.5 million. In the annual reports it is also noticeable that the bank’s lending rate in the Baltic region increased by 33 percent. Despite this the annual report of year 2007 referred to a more conservative approach for the coming years. The strategy was to secure credit quality due to reduced creditability in the region and increased risk exposure. Nevertheless, throughout 2007 the expansion abroad continued with the same intensity as in previous years. Moreover Swedbank’s office in Shanghai was upgraded to a branch. The year 2007 had hardly begun when Swedbank entered Ukraine and bought TAS-Kommerzbank for USD 735 million including a capital injec-tion of USD 50 million475. Goodwill, the difference between TAS-Kommerzbank net assets and the purchase price, amounted to nearly USD 91 million476. Further an earn-out maximum of USD 250 million, based on TAS-Kommerzbank’s financial performance, might be paid in three years477. Many eyebrows were raised when Swedbank paid 4.2 times the book value knowing investments in Ukraine was risky,478 to which CEO Lidén coun-
472 Hugin (2006). SpareBank 1 Nord-Norge makes record profit for 2005 and strengthens its commitment to the communities within the region. Hugin, 7 February; Hugin (2006). Spare-Bank 1 SR-bank – Historically good results – high recoveries on losses and high return on financial investments. Hugin, 2 February 473 Swedbank Press release (2006). FSB säljer sina aktier i SpareBank 1 Gruppen. 23 June; Fond & Bank Online (2006). FSB vill inte vara minioritetsägare säljer Sparebank 1. Fond & Bank Online, 26 June; Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March 474 Ibid.; RF Online (2006). ”FSB vill inte vara minioritetsägare”. RF Online, 26 June 475 Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March; Öhlin, H. (2007). Swedbank: Köper TAS-Kommerzbank i Ukraina för 735 MUSD. Affärsvärlden, 7 February 476 Forsberg, B. (2009). Guldjakten i Ukraina. Affärsvärlden, 5 May 477 Press release (2007). Swedbank fullbordar förvärvet av TAS-Kommerzbank. Swedbank, 9 June 478 Braconier, F. (2007). Swedbank köper bank i Ukraina. Svenska Dagbladet, 8 February; Aktiespararna (2009). Ukraina svider för Swedbank. Aktiespararna, 29 October; Forsberg, B. (2009). Guldjakten i Ukraina. Affärsvärlden, 5 May; TT (2007). Swedbank köper ukrainska TAS. Dagens Industri, 7 February; Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stål-bergs lappkast. Affärsvärlden, 7 March; Svensson, K. (2007). Säljaren enda säkra vinnaren på
104
Immediately after the purchase Hansabank’s CEO and Vice CEO left. Some believed FöreningsSparbanken paid more than it was worth.464 Stålberg an-swered:
“Short term, one might think so. But the Baltic States and Russia are key el-ements of our future growth. In a longer term this will be a profitable invest-ment. […] I think that the market is drawing a sigh of relief that Fören-ingsSparbanken is investing in Hansabank and not another more risky alter-native”465
In the annual report the board chairman, Stålberg, wrote: “We are now a very strong banking alternative on the Nordic-Baltic banking market”466. The review of annual reports indicates, in line with what Stålberg wrote, that the bank divided its business activities into three categories, 1) Sweden, 2) the Baltic region and 3) the rest of the world. Stålberg further pointed out that about half of the staff and customers were localized in the Baltic region yet only accounted for ten percent of the total business467. Why the bank had even more staff in the Baltic region than in Sweden was commented on by the CEO, Lidén: “I hope that people will recognize us as a bank that operates locally”468. The number of offices increased by a few during year 2006. But the number of staff grew extensively for the second year in a row, with more than thou-sand new associates (see Table 6). Involvement in the Baltic market in-creased remarkably as the number of staff in the Baltic operations increased from 7,226 to 8,209. In the autumn of 2006 FöreningsSparbanken changed its name to Swedbank. In the 2006 annual report, Stålberg declared that the entry of the Baltic countries into the EU two years earlier had advanced those countries’ economies but caused small disturbances on the market that one had to be aware of469. According to Anders Ek, manager of foreign activ-ities, the bank was looking for opportunities to make acquisition in Denmark and Norway. In most of the cases, he stated, the ones available did not fit the price. He also thought the prices in Ukraine and Russia were bit too steep at the time.470 The long-term plan was to gradually invest the experience and profits gained from the Baltic region in Ukraine and Russia471. 464 Ibid. 465 Ibid. 466 FöreningsSparbanken Annual Report 2005, p. 4 467 FöreningsSparbanken Annual Report 2005, p. 4-5 468 Palutko Macéus, K. (2007). Kostnaderna satte press på Swedbank. Dagens Industri, 17 February 469 Swedbank Annual Report 2006, p. 6 470 Nyhetsbyrån Direkt (2006). Swedbank: Begränsade möjligheter göra köp i Norge och Danmark. Nyhetsbyrån Direkt, 16 November 471 Swedbank Annual Report 2006, p. 6, 21; 2007, p. 2, 4-7, 21, 27; Grundberg, K. (2006). Swedbank skriver upp Rysslandsprognosen. DI.se, 11 October
105
Norwegian Sparebank 1 made a record profit in 2005472. Yet in June 2006 all remaining shares (19.5 percent) in Sparebank 1 were sold for USD 110.2 million, making a profit of USD 47.5 million473. In a press release Swedbank wrote: “Being [merely] a shareholder is not in line with the strategy that the board has laid down. The strategy is to refine the bank’s majority ownership, but this was not possible”474. This is line with previous statements by the bank in past years. But now Swedbank felt that it was a matter of either seiz-ing control or getting out. When the only option was to leave, the bank left. Between 2006 and 2007 the number of private customers went up more than usual, by about 0.5 million. In the annual reports it is also noticeable that the bank’s lending rate in the Baltic region increased by 33 percent. Despite this the annual report of year 2007 referred to a more conservative approach for the coming years. The strategy was to secure credit quality due to reduced creditability in the region and increased risk exposure. Nevertheless, throughout 2007 the expansion abroad continued with the same intensity as in previous years. Moreover Swedbank’s office in Shanghai was upgraded to a branch. The year 2007 had hardly begun when Swedbank entered Ukraine and bought TAS-Kommerzbank for USD 735 million including a capital injec-tion of USD 50 million475. Goodwill, the difference between TAS-Kommerzbank net assets and the purchase price, amounted to nearly USD 91 million476. Further an earn-out maximum of USD 250 million, based on TAS-Kommerzbank’s financial performance, might be paid in three years477. Many eyebrows were raised when Swedbank paid 4.2 times the book value knowing investments in Ukraine was risky,478 to which CEO Lidén coun-
472 Hugin (2006). SpareBank 1 Nord-Norge makes record profit for 2005 and strengthens its commitment to the communities within the region. Hugin, 7 February; Hugin (2006). Spare-Bank 1 SR-bank – Historically good results – high recoveries on losses and high return on financial investments. Hugin, 2 February 473 Swedbank Press release (2006). FSB säljer sina aktier i SpareBank 1 Gruppen. 23 June; Fond & Bank Online (2006). FSB vill inte vara minioritetsägare säljer Sparebank 1. Fond & Bank Online, 26 June; Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March 474 Ibid.; RF Online (2006). ”FSB vill inte vara minioritetsägare”. RF Online, 26 June 475 Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March; Öhlin, H. (2007). Swedbank: Köper TAS-Kommerzbank i Ukraina för 735 MUSD. Affärsvärlden, 7 February 476 Forsberg, B. (2009). Guldjakten i Ukraina. Affärsvärlden, 5 May 477 Press release (2007). Swedbank fullbordar förvärvet av TAS-Kommerzbank. Swedbank, 9 June 478 Braconier, F. (2007). Swedbank köper bank i Ukraina. Svenska Dagbladet, 8 February; Aktiespararna (2009). Ukraina svider för Swedbank. Aktiespararna, 29 October; Forsberg, B. (2009). Guldjakten i Ukraina. Affärsvärlden, 5 May; TT (2007). Swedbank köper ukrainska TAS. Dagens Industri, 7 February; Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stål-bergs lappkast. Affärsvärlden, 7 March; Svensson, K. (2007). Säljaren enda säkra vinnaren på
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tered, “[…] in order to secure the firm’s growth we have to establish our-selves on other markets”479. Board chairman Stålberg added:
“When you are familiar with a business and in the market then you know what a reasonable price tag is. One has to distinguish between mature and emerging markets when comparing price tags. We realized that the market would think we paid too much for Hansabank. But now it appears that we re-ceived a good price, and it has proven to have happened more quickly than we had anticipated in the calculation of the acquisition. I am convinced that we will see the same development with TAS.”480
Swedbank had actually started a representative office in Ukraine in late 2006 and back then CEO Lidén said:
“Ukraine has over 47 million inhabitants and is a very exciting market. The economy is experiencing strong growth, and we see that the interest from our customers is steadily increasing. It is therefore natural to form an establish-ment in Kiev to meet an increased demand. But also to build a network and make contact with the public authorities on spot.”481
The bank tried to get a notion of what was going on and what prerequisites there were when it searched for a suitable bank to purchase.482 The choice of Ukraine instead of Poland was justified by the prices in Poland, which were considered too high; besides, foreign banks already dominated the market and regulations made it too difficult for foreign banks to enter483. The chair-man of the board, Stålberg, compared Ukraine with the Baltic region and concluded that Ukraine was where the Baltic region was six-seven years ago and had great potential484. Two days before the purchase the CEO stated:
“We have made the strategic decision to focus on service in Sweden and growth in the Baltic region and Russia, where there is a growing credit mar-ket and the use of financial services is continuing to increase.485 […] In twen-ty years I think those who then run our bank will say that it was one clever rascal who invested there in 2006.486”
bankaffären. Dagens Industri, 8 February; Braconier, F. (2007). Analys: SEB in på växande marknad – Riskfyllt bankköp i Ukraina. Svenska Dagbladet, 17 November 479 Palutko Macéus, K. (2007). Kostnaderna satte press på Swedbank. Dagens Industri, 17 February 480 Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March 481 Press release (2006). Swedbank: Swedbank öppnar kontor i Kiev. Swedbank, 4 December 482 Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March 483 Braconier, F. (2007). Swedbank köper bank i Ukraina. Svenska Dagbladet, 8 February 484 Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March 485 Malmborg, J. & Lindsten, P. O. (2007). Special: Bankpusslet – Bankjättarna allt färre och större. Veckans Affärer, 15 February 486 Lindstedt, G. (2009). Den svenska subprimeskandalen. Veckans Affärer, 30 April
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At the time TAS-Kommerzbank, which soon changed its name to OJSC Swedbank, had about 170 offices scattered in Ukraine with a staff of 2,300, which made it the fifteenth largest bank in the country. This was back in February when the purchase was finalized. Another few months later the bank had 190 offices and 3,000 staff members.487 Further, OJSC Swedbank had grown from 95 offices to 170 during the previous year488. In an interview CEO Lidén discussed the future in Ukraine as following:
“The acquisition of TAS is in line with Swedbank’s strategy to expand in Eastern Europe, where the bank is already the market leader in the Baltic countries. Ukraine has strong growth expected and a low level of penetration of financial services.”489 […] “It is an extremely interesting market that we have followed for a long time”490. “[…] If you look at the macro indicators in Ukraine you will see that the track they are on is firm and growing. We have been amazed by the country’s good condition and well-developed industrial infrastructure, high skills, high education and good natural resources. We be-lieve that Ukraine is now awaking from its beauty sleep and many years of planned economy.”491. “[…] If we speak of Ukraine I have to be very posi-tive. Economic growth is intact and there are no imbalances.”492. “[…] We have gained much experience together with Hansabank, and there is a lot of this to contribute to Ukraine.”493. […] “[…] in the countries we have entered we want to obtain a strong presence and large market shares”494
Lidén was evidently enthusiastic about this purchase and noted that by the end of the year the bank anticipated having 200 offices in the country, which the bank also almost succeeded in reaching495. Overall, Swedbank shifted its interest from the Baltic region and leaned more towards Russia and Ukraine496. OJSC Swedbank grew rapidly, particularly in private banking. Board chairman Stålberg was satisfied and declared:
487 Öhlin, H. (2007). Swedbank: Köper TAS-Kommerzbank i Ukraina för 735 MUSD. Affärs-världen, 7 February; Nyhetsbyrån Direkt (2007). Swedbank: Avser att öppna yttl 15 nya kontor Ukraina i år – VD. Nyhetsbyrån Direkt, 24 October; Joons, A. (2007). Swedbank: Sannolikt inga ryska kontor i år – VD. Nyhetsbyrån Direkt, 31 August; Press release (2007). Swedbank fullbordar förvärvet av TAS-Kommerzbank. Swedbank, 9 June; Sandkvist, L. (2007). TAS-Kommerzbank i Ukraina byter namn till Swedbank. Fond & Bank, 11 December 488 TT (2007). Swedbank köper ukrainska TAS. Dagens Industri, 7 February 489 Press release (2007). Swedbank fullbordar förvärvet av TAS-Kommerzbank. Swedbank, 9 June 490 Törnwall, M. (2007). Swedbank ökar takten i Ryssland och Ukraina. Dagens Industri, 23 April 491 Svensson, K. (2007). “Tillväxten finns i öst”. Dagens Industri, 5 December 492 Joons, A. (2007). Swedbank: Sannolikt inga ryska kontor i år – VD. Nyhetsbyrån Direkt, 31 August 493 Palutko Macéus, K. (2007). Swedbank köper bank i Ukraina. Dagens Industri, 8 February 494 Palutko Macéus, K. (2007). Kostnaderna satte press på Swedbank. Dagens Industri, 17 February 495 Svensson, K. (2007). “Tillväxten finns i öst”. Dagens Industri, 5 December; Di.se (2008). SEB vill ha 300 kontor – i Ukraina. Di.se, 4 March 496 Svensson, K. (2007). “Tillväxten finns i öst”. Dagens Industri, 5 December
106
tered, “[…] in order to secure the firm’s growth we have to establish our-selves on other markets”479. Board chairman Stålberg added:
“When you are familiar with a business and in the market then you know what a reasonable price tag is. One has to distinguish between mature and emerging markets when comparing price tags. We realized that the market would think we paid too much for Hansabank. But now it appears that we re-ceived a good price, and it has proven to have happened more quickly than we had anticipated in the calculation of the acquisition. I am convinced that we will see the same development with TAS.”480
Swedbank had actually started a representative office in Ukraine in late 2006 and back then CEO Lidén said:
“Ukraine has over 47 million inhabitants and is a very exciting market. The economy is experiencing strong growth, and we see that the interest from our customers is steadily increasing. It is therefore natural to form an establish-ment in Kiev to meet an increased demand. But also to build a network and make contact with the public authorities on spot.”481
The bank tried to get a notion of what was going on and what prerequisites there were when it searched for a suitable bank to purchase.482 The choice of Ukraine instead of Poland was justified by the prices in Poland, which were considered too high; besides, foreign banks already dominated the market and regulations made it too difficult for foreign banks to enter483. The chair-man of the board, Stålberg, compared Ukraine with the Baltic region and concluded that Ukraine was where the Baltic region was six-seven years ago and had great potential484. Two days before the purchase the CEO stated:
“We have made the strategic decision to focus on service in Sweden and growth in the Baltic region and Russia, where there is a growing credit mar-ket and the use of financial services is continuing to increase.485 […] In twen-ty years I think those who then run our bank will say that it was one clever rascal who invested there in 2006.486”
bankaffären. Dagens Industri, 8 February; Braconier, F. (2007). Analys: SEB in på växande marknad – Riskfyllt bankköp i Ukraina. Svenska Dagbladet, 17 November 479 Palutko Macéus, K. (2007). Kostnaderna satte press på Swedbank. Dagens Industri, 17 February 480 Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March 481 Press release (2006). Swedbank: Swedbank öppnar kontor i Kiev. Swedbank, 4 December 482 Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March 483 Braconier, F. (2007). Swedbank köper bank i Ukraina. Svenska Dagbladet, 8 February 484 Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March 485 Malmborg, J. & Lindsten, P. O. (2007). Special: Bankpusslet – Bankjättarna allt färre och större. Veckans Affärer, 15 February 486 Lindstedt, G. (2009). Den svenska subprimeskandalen. Veckans Affärer, 30 April
107
At the time TAS-Kommerzbank, which soon changed its name to OJSC Swedbank, had about 170 offices scattered in Ukraine with a staff of 2,300, which made it the fifteenth largest bank in the country. This was back in February when the purchase was finalized. Another few months later the bank had 190 offices and 3,000 staff members.487 Further, OJSC Swedbank had grown from 95 offices to 170 during the previous year488. In an interview CEO Lidén discussed the future in Ukraine as following:
“The acquisition of TAS is in line with Swedbank’s strategy to expand in Eastern Europe, where the bank is already the market leader in the Baltic countries. Ukraine has strong growth expected and a low level of penetration of financial services.”489 […] “It is an extremely interesting market that we have followed for a long time”490. “[…] If you look at the macro indicators in Ukraine you will see that the track they are on is firm and growing. We have been amazed by the country’s good condition and well-developed industrial infrastructure, high skills, high education and good natural resources. We be-lieve that Ukraine is now awaking from its beauty sleep and many years of planned economy.”491. “[…] If we speak of Ukraine I have to be very posi-tive. Economic growth is intact and there are no imbalances.”492. “[…] We have gained much experience together with Hansabank, and there is a lot of this to contribute to Ukraine.”493. […] “[…] in the countries we have entered we want to obtain a strong presence and large market shares”494
Lidén was evidently enthusiastic about this purchase and noted that by the end of the year the bank anticipated having 200 offices in the country, which the bank also almost succeeded in reaching495. Overall, Swedbank shifted its interest from the Baltic region and leaned more towards Russia and Ukraine496. OJSC Swedbank grew rapidly, particularly in private banking. Board chairman Stålberg was satisfied and declared:
487 Öhlin, H. (2007). Swedbank: Köper TAS-Kommerzbank i Ukraina för 735 MUSD. Affärs-världen, 7 February; Nyhetsbyrån Direkt (2007). Swedbank: Avser att öppna yttl 15 nya kontor Ukraina i år – VD. Nyhetsbyrån Direkt, 24 October; Joons, A. (2007). Swedbank: Sannolikt inga ryska kontor i år – VD. Nyhetsbyrån Direkt, 31 August; Press release (2007). Swedbank fullbordar förvärvet av TAS-Kommerzbank. Swedbank, 9 June; Sandkvist, L. (2007). TAS-Kommerzbank i Ukraina byter namn till Swedbank. Fond & Bank, 11 December 488 TT (2007). Swedbank köper ukrainska TAS. Dagens Industri, 7 February 489 Press release (2007). Swedbank fullbordar förvärvet av TAS-Kommerzbank. Swedbank, 9 June 490 Törnwall, M. (2007). Swedbank ökar takten i Ryssland och Ukraina. Dagens Industri, 23 April 491 Svensson, K. (2007). “Tillväxten finns i öst”. Dagens Industri, 5 December 492 Joons, A. (2007). Swedbank: Sannolikt inga ryska kontor i år – VD. Nyhetsbyrån Direkt, 31 August 493 Palutko Macéus, K. (2007). Swedbank köper bank i Ukraina. Dagens Industri, 8 February 494 Palutko Macéus, K. (2007). Kostnaderna satte press på Swedbank. Dagens Industri, 17 February 495 Svensson, K. (2007). “Tillväxten finns i öst”. Dagens Industri, 5 December; Di.se (2008). SEB vill ha 300 kontor – i Ukraina. Di.se, 4 March 496 Svensson, K. (2007). “Tillväxten finns i öst”. Dagens Industri, 5 December
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“Through the purchase of TAS, Swedbank takes another step in its growth strategy after its success in the Baltic region. Ukraine is an important econo-my with impressive accumulation and positive development.”497 […] “Growth is very strong in the country and in a few years the activity in Ukraine might be bigger than our Baltic business where we currently are market leaders.498” [and further on] “After the Baltic region and Russia we are taking another step. Banking is a bit underdeveloped in Ukraine, but there is a strong growth potential with 47 million inhabitants.”499.
Stålberg noted that the possibilities in Ukraine from the investment were numerous and the future outlook was positive. He additionally added in the statement below that although the investments in Ukraine might not always be positive in the forthcoming years, within a short time span the invest-ments would be as profitable as the ones made in the Baltic region.
“With the acquisition of TAS in Ukraine we slide from being a Nordic-Baltic bank into a bank with a strong base in Sweden, local presence in the Nordic region, and with growth potential particularly in the Baltic region further east. […] Although it may be a bumpy road it is crystal clear where Ukraine is headed and that is toward the west. So far, Ukraine has shown rather good growth in the past five to ten years, hence TAS will account for fairly signifi-cant growth. What we can provide is of course knowledge and skills but also financial resources. […] We obviously cannot grow unhindered. We are still in an investment phase in the Baltic States, Russia and Ukraine. Meanwhile we have good growth in the Swedish market. […] But according to our calcu-lations it will prove that our capital adequacy is not a problem. […] In the Baltic region more customers will use more products, which will drive mar-ket growth. In Russia the market is still several years behind development, which is a challenge, but it also shows potential for growth. Ukraine has a rapidly growing economy that will drive demand for banking products.”500
CEO Lidén agreed and joined in:
497 Öhlin, H. (2007). Swedbank: Köper TAS-Kommerzbank i Ukraina för 735 MUSD. Ny-hetsbyrån Ticker, 7 February 498 Lundell, S. (2007). ”Snart inga svenska storbanker kvar”. Dagens Industri, 14 February 499 Braconier, F. (2007). Swedbank köper bank i Ukraina. Svenska Dagbladet, 8 February 500 Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March
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“We are investing in a bank that is intended to grow rapidly. TAS manage-ment is well experienced and engaged in the strategy we have agreed upon for the bank’s continued development.”501 [Followed up with] “In any case my ambition is that within five to ten years we are to be the largest bank in Sweden, Estonia, Latvia and Lithuania. Then I think we will have a stronger establishment in the rest of Nordic region and that we will have come a long way in Ukraine.”502. […] “Within a few years we will have a million custom-ers in Russia and become larger in Ukraine”503. […] “In both Russia and Ukraine we see a great potential for growth”504. […] “It might take a few years before we are able to make major profits, but we will not incur any losses”505.
The two were excited about entering a market that allegedly was growing fast. OJSC Swedbank aimed to open 60 new offices during the first six months and intended to grow rapidly. Of the bank’s lending in Ukraine 65 percent was to business firms, mostly domestic, and 35 percent to private customers.506 Swedbank predicted that by 2014 Eastern Europe and Russia would be a larger ‘home market’ for the bank, larger than Sweden, and more specifically over one million customers in Russia and Ukraine507. Further Lidén noted that it was a strategic investment: “Market growth is very strong in the country and in a few years the operations in Ukraine might be bigger than our Baltic ones […]”508. Although CEO Lidén later on declared, “Dur-ing the last quarter we have seen a deceleration in the Estonian economy and there are signs that Latvia might follow.”509.
According to Stålberg, Ukraine might be a larger and better version of the Baltic region. By the end of 2007 OJSC Swedbank had increased its lending by 112 percent and earned USD 11 million during the fourth quarter of 2007. Lidén agreed with Stålberg while discussing a similar topic: “We have in-vested heavily in the Baltic region to capture the strong market growth.”510. While CEO Lidén was happy with the activities in the Baltic region, experts worried that the investments made could turn out to be losses. Lidén stated that the bank was remaining positive: “We are not worried. We are monitor- 501 Öhlin, H. (2007). Swedbank: Köper TAS-Kommerzbank i Ukraina för 735 MUSD. Ny-hetsbyrån Ticker, 7 February 502 Svensson, K. (2007). “Tillväxten finns i öst”. Dagens Industri, 5 December 503 Törnwall, M. (2007). Swedbank ökar takten i Ryssland och Ukraina. Dagens Industri, 23 April 504 Ström, C. G. & TT (2007). Swedbanks satsning i Baltikum lönar sig. DN.se, 16 February 505 Palutko Macéus, K. (2007). Swedbank köper bank i Ukraina. Dagens Industri, 8 February 506 Joons, A. (2008). Swedbank: Tajming för intåg i Ukraina kan diskuteras – Ordf. Nyhetsby-rån Direkt, 4 December; Törnwall, M. (2007). Swedbank ökar takten i Ryssland och Ukraina. Dagens Industri, 23 April 507 Törnwall, M. (2007). Swedbank ökar takten i Ryssland och Ukraina. Dagens Industri, 23 April 508 Nyhetsbyrån Direkt (2007). Swedbank: Svenska banker riskerar slukas av utländska jättar – DI. Nyhetsbyrån Direkt, 14 February 509 Ström, C. G. & TT (2007). Baltikum spökar i Swedbanks delår. TT, 24 October 510 Ström, C. G. & TT (2007). Swedbanks satsning i Baltikum lönar sig. DN.se, 16 February
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“Through the purchase of TAS, Swedbank takes another step in its growth strategy after its success in the Baltic region. Ukraine is an important econo-my with impressive accumulation and positive development.”497 […] “Growth is very strong in the country and in a few years the activity in Ukraine might be bigger than our Baltic business where we currently are market leaders.498” [and further on] “After the Baltic region and Russia we are taking another step. Banking is a bit underdeveloped in Ukraine, but there is a strong growth potential with 47 million inhabitants.”499.
Stålberg noted that the possibilities in Ukraine from the investment were numerous and the future outlook was positive. He additionally added in the statement below that although the investments in Ukraine might not always be positive in the forthcoming years, within a short time span the invest-ments would be as profitable as the ones made in the Baltic region.
“With the acquisition of TAS in Ukraine we slide from being a Nordic-Baltic bank into a bank with a strong base in Sweden, local presence in the Nordic region, and with growth potential particularly in the Baltic region further east. […] Although it may be a bumpy road it is crystal clear where Ukraine is headed and that is toward the west. So far, Ukraine has shown rather good growth in the past five to ten years, hence TAS will account for fairly signifi-cant growth. What we can provide is of course knowledge and skills but also financial resources. […] We obviously cannot grow unhindered. We are still in an investment phase in the Baltic States, Russia and Ukraine. Meanwhile we have good growth in the Swedish market. […] But according to our calcu-lations it will prove that our capital adequacy is not a problem. […] In the Baltic region more customers will use more products, which will drive mar-ket growth. In Russia the market is still several years behind development, which is a challenge, but it also shows potential for growth. Ukraine has a rapidly growing economy that will drive demand for banking products.”500
CEO Lidén agreed and joined in:
497 Öhlin, H. (2007). Swedbank: Köper TAS-Kommerzbank i Ukraina för 735 MUSD. Ny-hetsbyrån Ticker, 7 February 498 Lundell, S. (2007). ”Snart inga svenska storbanker kvar”. Dagens Industri, 14 February 499 Braconier, F. (2007). Swedbank köper bank i Ukraina. Svenska Dagbladet, 8 February 500 Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March
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“We are investing in a bank that is intended to grow rapidly. TAS manage-ment is well experienced and engaged in the strategy we have agreed upon for the bank’s continued development.”501 [Followed up with] “In any case my ambition is that within five to ten years we are to be the largest bank in Sweden, Estonia, Latvia and Lithuania. Then I think we will have a stronger establishment in the rest of Nordic region and that we will have come a long way in Ukraine.”502. […] “Within a few years we will have a million custom-ers in Russia and become larger in Ukraine”503. […] “In both Russia and Ukraine we see a great potential for growth”504. […] “It might take a few years before we are able to make major profits, but we will not incur any losses”505.
The two were excited about entering a market that allegedly was growing fast. OJSC Swedbank aimed to open 60 new offices during the first six months and intended to grow rapidly. Of the bank’s lending in Ukraine 65 percent was to business firms, mostly domestic, and 35 percent to private customers.506 Swedbank predicted that by 2014 Eastern Europe and Russia would be a larger ‘home market’ for the bank, larger than Sweden, and more specifically over one million customers in Russia and Ukraine507. Further Lidén noted that it was a strategic investment: “Market growth is very strong in the country and in a few years the operations in Ukraine might be bigger than our Baltic ones […]”508. Although CEO Lidén later on declared, “Dur-ing the last quarter we have seen a deceleration in the Estonian economy and there are signs that Latvia might follow.”509.
According to Stålberg, Ukraine might be a larger and better version of the Baltic region. By the end of 2007 OJSC Swedbank had increased its lending by 112 percent and earned USD 11 million during the fourth quarter of 2007. Lidén agreed with Stålberg while discussing a similar topic: “We have in-vested heavily in the Baltic region to capture the strong market growth.”510. While CEO Lidén was happy with the activities in the Baltic region, experts worried that the investments made could turn out to be losses. Lidén stated that the bank was remaining positive: “We are not worried. We are monitor- 501 Öhlin, H. (2007). Swedbank: Köper TAS-Kommerzbank i Ukraina för 735 MUSD. Ny-hetsbyrån Ticker, 7 February 502 Svensson, K. (2007). “Tillväxten finns i öst”. Dagens Industri, 5 December 503 Törnwall, M. (2007). Swedbank ökar takten i Ryssland och Ukraina. Dagens Industri, 23 April 504 Ström, C. G. & TT (2007). Swedbanks satsning i Baltikum lönar sig. DN.se, 16 February 505 Palutko Macéus, K. (2007). Swedbank köper bank i Ukraina. Dagens Industri, 8 February 506 Joons, A. (2008). Swedbank: Tajming för intåg i Ukraina kan diskuteras – Ordf. Nyhetsby-rån Direkt, 4 December; Törnwall, M. (2007). Swedbank ökar takten i Ryssland och Ukraina. Dagens Industri, 23 April 507 Törnwall, M. (2007). Swedbank ökar takten i Ryssland och Ukraina. Dagens Industri, 23 April 508 Nyhetsbyrån Direkt (2007). Swedbank: Svenska banker riskerar slukas av utländska jättar – DI. Nyhetsbyrån Direkt, 14 February 509 Ström, C. G. & TT (2007). Baltikum spökar i Swedbanks delår. TT, 24 October 510 Ström, C. G. & TT (2007). Swedbanks satsning i Baltikum lönar sig. DN.se, 16 February
110
ing the situation there very carefully.”511. Board chairman Stålberg expanded on Lidén’s assessment:
“A bank’s job is to assess the risks and returns. To some extent there is a risk of overheating and a shortage of labor in the Baltic countries, but each coun-try has its own specific risk profile. We have been following Latvia for quite some time, before the media reacted. In Russia and Ukraine, the political risk is greater. We put more emphasis on analyzing the situation in Russia and Ukraine in order to avoid dealing with too large a political risk”512
Thus although the bank was aware that the financial market had some issues, the bank was largely optimistic. In between these errands, the Finansin-spektionen (Swedish financial supervisory authority) among others warned Swedish banks that operations in the Baltic region might very well create setbacks513. CEO, Lidén, answered as follows:
“The central bank governor thinks that lending growth in 2004 and 2005 has been too strong, and it may well be the case. We are certainly a part of it be-cause we have helped to finance the investments made. But we hope we have done this in a good way – by applying the methods in an analytical way as we have. We believe that the investments that have been made are very good.”514
Swedbank was calm and reported that they were constantly analyzing devel-opments515. Meanwhile in Russia Swedbank began further investments to-wards private customers. CEO Lidén stated that, “We have identified Mos-cow and Saint Petersburg as areas of interest”516. Stålberg said that experi-ences from the Baltic region had pushed Swedbank’s expansion in Russia further517. All operations in the country now went under the name of Swedbank. Six new offices were also announced, mainly in Saint Petersburg and Kaliningrad. On the long run the bank was expecting to get one million new private customers in the Russian market518. Not long after, Swedbank was forced into a three-month shut down in Russia by the Russian central bank. Before the bank could open its offices again, the bank had to make
511 Ibid. 512 Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March 513 Gustafsson, S. & TT (2009). Riksbanken: Vi varnade för Baltikum. Dagens Nyheter, 5 November; Åkesson, N. (2007). Baltikums tillväxt börjar bromsa in. Dagens Industri, 11 October; TT (2007). Baltikum spökar i Swedbanks delår. TT, 24 October; Finansinspektionen (2007). Finanssektorns stabilitet 2007. Rapport 2007:16, Stockholm: Finansinspektionen 514 Svensson, K. (2007). “Tillväxten finns i öst”. Dagens Industri, 5 December 515 TT (2007). Swedbanks satsning i Baltikum lönar sig. TT, 16 February; Östlund, A. (2007). Kurslyft vid förvärv – ett tecken på överhettning. Affärsvärlden, 2 March 516 Svensson, K. (2007). “Tillväxten finns i öst”. Dagens Industri, 5 December 517 Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March 518 Wallén, M. (2007). Swedbank till Ryssland. Dagens Industri, 26 January
111
some adjustments following charges of money laundering519. Instead of opening any new offices they instead shut down two, but recorded that it was looking into the possibility of opening new ones during the following year520. The board chairman, Stålberg, commented on an interesting topic when dis-cussing a possible merger with another Nordic bank early in 2007:
“We are always interested in everything that comes up [but it requires a loos-ening of the competition regulations]. […] In Europe the trend is towards larger banks. In this respect Swedish banks should not be stopped from merg-ing on competitive grounds. This will mean that in the long run we will no longer have any Swedish-owned banks remaining. […] Since the European giants can acquire a Swedish bank for a mere pittance. If we do not do any-thing soon the Swedish banks will soon be gone from the scene.”521
He continued on to say in another interview:
“It is not necessary to make a major deal in order to survive, but in the long term it may be a necessity to compete on equal terms with the big European banks. We can satisfy our shareholders over the medium term with the acqui-sitions we have done now. But in the long term there is a need to grow in size, either on your own or together with a suitable partner. […] We assess that the competition will increase in the banking market and it will not just be done with a physical presence. When we put forward the bank’s strategy in 1994-1995 there was no mention of Internet banking […] we are now trying to make the strategy for the next phase in the evolution of Internet. The ques-tion is whether, for example, one can measure competitiveness based on for example physical presence in the form of offices.”522
Stålberg worried that if Swedish banks did not expand, Swedes would no longer run them and that the banking business was changing since the intro-duction of Internet banking. Market shares in Sweden were considered to be a strong base, and the Baltic region was expected to enjoy continued healthy growth. Accordingly, by being the largest bank in the Baltic region, Swedbank projected profits to continue to grow and that the bank would be enriched by the experience in the process. CEO Lidén stated that this prediction was accurate, and over the
519 Thulin, C. (2007). Rysk öppning för Swedbank. Dagens Industri, 7 August; Flores, J. (2007). Swedbank medger misstag efter ryskt affärsstopp. Dagens Nyheter, 8 June; Persson Löfgren, M. (2007). Swedbank i rysk karantän i tre månader. Sveriges Radio, 7 June 520 Joons, A. (2007). Swedbank: Sannolikt inga ryska kontor i år – VD. Nyhetsbyrån Direkt, 31 August 521 Lundell, S. (2007). ”Snart inga svenska storbanker kvar”. Dagens Industri, 14 February 522 Hedelius, P. 2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March
110
ing the situation there very carefully.”511. Board chairman Stålberg expanded on Lidén’s assessment:
“A bank’s job is to assess the risks and returns. To some extent there is a risk of overheating and a shortage of labor in the Baltic countries, but each coun-try has its own specific risk profile. We have been following Latvia for quite some time, before the media reacted. In Russia and Ukraine, the political risk is greater. We put more emphasis on analyzing the situation in Russia and Ukraine in order to avoid dealing with too large a political risk”512
Thus although the bank was aware that the financial market had some issues, the bank was largely optimistic. In between these errands, the Finansin-spektionen (Swedish financial supervisory authority) among others warned Swedish banks that operations in the Baltic region might very well create setbacks513. CEO, Lidén, answered as follows:
“The central bank governor thinks that lending growth in 2004 and 2005 has been too strong, and it may well be the case. We are certainly a part of it be-cause we have helped to finance the investments made. But we hope we have done this in a good way – by applying the methods in an analytical way as we have. We believe that the investments that have been made are very good.”514
Swedbank was calm and reported that they were constantly analyzing devel-opments515. Meanwhile in Russia Swedbank began further investments to-wards private customers. CEO Lidén stated that, “We have identified Mos-cow and Saint Petersburg as areas of interest”516. Stålberg said that experi-ences from the Baltic region had pushed Swedbank’s expansion in Russia further517. All operations in the country now went under the name of Swedbank. Six new offices were also announced, mainly in Saint Petersburg and Kaliningrad. On the long run the bank was expecting to get one million new private customers in the Russian market518. Not long after, Swedbank was forced into a three-month shut down in Russia by the Russian central bank. Before the bank could open its offices again, the bank had to make
511 Ibid. 512 Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March 513 Gustafsson, S. & TT (2009). Riksbanken: Vi varnade för Baltikum. Dagens Nyheter, 5 November; Åkesson, N. (2007). Baltikums tillväxt börjar bromsa in. Dagens Industri, 11 October; TT (2007). Baltikum spökar i Swedbanks delår. TT, 24 October; Finansinspektionen (2007). Finanssektorns stabilitet 2007. Rapport 2007:16, Stockholm: Finansinspektionen 514 Svensson, K. (2007). “Tillväxten finns i öst”. Dagens Industri, 5 December 515 TT (2007). Swedbanks satsning i Baltikum lönar sig. TT, 16 February; Östlund, A. (2007). Kurslyft vid förvärv – ett tecken på överhettning. Affärsvärlden, 2 March 516 Svensson, K. (2007). “Tillväxten finns i öst”. Dagens Industri, 5 December 517 Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March 518 Wallén, M. (2007). Swedbank till Ryssland. Dagens Industri, 26 January
111
some adjustments following charges of money laundering519. Instead of opening any new offices they instead shut down two, but recorded that it was looking into the possibility of opening new ones during the following year520. The board chairman, Stålberg, commented on an interesting topic when dis-cussing a possible merger with another Nordic bank early in 2007:
“We are always interested in everything that comes up [but it requires a loos-ening of the competition regulations]. […] In Europe the trend is towards larger banks. In this respect Swedish banks should not be stopped from merg-ing on competitive grounds. This will mean that in the long run we will no longer have any Swedish-owned banks remaining. […] Since the European giants can acquire a Swedish bank for a mere pittance. If we do not do any-thing soon the Swedish banks will soon be gone from the scene.”521
He continued on to say in another interview:
“It is not necessary to make a major deal in order to survive, but in the long term it may be a necessity to compete on equal terms with the big European banks. We can satisfy our shareholders over the medium term with the acqui-sitions we have done now. But in the long term there is a need to grow in size, either on your own or together with a suitable partner. […] We assess that the competition will increase in the banking market and it will not just be done with a physical presence. When we put forward the bank’s strategy in 1994-1995 there was no mention of Internet banking […] we are now trying to make the strategy for the next phase in the evolution of Internet. The ques-tion is whether, for example, one can measure competitiveness based on for example physical presence in the form of offices.”522
Stålberg worried that if Swedish banks did not expand, Swedes would no longer run them and that the banking business was changing since the intro-duction of Internet banking. Market shares in Sweden were considered to be a strong base, and the Baltic region was expected to enjoy continued healthy growth. Accordingly, by being the largest bank in the Baltic region, Swedbank projected profits to continue to grow and that the bank would be enriched by the experience in the process. CEO Lidén stated that this prediction was accurate, and over the
519 Thulin, C. (2007). Rysk öppning för Swedbank. Dagens Industri, 7 August; Flores, J. (2007). Swedbank medger misstag efter ryskt affärsstopp. Dagens Nyheter, 8 June; Persson Löfgren, M. (2007). Swedbank i rysk karantän i tre månader. Sveriges Radio, 7 June 520 Joons, A. (2007). Swedbank: Sannolikt inga ryska kontor i år – VD. Nyhetsbyrån Direkt, 31 August 521 Lundell, S. (2007). ”Snart inga svenska storbanker kvar”. Dagens Industri, 14 February 522 Hedelius, P. 2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March
112
year Swedbank increased its profits in the Baltic region by 46 percent523. Long-term investments were planned for the Ukraine and Russian markets. Stålberg said in early 2007 that the Swedish economy was strong at the time and would continue to be strong. While the major cause of concern was the US with huge deficits and signals that the consumption was going down.524 To reduce risk exposure Swedbank tried to loosen restraints, act more locally and let the local offices make their own decisions as well as train new em-ployees. At the end of 2007 Stålberg became a little anxious and sent out a warning that a recession in the US would harm Europe525. Regardless of Stålberg’s and the international market’s anxiousness, Swedbank recorded its best year so far in terms of earnings.
5.4 2008-2010 Contracting internationalization In early 2008 Swedbank increased its foreign investments in Ukraine and Russia but was later strongly affected by a worldwide financial crisis that in turn made the bank introduce changes in its activities. Table 7 below indi-cates that Swedbank at the time had great interest in expanding in Ukraine and Russia. The following subchapter will provide the empirical facts of Swedbank’s international activities during the years 2008-2010.
Swedbank’s reduces its expansion Year 2008 2009 2010
Sweden 419 400 340 8 761 8 454 8 352
Baltic region 278 226 220 8 327 6 105 5 416
Ukraine & Russia 234 172 97 4 305 3 456 1 884
Bold = Offices, Italic = Staff
Table 7. Swedbank’s expansion in 2008-2010
In September of 2008 Lehman Brothers, which both Handelsbanken and Swedbank had business with, submitted a bankruptcy petition with debts of USD 613 billion526. Prior to the submission of the petition, the world econo-
523 E24 (2008). Baltikum guldgruva för Swedbank. E24, 14 February; Swedbank Annual Report 2007, p. 21 524 Lundell, S. (2007). ”Snart inga svenska storbanker kvar”. Dagens Industri, 14 February 525 Swedbank Annual Report 2007, p. 4 526 TT (2008). Barclays övertar delar av Lehman. Dagens Nyheter, 17 September; TT (2008). Lehman brothers ansöker om konkurs. Dagens Nyheter, 15 September; (2008). Nyhetsbyrån Direkt (2008). Bank: Svenska storbanker går igenom Lehman-exponeringar – IR. Nyhetsby-rån Direkt, 15 September; Lind, J. (2008). Handelsbanken: VD bekräftar engagemang gente-
113
my was already unstable, and as the Lehman Brothers bankruptcy became official, this instability escalated into a worldwide financial crisis. The media worried about Swedbank’s future losses in the Baltic region. The Swedish national bank raised the key interest rate, and the coming recession worried analysts and the national bank. The national bank had earlier warned Swedbank about the Baltic region. Once again it stated that Swedbank had taken excessively high risks in its expansion. Meanwhile countries in the Baltic region prepared for darker times. To survive, firms in the Baltic re-gion decreased staff salaries and cut staff. Offices stood empty, show-off buildings stood half-finished and show-off cars were returned to the vendors. Reports from the risk group to HQ in Swedbank accelerated. Loss of reve-nues for Swedbank transformed into repossessed assets in the multi-millions. Before any of this occurred, the Swedish national bank and Swedish banks had provided numerous reports, and experts had warned Swedbank about its business in the Baltic region, Russia and Ukraine.527 These warnings did not only come from outside the bank. Swedbank AC’s (formerly known as Hansabank) annual report of 2007 suggested that the region was headed towards a recession528. Despite warnings of what might come, Swedbank maintained a favorable outlook with high expectations for growth in the future and went on as usual. In its annual report of 2007 Swedbank wrote:
“Swedbank has great confidence that the Baltic economies will continue to evolve and that prosperity in the long term will approach that of the Nordic region.”529
Swedbank, together with SEB, by then controlled about 60-80 percent of the market share in the Baltic region. Swedish banks had lent out about USD 59 billion in the region up to 2009, with Swedbank being one of the main inves-
mot Lehman Brothers. Nyhetsbyrån SIX, 15 September; Johansson, I. (2008). Analytikerna: ”svenska banker inte i farozonen”. Göteborgs-Posten, 16 September 527 Petersen, L. (2008). Finanskrisen dominerar på näringslivssidorna. Svenska Dagbladet, 30 October; Petersson, J. (2008). Övergiven marknad. Svenska Dagbladet, 25 October; Peters-son, J. (2008). Marknaden tror på baltisk kollaps. Svenska Dagbladet, 30 October; Gustafs-son, S. & TT (2009). Riksbanken: Vi varnade för Baltikum. Dagens Nyheter, 5 November; Ingves, S. (2010). Krisen i Baltikum – Riksbankens åtgärder, bedömningar och lärdomar (Speech at the Swedish Finance Committee). Sveriges Riksbank, 2 February; TT (2008). Ryktesvåg mot Swedbank. Dagens Industri, 25 September; Petersen, L. (2008). Baltikum lägger i backen. Svenska Dagbladet, 25 September; Thellenberg, I. & Ölander, M. (2009). Swedbank riskerar förlora 40 miljarder. Expressen, 8 March; Joons, A. (2010). Swedbank: Mer kreditåtervinningar väntas om positiv makroutv. Affärsvärlden, 21 October; Braconier, F. (2008). Sveriges ekonomi bromsar in tvärt. Svenska Dagbladet, 27 August; Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March; Svensson, K. (2007). Säljaren enda säkra vinnaren på bankaffären. Dagens Industri, 8 February 528 Swedbank AC Annual Report 2007, p. 17; 2008, p. 4; Swedbank Annual Report 2008, p. 12, 20 529 Lindqvist Sjöström, C. (2008). Baltikum Swedbanks guldgruva. E24, 14 February
112
year Swedbank increased its profits in the Baltic region by 46 percent523. Long-term investments were planned for the Ukraine and Russian markets. Stålberg said in early 2007 that the Swedish economy was strong at the time and would continue to be strong. While the major cause of concern was the US with huge deficits and signals that the consumption was going down.524 To reduce risk exposure Swedbank tried to loosen restraints, act more locally and let the local offices make their own decisions as well as train new em-ployees. At the end of 2007 Stålberg became a little anxious and sent out a warning that a recession in the US would harm Europe525. Regardless of Stålberg’s and the international market’s anxiousness, Swedbank recorded its best year so far in terms of earnings.
5.4 2008-2010 Contracting internationalization In early 2008 Swedbank increased its foreign investments in Ukraine and Russia but was later strongly affected by a worldwide financial crisis that in turn made the bank introduce changes in its activities. Table 7 below indi-cates that Swedbank at the time had great interest in expanding in Ukraine and Russia. The following subchapter will provide the empirical facts of Swedbank’s international activities during the years 2008-2010.
Swedbank’s reduces its expansion Year 2008 2009 2010
Sweden 419 400 340 8 761 8 454 8 352
Baltic region 278 226 220 8 327 6 105 5 416
Ukraine & Russia 234 172 97 4 305 3 456 1 884
Bold = Offices, Italic = Staff
Table 7. Swedbank’s expansion in 2008-2010
In September of 2008 Lehman Brothers, which both Handelsbanken and Swedbank had business with, submitted a bankruptcy petition with debts of USD 613 billion526. Prior to the submission of the petition, the world econo-
523 E24 (2008). Baltikum guldgruva för Swedbank. E24, 14 February; Swedbank Annual Report 2007, p. 21 524 Lundell, S. (2007). ”Snart inga svenska storbanker kvar”. Dagens Industri, 14 February 525 Swedbank Annual Report 2007, p. 4 526 TT (2008). Barclays övertar delar av Lehman. Dagens Nyheter, 17 September; TT (2008). Lehman brothers ansöker om konkurs. Dagens Nyheter, 15 September; (2008). Nyhetsbyrån Direkt (2008). Bank: Svenska storbanker går igenom Lehman-exponeringar – IR. Nyhetsby-rån Direkt, 15 September; Lind, J. (2008). Handelsbanken: VD bekräftar engagemang gente-
113
my was already unstable, and as the Lehman Brothers bankruptcy became official, this instability escalated into a worldwide financial crisis. The media worried about Swedbank’s future losses in the Baltic region. The Swedish national bank raised the key interest rate, and the coming recession worried analysts and the national bank. The national bank had earlier warned Swedbank about the Baltic region. Once again it stated that Swedbank had taken excessively high risks in its expansion. Meanwhile countries in the Baltic region prepared for darker times. To survive, firms in the Baltic re-gion decreased staff salaries and cut staff. Offices stood empty, show-off buildings stood half-finished and show-off cars were returned to the vendors. Reports from the risk group to HQ in Swedbank accelerated. Loss of reve-nues for Swedbank transformed into repossessed assets in the multi-millions. Before any of this occurred, the Swedish national bank and Swedish banks had provided numerous reports, and experts had warned Swedbank about its business in the Baltic region, Russia and Ukraine.527 These warnings did not only come from outside the bank. Swedbank AC’s (formerly known as Hansabank) annual report of 2007 suggested that the region was headed towards a recession528. Despite warnings of what might come, Swedbank maintained a favorable outlook with high expectations for growth in the future and went on as usual. In its annual report of 2007 Swedbank wrote:
“Swedbank has great confidence that the Baltic economies will continue to evolve and that prosperity in the long term will approach that of the Nordic region.”529
Swedbank, together with SEB, by then controlled about 60-80 percent of the market share in the Baltic region. Swedish banks had lent out about USD 59 billion in the region up to 2009, with Swedbank being one of the main inves-
mot Lehman Brothers. Nyhetsbyrån SIX, 15 September; Johansson, I. (2008). Analytikerna: ”svenska banker inte i farozonen”. Göteborgs-Posten, 16 September 527 Petersen, L. (2008). Finanskrisen dominerar på näringslivssidorna. Svenska Dagbladet, 30 October; Petersson, J. (2008). Övergiven marknad. Svenska Dagbladet, 25 October; Peters-son, J. (2008). Marknaden tror på baltisk kollaps. Svenska Dagbladet, 30 October; Gustafs-son, S. & TT (2009). Riksbanken: Vi varnade för Baltikum. Dagens Nyheter, 5 November; Ingves, S. (2010). Krisen i Baltikum – Riksbankens åtgärder, bedömningar och lärdomar (Speech at the Swedish Finance Committee). Sveriges Riksbank, 2 February; TT (2008). Ryktesvåg mot Swedbank. Dagens Industri, 25 September; Petersen, L. (2008). Baltikum lägger i backen. Svenska Dagbladet, 25 September; Thellenberg, I. & Ölander, M. (2009). Swedbank riskerar förlora 40 miljarder. Expressen, 8 March; Joons, A. (2010). Swedbank: Mer kreditåtervinningar väntas om positiv makroutv. Affärsvärlden, 21 October; Braconier, F. (2008). Sveriges ekonomi bromsar in tvärt. Svenska Dagbladet, 27 August; Hedelius, P. (2007). Intervju: Carl Eric Stålberg – Stålbergs lappkast. Affärsvärlden, 7 March; Svensson, K. (2007). Säljaren enda säkra vinnaren på bankaffären. Dagens Industri, 8 February 528 Swedbank AC Annual Report 2007, p. 17; 2008, p. 4; Swedbank Annual Report 2008, p. 12, 20 529 Lindqvist Sjöström, C. (2008). Baltikum Swedbanks guldgruva. E24, 14 February
114
tors530. To secure itself Swedbank made a new issue of USD 1.45 billion and participated in the national guarantee program531. The media together with analysts predicted a complete collapse of the Baltic region’s economy. Lat-via showed a deficit of 26 percent for 2007 and was expected to devalue its currency. Estonia revealed a large deficit and with a median income of USD 1,200 this speculation was justified. Lithuania voiced some optimism and was estimated to see continued growth, but with reassurance.532 The former gold mine of Swedbank (as the CEOs in the past ten years’ time had coined it) was severely struggling, although the bank had been aware of this since of year 2007. Yet Swedbank had “great confidence” that the Baltic countries would “continue to evolve” and the Ukrainian bank OJSC Swedbank would “develop well” and had a “great future”533. Back home a troubled finance minister Anders Borg worried about the consequences of the Swedish banks’ risk exposure534. Sweden faced bleak prognosis535, especially SEB and Swedbank. SEB had lent out USD 22 billion in the Baltic region and Swedbank USD 28 billion (Russia included, but additionally USD 2.4 billion in Ukraine)536. Financial analyst Rodney Alfvén was concerned that the Swedish currency lost value as foreign investors sold their Swedish shares because of their concern about Swedish banks537, even though Swedbank had scored its best-ever earning only a few months earlier538. Society at large was also provoked by the banks’ excessive risk exposure. Soon it led to a change in the Swedish financial rules; banks that took higher risks had to pay more for their insurance539. In a chat on the Swedish news
530 Svenska Dagbladet (2009). Baltikum skapar förlust för bankerna. Svenska Dagbladet, 2 June 531 Svedbom, A. & Lundell, S. (2009). Expansionen hotar fälla Stålberg. Dagens Industri, 14 March 532 Petersen, L. (2008). Finanskrisen dominerar på näringslivssidorna. Svenska Dagbladet, 30 October; Petersson, J. (2008). Övergiven marknad. Svenska Dagbladet, 25 October; Peters-son, J. (2008). Marknaden tror på baltisk kollaps. Svenska Dagbladet, 30 October; Gustafs-son, S. & TT (2009). Riksbanken: Vi varnade för Baltikum. Dagens Nyheter, 5 November; Ingves, S. (2010). Krisen i Baltikum – Riksbankens åtgärder, bedömningar och lärdomar (Speech at the Swedish Finance Committee). Sveriges Riksbank, 2 February; TT (2008). Ryktesvåg mot Swedbank. Dagens Industri, 25 September; Petersen, L. (2008). Baltikum lägger i backen. Svenska Dagbladet, 25 September; Thellenberg, I. & Ölander, M. (2009). Swedbank riskerar förlora 40 miljarder. Expressen, 8 March; Joons, A. (2010). Swedbank: Mer kreditåtervinningar väntas om positiv makroutv. Affärsvärlden, 21 October; Wallqvist, J. & Karlsson, K-J. (2009). Finansministern fruktar Baltikum. Expressen, 16 April 533 Lindqvist Sjöström, C. (2008). Baltikum Swedbanks guldgruva. E24, 24 February 534 Wallqvist, J. & Karlsson, K-J. (2009). Finansministern fruktar Baltikum. Expressen, 16 April 535 Braconier, F. (2008). Sveriges ekonomi bromsar in tvärt. Svenska Dagbladet, 27 August 536 Wallqvist, J. & Karlsson, K-J. (2009). Finansministern fruktar Baltikum. Expressen, 16 April 537 Ibid. 538 Lindqvist Sjöström, C. (2008). Baltikum Swedbanks guldgruva. E24, 14 February 539 Suneson, B. (2008). Risk ska styra avgiften. Svenska Dagbladet, 16 October; Lindström, O. & TT (2009). Balter betalar svenska bankvinster. Dagens Nyheter, 4 June
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portal Veckans Affärer CEO Jan Lidén defended Swedbank’s expenditures in Ukraine by referring to a long-term vision540. A year before the eruption of the financial crisis Swedbank had increased its momentum and gained 150,000 new business customers, the biggest increase since 1997. The mo-mentum could also be seen in the bank’s lending that in the Baltic region arose substantially from USD 18.9 to 27.4 billion. Lending continued to increase in the Baltic region during 2008 to 28.6 billion USD as it also did in Russia and Ukraine (USD 3.6 billion to USD 4.6 billion). Even in Sweden Swedbank’s lending increased from USD 121.3 to 147 billion.541 Although lending in the Baltic region, Russia, and Ukraine accounted for only a small part of Swedbank’s total lending, the bank was heavily dependent on the outcome from each region542. Although Swedbank had been optimistic about its investments in the Baltic region so far, the bank in late 2008 made new realizations and reported:
“The situation in the Baltic region is very troublesome, and has now evolved into something a little worse than we thought just a few quarters ago. Our friends there will have to prepare for a more prolonged recession”543
By the end of 2008 severe issues remained for Swedbank to ponder on. In the fourth quarter report the bank notified that its organization had to adapt to the existing conditions. Offices would be shut down and staff would be reduced. Predominantly in the Baltic region the organizations had to be re-structured544. As Tables 6 and 7 display, Swedbank removed 1,000 staff members and about 30 offices. The Baltic region then possessed 278 offices (299 previous year), and in Sweden 419 (459) while they increased overall in the rest of the bank’s international development areas. Of the increased posi-tions, 250 were in Russia. Otherwise staff in almost all markets were re-duced. In the Baltic region it was 1,000 staff fewer, in Ukraine above 100 and in Sweden around 200. Even though Swedbank announced as late as in March of 2008 that it would recruit 800 more to its staff in Ukraine545.
540 Veckans Affärer (2008). Swedbanks Jan Lidén ger svar på tal. Veckans Affärer, 2 Novem-ber 541 Swedbank Annual Report 2007, p. 2, 96; 2008, p. 2, 17, 93-94; Bränfeldt, L-E. (2008). Finanskrisen: Devalveringshotet förmörkar Baltikum. Affärsvärlden, 29 October 542 Hedelius, P. (2008). Kreditriskerna störst för SEB och Swedbank. Dagens Nyheter, 18 July; Petersen, L. (2008). Baltikum lägger i backen. Svenska Dagbladet, 25 September; Pe-tersson, J. (2008). Övergiven marknad. Svenska Dagbladet, 25 October 543 Almgren, J. (2008). Uttalande av Jan Lidén sänkte Swedbank-aktien. Svenska Dagbladet, 23 October 544 E24 (2008). Swedbank drar ned i Baltikum. E24, 23 October 545 Nyhetsbyrån Direkt (2008). Swedbank: Ska anställa 800 personer i Ukraina 2008 - Lands-chef. Nyhetsbyrån Direkt, 5 March
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tors530. To secure itself Swedbank made a new issue of USD 1.45 billion and participated in the national guarantee program531. The media together with analysts predicted a complete collapse of the Baltic region’s economy. Lat-via showed a deficit of 26 percent for 2007 and was expected to devalue its currency. Estonia revealed a large deficit and with a median income of USD 1,200 this speculation was justified. Lithuania voiced some optimism and was estimated to see continued growth, but with reassurance.532 The former gold mine of Swedbank (as the CEOs in the past ten years’ time had coined it) was severely struggling, although the bank had been aware of this since of year 2007. Yet Swedbank had “great confidence” that the Baltic countries would “continue to evolve” and the Ukrainian bank OJSC Swedbank would “develop well” and had a “great future”533. Back home a troubled finance minister Anders Borg worried about the consequences of the Swedish banks’ risk exposure534. Sweden faced bleak prognosis535, especially SEB and Swedbank. SEB had lent out USD 22 billion in the Baltic region and Swedbank USD 28 billion (Russia included, but additionally USD 2.4 billion in Ukraine)536. Financial analyst Rodney Alfvén was concerned that the Swedish currency lost value as foreign investors sold their Swedish shares because of their concern about Swedish banks537, even though Swedbank had scored its best-ever earning only a few months earlier538. Society at large was also provoked by the banks’ excessive risk exposure. Soon it led to a change in the Swedish financial rules; banks that took higher risks had to pay more for their insurance539. In a chat on the Swedish news
530 Svenska Dagbladet (2009). Baltikum skapar förlust för bankerna. Svenska Dagbladet, 2 June 531 Svedbom, A. & Lundell, S. (2009). Expansionen hotar fälla Stålberg. Dagens Industri, 14 March 532 Petersen, L. (2008). Finanskrisen dominerar på näringslivssidorna. Svenska Dagbladet, 30 October; Petersson, J. (2008). Övergiven marknad. Svenska Dagbladet, 25 October; Peters-son, J. (2008). Marknaden tror på baltisk kollaps. Svenska Dagbladet, 30 October; Gustafs-son, S. & TT (2009). Riksbanken: Vi varnade för Baltikum. Dagens Nyheter, 5 November; Ingves, S. (2010). Krisen i Baltikum – Riksbankens åtgärder, bedömningar och lärdomar (Speech at the Swedish Finance Committee). Sveriges Riksbank, 2 February; TT (2008). Ryktesvåg mot Swedbank. Dagens Industri, 25 September; Petersen, L. (2008). Baltikum lägger i backen. Svenska Dagbladet, 25 September; Thellenberg, I. & Ölander, M. (2009). Swedbank riskerar förlora 40 miljarder. Expressen, 8 March; Joons, A. (2010). Swedbank: Mer kreditåtervinningar väntas om positiv makroutv. Affärsvärlden, 21 October; Wallqvist, J. & Karlsson, K-J. (2009). Finansministern fruktar Baltikum. Expressen, 16 April 533 Lindqvist Sjöström, C. (2008). Baltikum Swedbanks guldgruva. E24, 24 February 534 Wallqvist, J. & Karlsson, K-J. (2009). Finansministern fruktar Baltikum. Expressen, 16 April 535 Braconier, F. (2008). Sveriges ekonomi bromsar in tvärt. Svenska Dagbladet, 27 August 536 Wallqvist, J. & Karlsson, K-J. (2009). Finansministern fruktar Baltikum. Expressen, 16 April 537 Ibid. 538 Lindqvist Sjöström, C. (2008). Baltikum Swedbanks guldgruva. E24, 14 February 539 Suneson, B. (2008). Risk ska styra avgiften. Svenska Dagbladet, 16 October; Lindström, O. & TT (2009). Balter betalar svenska bankvinster. Dagens Nyheter, 4 June
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portal Veckans Affärer CEO Jan Lidén defended Swedbank’s expenditures in Ukraine by referring to a long-term vision540. A year before the eruption of the financial crisis Swedbank had increased its momentum and gained 150,000 new business customers, the biggest increase since 1997. The mo-mentum could also be seen in the bank’s lending that in the Baltic region arose substantially from USD 18.9 to 27.4 billion. Lending continued to increase in the Baltic region during 2008 to 28.6 billion USD as it also did in Russia and Ukraine (USD 3.6 billion to USD 4.6 billion). Even in Sweden Swedbank’s lending increased from USD 121.3 to 147 billion.541 Although lending in the Baltic region, Russia, and Ukraine accounted for only a small part of Swedbank’s total lending, the bank was heavily dependent on the outcome from each region542. Although Swedbank had been optimistic about its investments in the Baltic region so far, the bank in late 2008 made new realizations and reported:
“The situation in the Baltic region is very troublesome, and has now evolved into something a little worse than we thought just a few quarters ago. Our friends there will have to prepare for a more prolonged recession”543
By the end of 2008 severe issues remained for Swedbank to ponder on. In the fourth quarter report the bank notified that its organization had to adapt to the existing conditions. Offices would be shut down and staff would be reduced. Predominantly in the Baltic region the organizations had to be re-structured544. As Tables 6 and 7 display, Swedbank removed 1,000 staff members and about 30 offices. The Baltic region then possessed 278 offices (299 previous year), and in Sweden 419 (459) while they increased overall in the rest of the bank’s international development areas. Of the increased posi-tions, 250 were in Russia. Otherwise staff in almost all markets were re-duced. In the Baltic region it was 1,000 staff fewer, in Ukraine above 100 and in Sweden around 200. Even though Swedbank announced as late as in March of 2008 that it would recruit 800 more to its staff in Ukraine545.
540 Veckans Affärer (2008). Swedbanks Jan Lidén ger svar på tal. Veckans Affärer, 2 Novem-ber 541 Swedbank Annual Report 2007, p. 2, 96; 2008, p. 2, 17, 93-94; Bränfeldt, L-E. (2008). Finanskrisen: Devalveringshotet förmörkar Baltikum. Affärsvärlden, 29 October 542 Hedelius, P. (2008). Kreditriskerna störst för SEB och Swedbank. Dagens Nyheter, 18 July; Petersen, L. (2008). Baltikum lägger i backen. Svenska Dagbladet, 25 September; Pe-tersson, J. (2008). Övergiven marknad. Svenska Dagbladet, 25 October 543 Almgren, J. (2008). Uttalande av Jan Lidén sänkte Swedbank-aktien. Svenska Dagbladet, 23 October 544 E24 (2008). Swedbank drar ned i Baltikum. E24, 23 October 545 Nyhetsbyrån Direkt (2008). Swedbank: Ska anställa 800 personer i Ukraina 2008 - Lands-chef. Nyhetsbyrån Direkt, 5 March
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“We plan on growing 70 percent this year, which is pessimistic, and with 40 percent the following year according to our business plan. We shall not worry about growth per se but about taking care of it. […] There is a high growth rate of loans to private individuals, who have great confidence in the banking system and are also willing to save.”546
Swedbank was far from skeptical, in fact rather the opposite: it was optimis-tic about its investments in Ukraine, as head manager of Ukraine operations Sergey Tigipko stated above. The CEO of Swedbank Jan Lidén was as en-thusiastic as Sergey Tigipko as he stated on the topic of growth in the Baltic region, Russia, and Ukraine that:
“It can be around 100 [new staff members] in Russia, a couple of hundred, and up to 1,000 in Ukraine, although I do not see any major net increases in the Baltic States.”547
During year 2005 10 percent of the bank’s total lending was made in the Baltic region that by year 2008 was up to 17 percent. Chairman of the board Stålberg was naturally worried but still somewhat optimistic and with high hopes. Stålberg suggested that the recession had come quickly but could also turn around quickly548. Work on the imbalance in Eastern Europe began late in the year. But the bank was expecting that the loan from the IMF to Ukraine (USD 16.4 billion) would help stabilize the banking system549. Lat-via received a support loan of USD 10 billion from the EU and IMF with strict demands on their financial policy550. Later in the same year, anticipations of the Russian and Ukraine markets hit rock bottom. Activities in Russia froze particularly because of the severe downturn in Ukraine551. OJSC Swedbank gave the bank a headache, as it continued to show big losses552. Some critics even suggested that the country was on the verge of bankruptcy553. Of the 250 staff that was employed in Russia during the year most of them were hired early in the year, as the bank was looking for recruits just weeks before the financial crisis broke out554. Ownership in OAO Swedbank (former Kvest Bank and Hansabank OAO) and the leasing department Hansa Leasing Ltd was sold from the Baltic de- 546 Ibid. 547 Nyhetsbyrån Direkt (2008). Swedbank: Nyanställningar österut i år, mest i Ukraina – VD. Nyhetsbyrån Direkt, 14 February 548 Swedbank Annual Report 2008, p. 4 549 Affärsvärlden (2008). IMF: Ger lån på 16,4 mdr USD till Ukraina. Affärsvärlden, 6 No-vember 550 TT (2011). Antonov skapar baltisk kris. Dagens Nyheter, 25 November 551 Swedbank Annual Report 2008, p. 5 552 Aktiespararna (2009). Ukraina svider för Swedbank. Aktiespararna, 29 October; Forsberg, B. (2009). Guldjakten i Ukraina. Affärsvärlden, 5 May 553 Cervenka, A. (2009). Bonus till chefer trots miljardsmäll. E24, 31 March 554 Nyhetsbrån Direkt (2008). Swedbank: Nyanställningar österut i år, mest i Ukraina – VD. Nyhetsbyrån Direkt, 14 February
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partment to the Swedish at a loss for the Baltic department. For Sweden, 2008 was the worst year on the stock market in 100 years and large contribu-tors to the decline were Swedbank and SEB555. In late September media be-gan speculating whether Lidén would be replaced as he and Stålberg was considered responsible for the crisis the bank was facing556. The market no longer trusted either. A few days later the name Michael Wolf popped up, a man with experience from credit management. Another few weeks later it became official that Wolf was to be Lidén’s successor while Swedbank searched for a successor to Stålberg too. An anonymous inside source stated:
“Stålberg was accountable for the strategy to move forward in growth re-gions. He was the driving force behind the acquisition of Hansabank for SEK 16 billion [USD 2 billion] and also the purchase of TAS in Ukraine for SEK 7 billion [USD 880 million]”557
The insider source was not the only one to disapprove of Stålberg. Annoyed investors also refused to accept that Lidén was the only one to take blame.558 According to another insider source in another Swedish newspaper the target of the Baltic region was set before Stålberg entered the picture. But Stålberg increased the level of the expansion drastically559. The insider source stated:
“It felt like they were very coincidental decisions [the path of the expansion]. A bank became vacant in Ukraine and we had done well in the Baltic States. So the message became ‘here we go guys’. Sure, there were a strategy on pa-per, but decisions were made a little ad-hoc”560
Stålberg responded to the criticism by saying:
“It is always easy to have comments in retrospect. Our initiative in the Baltics in 1996 was strategically right then and is as equally right now, even if the countries are in trouble. These issues will be overcome and there will be an interesting market in our region to remain active on. […] It was a much-acclaimed, , growth-oriented, strategy. Then we get a dip in the economy that is added to a completely improbable financial crisis with global recession. Then of course everything is wrong. But we will handle the situation in the Baltics and I am confident there will be an interesting market also in the fu-ture.”561
555 Andersson, K. (2008). 2008 – ett rekorduselt börsår. Svenska Dagbladet, 30 December 556 Svedbom, A. & Lundell, S. (2009). Expansionen hotar fälla Stålberg. Dagens Industri, 14 March 557 Gripenberg, P. & Hedelius, P. (2008). Swedbank söker ny vd. Dagens Nyheter, 4 Novem-ber 558 Ibid. 559 Svedbom, A. & Lundell, S. (2009). Expansionen hotar fälla Stålberg. Dagens Industri, 14 March 560 Ibid. 561 Joons, A. (2008). Swedbank: Tajming för intåg i Ukraina kan diskuteras – Ordf. Nyhetsby-rån Direkt, 04 December
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“We plan on growing 70 percent this year, which is pessimistic, and with 40 percent the following year according to our business plan. We shall not worry about growth per se but about taking care of it. […] There is a high growth rate of loans to private individuals, who have great confidence in the banking system and are also willing to save.”546
Swedbank was far from skeptical, in fact rather the opposite: it was optimis-tic about its investments in Ukraine, as head manager of Ukraine operations Sergey Tigipko stated above. The CEO of Swedbank Jan Lidén was as en-thusiastic as Sergey Tigipko as he stated on the topic of growth in the Baltic region, Russia, and Ukraine that:
“It can be around 100 [new staff members] in Russia, a couple of hundred, and up to 1,000 in Ukraine, although I do not see any major net increases in the Baltic States.”547
During year 2005 10 percent of the bank’s total lending was made in the Baltic region that by year 2008 was up to 17 percent. Chairman of the board Stålberg was naturally worried but still somewhat optimistic and with high hopes. Stålberg suggested that the recession had come quickly but could also turn around quickly548. Work on the imbalance in Eastern Europe began late in the year. But the bank was expecting that the loan from the IMF to Ukraine (USD 16.4 billion) would help stabilize the banking system549. Lat-via received a support loan of USD 10 billion from the EU and IMF with strict demands on their financial policy550. Later in the same year, anticipations of the Russian and Ukraine markets hit rock bottom. Activities in Russia froze particularly because of the severe downturn in Ukraine551. OJSC Swedbank gave the bank a headache, as it continued to show big losses552. Some critics even suggested that the country was on the verge of bankruptcy553. Of the 250 staff that was employed in Russia during the year most of them were hired early in the year, as the bank was looking for recruits just weeks before the financial crisis broke out554. Ownership in OAO Swedbank (former Kvest Bank and Hansabank OAO) and the leasing department Hansa Leasing Ltd was sold from the Baltic de- 546 Ibid. 547 Nyhetsbyrån Direkt (2008). Swedbank: Nyanställningar österut i år, mest i Ukraina – VD. Nyhetsbyrån Direkt, 14 February 548 Swedbank Annual Report 2008, p. 4 549 Affärsvärlden (2008). IMF: Ger lån på 16,4 mdr USD till Ukraina. Affärsvärlden, 6 No-vember 550 TT (2011). Antonov skapar baltisk kris. Dagens Nyheter, 25 November 551 Swedbank Annual Report 2008, p. 5 552 Aktiespararna (2009). Ukraina svider för Swedbank. Aktiespararna, 29 October; Forsberg, B. (2009). Guldjakten i Ukraina. Affärsvärlden, 5 May 553 Cervenka, A. (2009). Bonus till chefer trots miljardsmäll. E24, 31 March 554 Nyhetsbrån Direkt (2008). Swedbank: Nyanställningar österut i år, mest i Ukraina – VD. Nyhetsbyrån Direkt, 14 February
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partment to the Swedish at a loss for the Baltic department. For Sweden, 2008 was the worst year on the stock market in 100 years and large contribu-tors to the decline were Swedbank and SEB555. In late September media be-gan speculating whether Lidén would be replaced as he and Stålberg was considered responsible for the crisis the bank was facing556. The market no longer trusted either. A few days later the name Michael Wolf popped up, a man with experience from credit management. Another few weeks later it became official that Wolf was to be Lidén’s successor while Swedbank searched for a successor to Stålberg too. An anonymous inside source stated:
“Stålberg was accountable for the strategy to move forward in growth re-gions. He was the driving force behind the acquisition of Hansabank for SEK 16 billion [USD 2 billion] and also the purchase of TAS in Ukraine for SEK 7 billion [USD 880 million]”557
The insider source was not the only one to disapprove of Stålberg. Annoyed investors also refused to accept that Lidén was the only one to take blame.558 According to another insider source in another Swedish newspaper the target of the Baltic region was set before Stålberg entered the picture. But Stålberg increased the level of the expansion drastically559. The insider source stated:
“It felt like they were very coincidental decisions [the path of the expansion]. A bank became vacant in Ukraine and we had done well in the Baltic States. So the message became ‘here we go guys’. Sure, there were a strategy on pa-per, but decisions were made a little ad-hoc”560
Stålberg responded to the criticism by saying:
“It is always easy to have comments in retrospect. Our initiative in the Baltics in 1996 was strategically right then and is as equally right now, even if the countries are in trouble. These issues will be overcome and there will be an interesting market in our region to remain active on. […] It was a much-acclaimed, , growth-oriented, strategy. Then we get a dip in the economy that is added to a completely improbable financial crisis with global recession. Then of course everything is wrong. But we will handle the situation in the Baltics and I am confident there will be an interesting market also in the fu-ture.”561
555 Andersson, K. (2008). 2008 – ett rekorduselt börsår. Svenska Dagbladet, 30 December 556 Svedbom, A. & Lundell, S. (2009). Expansionen hotar fälla Stålberg. Dagens Industri, 14 March 557 Gripenberg, P. & Hedelius, P. (2008). Swedbank söker ny vd. Dagens Nyheter, 4 Novem-ber 558 Ibid. 559 Svedbom, A. & Lundell, S. (2009). Expansionen hotar fälla Stålberg. Dagens Industri, 14 March 560 Ibid. 561 Joons, A. (2008). Swedbank: Tajming för intåg i Ukraina kan diskuteras – Ordf. Nyhetsby-rån Direkt, 04 December
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According to a somewhat annoyed Stålberg, no one could have anticipated what was going to happen. Whatever the future would bring, Swedbank would nevertheless prevail. Regarding the more immediate future Stålberg added that he was uncertain. He suspected that things would turn out worse, and the answer to the question of how much worse was vague. Swedbank’s expectations for 2009 were mixed with cautious optimism and worry562. The first quarter Swedbank showed losses of almost USD 440 mil-lion and the newly appointed CEO Wolf noted he predicted even worse times ahead. A large part of this error was ascribed to Swedbank’s opera-tions in Ukraine. The CFO (Erkki Raasuke) said: “What is happening in Ukraine is something that Europe has never seen before”563. Lidén, who only months before had spoken fondly regarding the Ukrainian market and the bank’s investment in it, now declared: “The situation has rapidly become worse. […] The immediate future will be challenging for Ukraine”564. Not much later CEO Wolf’s fears became reality, as Swedbank and SEB together disclosed losses of approximately USD 2.85 billion between January and October. This despite the fact that SEB made profits of USD 642 million in Sweden and Swedbank’s profit was USD 257 million during the first quar-ter, profits that were used to put out the fires abroad. The media debate grew and revolved around Swedish households, which paid the price for the banks’ “bad” business decisions in the Baltic region565. Swedbank, which counted itself among low-risk banks, faced growing problem loans, so many that the bank had to develop new organizations with the sole purpose of tak-ing care of the problem loans in Russia, Ukraine and the Baltic region. The latter market had particularly difficulty with the increasing private and cor-porate bankruptcies where the real estate sector was in trouble. Customers who were unable to pay off their debts lost their assets, and Swedbank estab-lished Ektornet AB whose job was to manage and refine the overtaken as-sets. By year 2010 the assets Ektornet possessed were valued at USD 600 million566. Wolf had a rough first year and in the annual report he wrote:
562 Swedbank Annual Report 2008, p. 4 563 Ström, C.-G. & TT (2009). Baltikum knockar Swedbank. Dagens Nyheter, 23 April 564 Almgren, J. (2009). Miljardförlust för Swedbank i Ukraina. Svenska Dagbladet, 13 Febru-ary 565 Lindström, O. (2009). Svenska hushåll betalar baltnota. Svenska Dagbladet, 21 October; Ström, C.-G. & TT (2009). Baltikum knockar Swedbank. Dagens Nyheter, 23 April 566 Joons, A. (2010). Swedbank: Mer kreditåtervinningar väntas om positiv makroutv. Affärs-världen, 21 October
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“2009 will go down in history as one of Swedbank’s toughest years ever. Everyone knows that the year is marked by an economic crisis the likes of which has not been seen since the 1930s. A crisis that particularly affected the banks that in relative to others had higher exposure of risk and were more dependent on external borrowing. This was true in our case, which was the main reason for our position in the beginning of the year where we were se-verely weakened. Casualty figures cannot – and should not – be white-washed. We are well aware that our lending operation outside Sweden, espe-cially in the Baltic countries in 2005-2008, is a big part of the explanation for this. Where we are trying in every way to assume our responsibilities. […] The financial crisis has brought to light structural problems and purely sys-temic failure in the financial sector. Without fundamental changes in the structure, regulation, control, and approach, we risk experiencing an even worse crisis next time. We welcome a clearer and fairer playing field.”567
CEO Wolf admitted that Swedbank had been a bit too exposed, with too much optimism and high hopes in the expansion. He welcomed new regula-tory changes, although he implicitly blamed the former CEOs. Further he stated that it is easy to blame the financial sector for its inadequacies and structural problems when the fire is spreading elsewhere. Before the unravel-ing of the financial crisis, Swedbank could borrow in the short term to get lower interest rates, loans that were renewed continuously and in turn lent long term with a surcharge on the interest rate, which worked fine as long as the economy was good568. When the global financial system was in crisis the banks could no longer follow this strategy. The currency fell and the banking system came close to collapse. As Table 7 shows this was a period of time where Swedbank tried to heal its wounds and when expansion became con-traction. In the previous five years, Swedbank made profits of USD 2 billion in the Baltic region alone. Together with SEB, Swedbank faced blistering criticism from the governments of the Baltic countries, who identified these banks as major contributors to their difficulties. Finally Sweden’s Prime minister Fredrik Reinfeldt and finance minister Anders Borg among others chimed in on this criticism. One can understand the Baltic countries’ frustration, as they once again lost much of their savings. When Russia deregulated, it pri-vatized in a way that favored the already rich. To protect their money the rich funneled their money around countries where banks rarely or never opened their books to government inspection. One of these countries was Latvia. But since Latvia was in the EU and NATO, a certain level of public scrutiny was required. The richest were then advised to invest in real estate, causing prices to hit the ceiling and forcing Latvians to take loans. It was then Swedbank started to make money. But since tax returns were not really working, Swedbank was forced to appraise people’s assets. Owing to all
567 Swedbank Annual Report 2009, p. 4 568 Petersson, U. (2010). Bankfesten är över. Veckans Affärer, 14 April
118
According to a somewhat annoyed Stålberg, no one could have anticipated what was going to happen. Whatever the future would bring, Swedbank would nevertheless prevail. Regarding the more immediate future Stålberg added that he was uncertain. He suspected that things would turn out worse, and the answer to the question of how much worse was vague. Swedbank’s expectations for 2009 were mixed with cautious optimism and worry562. The first quarter Swedbank showed losses of almost USD 440 mil-lion and the newly appointed CEO Wolf noted he predicted even worse times ahead. A large part of this error was ascribed to Swedbank’s opera-tions in Ukraine. The CFO (Erkki Raasuke) said: “What is happening in Ukraine is something that Europe has never seen before”563. Lidén, who only months before had spoken fondly regarding the Ukrainian market and the bank’s investment in it, now declared: “The situation has rapidly become worse. […] The immediate future will be challenging for Ukraine”564. Not much later CEO Wolf’s fears became reality, as Swedbank and SEB together disclosed losses of approximately USD 2.85 billion between January and October. This despite the fact that SEB made profits of USD 642 million in Sweden and Swedbank’s profit was USD 257 million during the first quar-ter, profits that were used to put out the fires abroad. The media debate grew and revolved around Swedish households, which paid the price for the banks’ “bad” business decisions in the Baltic region565. Swedbank, which counted itself among low-risk banks, faced growing problem loans, so many that the bank had to develop new organizations with the sole purpose of tak-ing care of the problem loans in Russia, Ukraine and the Baltic region. The latter market had particularly difficulty with the increasing private and cor-porate bankruptcies where the real estate sector was in trouble. Customers who were unable to pay off their debts lost their assets, and Swedbank estab-lished Ektornet AB whose job was to manage and refine the overtaken as-sets. By year 2010 the assets Ektornet possessed were valued at USD 600 million566. Wolf had a rough first year and in the annual report he wrote:
562 Swedbank Annual Report 2008, p. 4 563 Ström, C.-G. & TT (2009). Baltikum knockar Swedbank. Dagens Nyheter, 23 April 564 Almgren, J. (2009). Miljardförlust för Swedbank i Ukraina. Svenska Dagbladet, 13 Febru-ary 565 Lindström, O. (2009). Svenska hushåll betalar baltnota. Svenska Dagbladet, 21 October; Ström, C.-G. & TT (2009). Baltikum knockar Swedbank. Dagens Nyheter, 23 April 566 Joons, A. (2010). Swedbank: Mer kreditåtervinningar väntas om positiv makroutv. Affärs-världen, 21 October
119
“2009 will go down in history as one of Swedbank’s toughest years ever. Everyone knows that the year is marked by an economic crisis the likes of which has not been seen since the 1930s. A crisis that particularly affected the banks that in relative to others had higher exposure of risk and were more dependent on external borrowing. This was true in our case, which was the main reason for our position in the beginning of the year where we were se-verely weakened. Casualty figures cannot – and should not – be white-washed. We are well aware that our lending operation outside Sweden, espe-cially in the Baltic countries in 2005-2008, is a big part of the explanation for this. Where we are trying in every way to assume our responsibilities. […] The financial crisis has brought to light structural problems and purely sys-temic failure in the financial sector. Without fundamental changes in the structure, regulation, control, and approach, we risk experiencing an even worse crisis next time. We welcome a clearer and fairer playing field.”567
CEO Wolf admitted that Swedbank had been a bit too exposed, with too much optimism and high hopes in the expansion. He welcomed new regula-tory changes, although he implicitly blamed the former CEOs. Further he stated that it is easy to blame the financial sector for its inadequacies and structural problems when the fire is spreading elsewhere. Before the unravel-ing of the financial crisis, Swedbank could borrow in the short term to get lower interest rates, loans that were renewed continuously and in turn lent long term with a surcharge on the interest rate, which worked fine as long as the economy was good568. When the global financial system was in crisis the banks could no longer follow this strategy. The currency fell and the banking system came close to collapse. As Table 7 shows this was a period of time where Swedbank tried to heal its wounds and when expansion became con-traction. In the previous five years, Swedbank made profits of USD 2 billion in the Baltic region alone. Together with SEB, Swedbank faced blistering criticism from the governments of the Baltic countries, who identified these banks as major contributors to their difficulties. Finally Sweden’s Prime minister Fredrik Reinfeldt and finance minister Anders Borg among others chimed in on this criticism. One can understand the Baltic countries’ frustration, as they once again lost much of their savings. When Russia deregulated, it pri-vatized in a way that favored the already rich. To protect their money the rich funneled their money around countries where banks rarely or never opened their books to government inspection. One of these countries was Latvia. But since Latvia was in the EU and NATO, a certain level of public scrutiny was required. The richest were then advised to invest in real estate, causing prices to hit the ceiling and forcing Latvians to take loans. It was then Swedbank started to make money. But since tax returns were not really working, Swedbank was forced to appraise people’s assets. Owing to all
567 Swedbank Annual Report 2009, p. 4 568 Petersson, U. (2010). Bankfesten är över. Veckans Affärer, 14 April
120
these impacts the media suggested Latvia was facing devaluation. Mean-while the rouble hit a five-year low.569 The new share emission earlier in 2008 for USD 2 billion was not sufficient, and a year later the bank made another one of USD 2 billion. The media speculated that this still would not be enough. Swedbank’s return on equity hit rock bottom at -12.5 percent and the earnings finished at USD -1 463 million in comparison to 2008 when they were USD 1 402 million. Late in 2008, after the outbreak of the financial crisis, Swedbank’s expectations of foreign involvement diminished. Resulting in heavy cuts to be made, espe-cially in the Baltic region. Compared to a year earlier, the number of offices dropped by 19 in Sweden, 52 in the Baltic region and 62 in Ukraine and Russia. The number of staff was reduced by around 3,000. Lending in 2009 in the Baltic countries decreased by USD 5 billion to USD 23.6 billion. A year before, in 2008 the Baltic countries accounted for 17 percent of the bank’s total lending, which during year 2009 fell to 12 percent. Lending to the other countries abroad went from USD 11 billion to USD 6.35 billion. Dismantled offices and activities abroad were combined with reduced expo-sure in order to strengthen the bank’s finances.570 Cost control was tightened and Swedbank took every chance it could to render cost savings. As seen in Table 7 the number of staff and offices vastly decreased between 2008 and 2009, and this continued the following year. In the 2009 annual report of CEO Wolf noted: “We continue to work closely with the Baltic countries’ governments and central banks, in order to support the develop-ment of a sustainable financial structure”571. Not much seemed to give hope that 2010 would improve. On top of the circumstances in the Baltic region, Russia and Ukraine, which the bank had spoken so fondly of less than a year ago, were continuing to give the bank a headache. Early in the following year (2010) the bank and its investors had grown im-patient with the earlier CEO (Stålberg) whom was held responsible for the investments in Eastern Europe and Baltic region. Swedbank, combined with SEB, suffered USD 7 billion in losses in the Baltic region572. Lars Idermark, who later on was reported to have a conflict with Wolf, replaced the board chairman, Stålberg573. A new CEO of the Ukrainian department was appoint- 569 Lindström, O. & TT (2009). Balter betalar svenska bankvinster. Dagens Nyheter, 4 June; Johansson, J. (2010). Letterna blåstes inte bara en gång utan många. Barometern, 6 January; Zachrison, O. (2009). Svenska krav retar Lettland. Svenska Dagbladet, 6 October; Thulin, C. (2008). Rubeln på femårslägsta. DI.se, 30 December 570 Swedbank Annual Report 2008, p. 2, 93-94; 2009, p. 2, 12, 71-72; Hedelius, P. (2009). Swedbank bantar sig i form. Dagens Nyheter, 18 July 571 Swedbank Annual Report 2009, p. 6 572 Collin, B. (2010). Finansinspektionen har inte skött sitt uppdrag. Svenska Dagbladet, 16 October 573 Dagens PS (2010). Hemligt avtal skapar kaos i Swedbank-topp. Dagens PS, 25 August
121
ed as well (Reiner Müller-Hanke). In the beginning of the year the latter stated in an interview: “As in all crises there are opportunities. During the Russian crisis I learned that if you act fast you will be one step ahead.”574. Regarding Ukraine he stated that, ”It is easy in hindsight to be critical […] [yet] everyone else is here […] they probably saw the same potential”575. Although Müller-Hanke was slightly optimistic, he also was largely skepti-cal and did not think that Ukraine’s situation would improve any time soon. During the summer of 2009 Ukraine was granted a new loan of USD 15.2 billion from IMF. The earlier one had been withdrawn when IMF felt Ukraine did not put in place the necessary constraints576. The Estonian econ-omy looked sharper much thanks to a strict monetary policy and solid fi-nances. The annual report from previous year also noted that Estonia’s intro-duction of the Euro in 2011 would help their case. Some even reported that Estonia’s recovery so far during the financial crisis was more progressive than Sweden’s. Latvia and Lithuania took some small steps forward, and this enabled the bank to breathe.577 Nevertheless the CEO reported the invest-ments made in Ukraine to a large extent needed to be liquidated578. Swedbank left the governmental guarantee program, and in the end of the year was able to demonstrate profits in the Baltic region (for the first time since 2008). Of the 97 offices located in Ukraine and Russia, 92 were in Ukraine and 5 in Russia. However, during late 2010 the goal in Russia was to exit the country, and Swedbank halted private banking in Russia. Instead the bank decided to simply support home markets’ (Sweden and Baltic re-gion)579. The bank was even able to turn the previous year’s earnings of USD -1.4 billion into a USD 1.1 billion profit. In the annual report Wolf wrote:
“An important lesson from the financial crisis, both for Swedbank and other banks, is to be in complete control of liquidity risk and to secure financing over a longer period of time rather than maximizing profits in the short per-spective. The banking industry should strive for long-term stability and transparency; otherwise we risk repeating crises with subsequent regulations that may constrain the industry as well as the real economy. Swedbank’s board has adopted new objectives regarding the bank’s risk appetite and risk tolerance. These form the cornerstones to ensure that Swedbank stands strong in the future.”580
574 Mellqvist, G. (2010). Mission Impossible. Dagens Industri, 26 February 575 Ibid. 576 TT (2010). Ukraina får IMF lån. Svenska Dagbladet, 29 July 577 Bel Habib, H. (2010). Därför har Estland bättre statsfinanser och högre tillväxt än Sverige. Newsmill, 30 May; Åkesson, N. (2010). Baltikum ute ur tunnel. Dagens Industri, 10 Novem-ber; Swedbank Annual Report 2009, p. 4 578 Petersson, J. & Hedelius, P. (2010). Östeuropa bakom Swedbanks rekordras. Dagens Nyheter, 10 February 579 Swedbank Annual Report 2010, p. 3 580 Swedbank Annual Report 2010, p. 4
120
these impacts the media suggested Latvia was facing devaluation. Mean-while the rouble hit a five-year low.569 The new share emission earlier in 2008 for USD 2 billion was not sufficient, and a year later the bank made another one of USD 2 billion. The media speculated that this still would not be enough. Swedbank’s return on equity hit rock bottom at -12.5 percent and the earnings finished at USD -1 463 million in comparison to 2008 when they were USD 1 402 million. Late in 2008, after the outbreak of the financial crisis, Swedbank’s expectations of foreign involvement diminished. Resulting in heavy cuts to be made, espe-cially in the Baltic region. Compared to a year earlier, the number of offices dropped by 19 in Sweden, 52 in the Baltic region and 62 in Ukraine and Russia. The number of staff was reduced by around 3,000. Lending in 2009 in the Baltic countries decreased by USD 5 billion to USD 23.6 billion. A year before, in 2008 the Baltic countries accounted for 17 percent of the bank’s total lending, which during year 2009 fell to 12 percent. Lending to the other countries abroad went from USD 11 billion to USD 6.35 billion. Dismantled offices and activities abroad were combined with reduced expo-sure in order to strengthen the bank’s finances.570 Cost control was tightened and Swedbank took every chance it could to render cost savings. As seen in Table 7 the number of staff and offices vastly decreased between 2008 and 2009, and this continued the following year. In the 2009 annual report of CEO Wolf noted: “We continue to work closely with the Baltic countries’ governments and central banks, in order to support the develop-ment of a sustainable financial structure”571. Not much seemed to give hope that 2010 would improve. On top of the circumstances in the Baltic region, Russia and Ukraine, which the bank had spoken so fondly of less than a year ago, were continuing to give the bank a headache. Early in the following year (2010) the bank and its investors had grown im-patient with the earlier CEO (Stålberg) whom was held responsible for the investments in Eastern Europe and Baltic region. Swedbank, combined with SEB, suffered USD 7 billion in losses in the Baltic region572. Lars Idermark, who later on was reported to have a conflict with Wolf, replaced the board chairman, Stålberg573. A new CEO of the Ukrainian department was appoint- 569 Lindström, O. & TT (2009). Balter betalar svenska bankvinster. Dagens Nyheter, 4 June; Johansson, J. (2010). Letterna blåstes inte bara en gång utan många. Barometern, 6 January; Zachrison, O. (2009). Svenska krav retar Lettland. Svenska Dagbladet, 6 October; Thulin, C. (2008). Rubeln på femårslägsta. DI.se, 30 December 570 Swedbank Annual Report 2008, p. 2, 93-94; 2009, p. 2, 12, 71-72; Hedelius, P. (2009). Swedbank bantar sig i form. Dagens Nyheter, 18 July 571 Swedbank Annual Report 2009, p. 6 572 Collin, B. (2010). Finansinspektionen har inte skött sitt uppdrag. Svenska Dagbladet, 16 October 573 Dagens PS (2010). Hemligt avtal skapar kaos i Swedbank-topp. Dagens PS, 25 August
121
ed as well (Reiner Müller-Hanke). In the beginning of the year the latter stated in an interview: “As in all crises there are opportunities. During the Russian crisis I learned that if you act fast you will be one step ahead.”574. Regarding Ukraine he stated that, ”It is easy in hindsight to be critical […] [yet] everyone else is here […] they probably saw the same potential”575. Although Müller-Hanke was slightly optimistic, he also was largely skepti-cal and did not think that Ukraine’s situation would improve any time soon. During the summer of 2009 Ukraine was granted a new loan of USD 15.2 billion from IMF. The earlier one had been withdrawn when IMF felt Ukraine did not put in place the necessary constraints576. The Estonian econ-omy looked sharper much thanks to a strict monetary policy and solid fi-nances. The annual report from previous year also noted that Estonia’s intro-duction of the Euro in 2011 would help their case. Some even reported that Estonia’s recovery so far during the financial crisis was more progressive than Sweden’s. Latvia and Lithuania took some small steps forward, and this enabled the bank to breathe.577 Nevertheless the CEO reported the invest-ments made in Ukraine to a large extent needed to be liquidated578. Swedbank left the governmental guarantee program, and in the end of the year was able to demonstrate profits in the Baltic region (for the first time since 2008). Of the 97 offices located in Ukraine and Russia, 92 were in Ukraine and 5 in Russia. However, during late 2010 the goal in Russia was to exit the country, and Swedbank halted private banking in Russia. Instead the bank decided to simply support home markets’ (Sweden and Baltic re-gion)579. The bank was even able to turn the previous year’s earnings of USD -1.4 billion into a USD 1.1 billion profit. In the annual report Wolf wrote:
“An important lesson from the financial crisis, both for Swedbank and other banks, is to be in complete control of liquidity risk and to secure financing over a longer period of time rather than maximizing profits in the short per-spective. The banking industry should strive for long-term stability and transparency; otherwise we risk repeating crises with subsequent regulations that may constrain the industry as well as the real economy. Swedbank’s board has adopted new objectives regarding the bank’s risk appetite and risk tolerance. These form the cornerstones to ensure that Swedbank stands strong in the future.”580
574 Mellqvist, G. (2010). Mission Impossible. Dagens Industri, 26 February 575 Ibid. 576 TT (2010). Ukraina får IMF lån. Svenska Dagbladet, 29 July 577 Bel Habib, H. (2010). Därför har Estland bättre statsfinanser och högre tillväxt än Sverige. Newsmill, 30 May; Åkesson, N. (2010). Baltikum ute ur tunnel. Dagens Industri, 10 Novem-ber; Swedbank Annual Report 2009, p. 4 578 Petersson, J. & Hedelius, P. (2010). Östeuropa bakom Swedbanks rekordras. Dagens Nyheter, 10 February 579 Swedbank Annual Report 2010, p. 3 580 Swedbank Annual Report 2010, p. 4
122
According to CEO Wolf Swedbank had learned lessons from its foreign expansion, namely risk-exposure control and investing more for the long term. Exposure to Eastern Europe in general was reduced since the 2008 by USD 15 billion581. In past years Swedbank had increased its ownership in Norwegian First Securities. By this year the bank had secured full ownership by acquiring the remaining 49 percent in one swoop for USD 90.1 million with an additional USD 25 million in investments582. Both Swedbank and First Securities commented that the purchase was in line with the ambitions of both parties. First Securities wanted to expand its product and distribution capacity, and Swedbank wanted to increase integration and strengthen its position in Norway.583 This in particular was commented on by Thomas Backteman, head of corporate affairs, who said: “The acquisition is not based on the current business volumes at First Securities, but on the volumes that we feel comfortable with being able to achieve.”584. The purchase was not so much based on what immediate value it would bring to Swedbank but what it was presumed to do in the future.
5.5 A brief summary As in the previous chapter’s presentation of Handelsbanken, this summary also provides a summarizing illustration of Swedbank’s internationalization. It can be seen a few pages below in Figure 9 as a timeline of significant events during the years 1995 to 2010. However this summary will also pro-vide a more comprehensive summary of the case of Swedbank, as follows. The case of Swedbank’s internationalization process is interesting because it followed a completely different path compared with the case of Handels-banken. Handelsbanken, regardless of knowledge or the economic capacity, had developed strict decision rules of organic development and decentraliza-tion. Swedbank, on the other hand, employed the strategy of major acquisi-tions and made a large number of investments to attain ownership of foreign banks. As discussed in the case above, in several occasions the bank entered 581 Swedbank Annual Report 2010, p. 10 582 Swedbank Annual Report 2010, p. 1, 10, 24, 56; Nyhetsbyrån Direkt (2010). Swedbank: Köper resterande 49% i norska First Securities (ny). Nyhetsbyrån Direkt, 12 November; Ber-net, M. (2010). Swedbank: Köper resterande 49 % i First Securities för 539 MNOK. Nyhets-byrån SIX, 12 November; Lind, J. (2010). Swedbank: Köper resterande 49 % i First Securities (forts). Nyhetsbyrån SIX, 12 November; Olsson, S. (2010). Swebank: Helägt First Securities stärker potential Norge – IC. Nyhetsbyrån Direkt, 12 November; Lind, J. (2010). Swedbank: Är på väg att köpa First Securities –e24.no. Nyhetsbyrån SIX, 17 August; Nyhetsbyrån Direkt & Affärsvärlden (2010). Swedbank köper hela investmentbanken. Affärlsvärlden, 12 Novem-ber; TT (2010). Swedbank köper First Securities. TT, 12 November 583 Press release (2010). Swedbank köper resterande 49 procent i First Securities i Norge. Swedbank, 12 November 584 Olsson, S. (2010). Swedbank: Helägt First Securities stäker potential Norge – IC. Nyhets-byrån Direkt, 12 November
123
and expanded in several foreign markets, but decided to exit when they real-ized the selling of ownership could bring economic benefits suddenly. When the bank saw a new opportunity to make profit, they returned to the same market but exited again. The bank also changed its foreign investments from focusing on households and small business, as in Sweden, to targeting medi-um-sized and large firms.
122
According to CEO Wolf Swedbank had learned lessons from its foreign expansion, namely risk-exposure control and investing more for the long term. Exposure to Eastern Europe in general was reduced since the 2008 by USD 15 billion581. In past years Swedbank had increased its ownership in Norwegian First Securities. By this year the bank had secured full ownership by acquiring the remaining 49 percent in one swoop for USD 90.1 million with an additional USD 25 million in investments582. Both Swedbank and First Securities commented that the purchase was in line with the ambitions of both parties. First Securities wanted to expand its product and distribution capacity, and Swedbank wanted to increase integration and strengthen its position in Norway.583 This in particular was commented on by Thomas Backteman, head of corporate affairs, who said: “The acquisition is not based on the current business volumes at First Securities, but on the volumes that we feel comfortable with being able to achieve.”584. The purchase was not so much based on what immediate value it would bring to Swedbank but what it was presumed to do in the future.
5.5 A brief summary As in the previous chapter’s presentation of Handelsbanken, this summary also provides a summarizing illustration of Swedbank’s internationalization. It can be seen a few pages below in Figure 9 as a timeline of significant events during the years 1995 to 2010. However this summary will also pro-vide a more comprehensive summary of the case of Swedbank, as follows. The case of Swedbank’s internationalization process is interesting because it followed a completely different path compared with the case of Handels-banken. Handelsbanken, regardless of knowledge or the economic capacity, had developed strict decision rules of organic development and decentraliza-tion. Swedbank, on the other hand, employed the strategy of major acquisi-tions and made a large number of investments to attain ownership of foreign banks. As discussed in the case above, in several occasions the bank entered 581 Swedbank Annual Report 2010, p. 10 582 Swedbank Annual Report 2010, p. 1, 10, 24, 56; Nyhetsbyrån Direkt (2010). Swedbank: Köper resterande 49% i norska First Securities (ny). Nyhetsbyrån Direkt, 12 November; Ber-net, M. (2010). Swedbank: Köper resterande 49 % i First Securities för 539 MNOK. Nyhets-byrån SIX, 12 November; Lind, J. (2010). Swedbank: Köper resterande 49 % i First Securities (forts). Nyhetsbyrån SIX, 12 November; Olsson, S. (2010). Swebank: Helägt First Securities stärker potential Norge – IC. Nyhetsbyrån Direkt, 12 November; Lind, J. (2010). Swedbank: Är på väg att köpa First Securities –e24.no. Nyhetsbyrån SIX, 17 August; Nyhetsbyrån Direkt & Affärsvärlden (2010). Swedbank köper hela investmentbanken. Affärlsvärlden, 12 Novem-ber; TT (2010). Swedbank köper First Securities. TT, 12 November 583 Press release (2010). Swedbank köper resterande 49 procent i First Securities i Norge. Swedbank, 12 November 584 Olsson, S. (2010). Swedbank: Helägt First Securities stäker potential Norge – IC. Nyhets-byrån Direkt, 12 November
123
and expanded in several foreign markets, but decided to exit when they real-ized the selling of ownership could bring economic benefits suddenly. When the bank saw a new opportunity to make profit, they returned to the same market but exited again. The bank also changed its foreign investments from focusing on households and small business, as in Sweden, to targeting medi-um-sized and large firms.
Figure 9. Sum
mary [tim
eline] of important events for Sw
edbank
Sweden
1997: Föreningsbanken &
Sparbanken m
erges
Austria
1998: Market entry
1.7% ow
nership Erste Bank 50 M
USD
2003: M
arket exit, sells Erste Bank 192 M
USD
Finland 1996: O
wnership
17.5 ! 25%
Aktia Sparbank 20 M
USD
Period 2
Period 3 Period 1
Swedbank
: Indicates organic growth
Baltic region
1996: Market entry. A
cquires 12.5%
ownership, 91 M
USD
, Eesti H
ouiupank 1997: O
wnership 12.5 !
19.9%
Eesti Houiupank
1998: Eesti Houiupank m
erges H
ansabank. Ow
nership ! 49.98%
H
ansabank 294 MU
SD
1999: Ow
nership ! 52%
Hansabank
18 MU
SD
2000: Ow
nership ! 57.7%
H
ansabank
Denm
ark 1996: O
wnership 3 !
5%
Bikuben Girobank
1998: Market exit, sells
Bikuben Girobank 29
MU
SD
1999: Market re-entry
acquires 60% ow
nership FIH
906 MU
SD
2000: Launches Internet bank Firstview
bank
Worldw
ide 2008-: Financial crisis U
ntil late 2008 increases investm
ents abroad especially in R
ussia and U
kraine but in late 2008 the bank drastically reduces all cross-border activities e.g. reduces staff and offices, and continues to do so onto year 2010.
Baltic region
2001: Acquires LTB 37 M
USD
2005: A
cquires full ownership
Hansabank 2.2 B
USD
2007: Increases lending
Russia
2005: Acquires
Kvest Bank 3
MU
SD
2007: +4 offices and increases activity
Finland 2004: O
wnership 25 "
19.9%
Aktia Sparbank 15 M
USD
2005: O
wnership "
9.6%
Aktia Sparbank 32 M
USD
O
wnership "
1.1% Aktia
Sparbank 25 MU
SD
+5 offices
Norw
ay 2004: O
wnership 25 "
19.5%
Sparebank 1 16 M
USD
2005: O
wnership 33 !
51%
First Securities 13 M
USD
2006: Sells Sparebank 1 110 M
USD
Norw
ay 1997: A
cquires 50% ow
nership OD
IN
Forvaltning AS 1998: O
wnership !
25% Sparebank 1
86 MU
SD
2000: Starts a branch in Oslo
2002: Acquires 33%
ownership First
Securities 22 MU
SD
Poland 1997: M
arket entry 3.5% ow
nership Bank H
andlowy for 52 M
USD
1998: O
wnership !
8% for 48 M
USD
2000: M
arket exit, sells Bank Handlow
y for 50 M
USD
Ukraine
2007: Acquires
TAS-Kom
merzbank
735 MU
SD
Norw
ay 2010: A
cquires full ow
nership First Securities 115 M
USD
Denm
ark 2001: C
loses down Firstview
bank. Ow
nership ! 65%
FIH 21 M
USD
2002: O
wnership !
70% FIH
21 MU
SD
2003: Ow
nership ! 75%
FIH 55 M
USD
2004: Sells com
plete ownership FIH
1.6 BU
SD. O
pens one new office
125
Facts and tables in this chapter also illuminate that Swedbank made a num-ber of sudden investments and increases in the number of offices and em-ployees and also had sudden de-investments, decreased numbers of offices and employees and withdrawals from the several foreign markets. The bank entered Poland and Denmark on several occasions but also suddenly with-drew and then re-entered. The increase and decrease in the number of offices and employments in different countries (in Tables above) testifies to such dramatic changes in the bank’s foreign market businesses. Such behavior was sometimes prompted by expectations of short-term gains in each busi-ness. Swedbank displayed this behavior, for example, when the CEO real-ized a profit by selling their holdings and withdrawing from Denmark and Poland, but the profit gains were finally invested in the Baltic States. The bank simply saw new opportunities as explained by the CEOs (after the cri-sis) in other markets, paying no attention to the future uncertainty. The bank made large investments and expanded its foreign market activities during a short period but sold the properties for investing in countries like the Baltic States, Ukraine, and Russia. Later, these markets ultimately became the last foreign countries that the bank had focused. In the second period investments in the Baltic countries were flourishing. The CEOs explained that the Baltic countries are the ‘gold mines’ of the bank. In the second period the bank strongly increased its investments and number of offices and employees. The numbers of customers were also rap-idly increasing. The gradual and intensive increase especially in the Baltic countries became the bank’s core of the losses in the period of crisis (the third period). While the bank made a high level of short-term profit in mar-kets like Austria, Poland, and Nordic countries, investments in especially in the Baltic countries were trapped and drove the bank close to bankruptcy. As discussed in the background section, in the early 1990s the bank had faced a critical crisis and was close to bankruptcy. Without governmental financial support, the bank could have disappeared from the market. The new CEO after the crisis in the 1990s stated that the problem was the lack of knowledge and high expectations of the earlier CEOs. He, therefore, pro-claimed he would not take high risks and would be customer oriented. The bank also put more emphasis on its risk analysis group. But shortly after, as discussed in the first and second periods, the bank embarked upon a large number of mergers and acquisitions in different countries, expecting to in-crease its market share and profit. In some markets, like the Baltic countries, the extensive increase in investments through mergers and acquisitions with banks like Hansabank was to gain local knowledge and increase the number of the customers. It did not take many years for the bank to completely for-get its experiences from the crisis of the late 1980s.
Figure 9. Sum
mary [tim
eline] of important events for Sw
edbank
Sweden
1997: Föreningsbanken &
Sparbanken m
erges
Austria
1998: Market entry
1.7% ow
nership Erste Bank 50 M
USD
2003: M
arket exit, sells Erste Bank 192 M
USD
Finland 1996: O
wnership
17.5 ! 25%
Aktia Sparbank 20 M
USD
Period 2
Period 3 Period 1
Swedbank
: Indicates organic growth
Baltic region
1996: Market entry. A
cquires 12.5%
ownership, 91 M
USD
, Eesti H
ouiupank 1997: O
wnership 12.5 !
19.9%
Eesti Houiupank
1998: Eesti Houiupank m
erges H
ansabank. Ow
nership ! 49.98%
H
ansabank 294 MU
SD
1999: Ow
nership ! 52%
Hansabank
18 MU
SD
2000: Ow
nership ! 57.7%
H
ansabank
Denm
ark 1996: O
wnership 3 !
5%
Bikuben Girobank
1998: Market exit, sells
Bikuben Girobank 29
MU
SD
1999: Market re-entry
acquires 60% ow
nership FIH
906 MU
SD
2000: Launches Internet bank Firstview
bank
Worldw
ide 2008-: Financial crisis U
ntil late 2008 increases investm
ents abroad especially in R
ussia and U
kraine but in late 2008 the bank drastically reduces all cross-border activities e.g. reduces staff and offices, and continues to do so onto year 2010.
Baltic region
2001: Acquires LTB 37 M
USD
2005: A
cquires full ownership
Hansabank 2.2 B
USD
2007: Increases lending
Russia
2005: Acquires
Kvest Bank 3
MU
SD
2007: +4 offices and increases activity
Finland 2004: O
wnership 25 "
19.9%
Aktia Sparbank 15 M
USD
2005: O
wnership "
9.6%
Aktia Sparbank 32 M
USD
O
wnership "
1.1% Aktia
Sparbank 25 MU
SD
+5 offices
Norw
ay 2004: O
wnership 25 "
19.5%
Sparebank 1 16 M
USD
2005: O
wnership 33 !
51%
First Securities 13 M
USD
2006: Sells Sparebank 1 110 M
USD
Norw
ay 1997: A
cquires 50% ow
nership OD
IN
Forvaltning AS 1998: O
wnership !
25% Sparebank 1
86 MU
SD
2000: Starts a branch in Oslo
2002: Acquires 33%
ownership First
Securities 22 MU
SD
Poland 1997: M
arket entry 3.5% ow
nership Bank H
andlowy for 52 M
USD
1998: O
wnership !
8% for 48 M
USD
2000: M
arket exit, sells Bank Handlow
y for 50 M
USD
Ukraine
2007: Acquires
TAS-Kom
merzbank
735 MU
SD
Norw
ay 2010: A
cquires full ow
nership First Securities 115 M
USD
Denm
ark 2001: C
loses down Firstview
bank. Ow
nership ! 65%
FIH 21 M
USD
2002: O
wnership !
70% FIH
21 MU
SD
2003: Ow
nership ! 75%
FIH 55 M
USD
2004: Sells com
plete ownership FIH
1.6 BU
SD. O
pens one new office
125
Facts and tables in this chapter also illuminate that Swedbank made a num-ber of sudden investments and increases in the number of offices and em-ployees and also had sudden de-investments, decreased numbers of offices and employees and withdrawals from the several foreign markets. The bank entered Poland and Denmark on several occasions but also suddenly with-drew and then re-entered. The increase and decrease in the number of offices and employments in different countries (in Tables above) testifies to such dramatic changes in the bank’s foreign market businesses. Such behavior was sometimes prompted by expectations of short-term gains in each busi-ness. Swedbank displayed this behavior, for example, when the CEO real-ized a profit by selling their holdings and withdrawing from Denmark and Poland, but the profit gains were finally invested in the Baltic States. The bank simply saw new opportunities as explained by the CEOs (after the cri-sis) in other markets, paying no attention to the future uncertainty. The bank made large investments and expanded its foreign market activities during a short period but sold the properties for investing in countries like the Baltic States, Ukraine, and Russia. Later, these markets ultimately became the last foreign countries that the bank had focused. In the second period investments in the Baltic countries were flourishing. The CEOs explained that the Baltic countries are the ‘gold mines’ of the bank. In the second period the bank strongly increased its investments and number of offices and employees. The numbers of customers were also rap-idly increasing. The gradual and intensive increase especially in the Baltic countries became the bank’s core of the losses in the period of crisis (the third period). While the bank made a high level of short-term profit in mar-kets like Austria, Poland, and Nordic countries, investments in especially in the Baltic countries were trapped and drove the bank close to bankruptcy. As discussed in the background section, in the early 1990s the bank had faced a critical crisis and was close to bankruptcy. Without governmental financial support, the bank could have disappeared from the market. The new CEO after the crisis in the 1990s stated that the problem was the lack of knowledge and high expectations of the earlier CEOs. He, therefore, pro-claimed he would not take high risks and would be customer oriented. The bank also put more emphasis on its risk analysis group. But shortly after, as discussed in the first and second periods, the bank embarked upon a large number of mergers and acquisitions in different countries, expecting to in-crease its market share and profit. In some markets, like the Baltic countries, the extensive increase in investments through mergers and acquisitions with banks like Hansabank was to gain local knowledge and increase the number of the customers. It did not take many years for the bank to completely for-get its experiences from the crisis of the late 1980s.
126
127
6 Analytical discussion
The intention in this chapter is to analyze the two cases using the analytical frame. This chapter is divided into three subchapters. In the first subchapter (6.1) the discussion concerns general comments on the internationalization behavior of the two banks. The second subchapter (6.2) is devoted to a dis-cussion of the overall dynamics of the process and growth and heterogeneity in the banks’ internationalization behavior. Since the empirical study con-cerns processes, market stability has indicated that market turbulence has affected the banks’ internationalization behavior. A portion of the subchapter is about the banks’ behavior under (6.2.1) stable market conditions while the second portion (6.2.2) is devoted to the banks’ behavior during critical peri-ods in the market, and the final section (6.3) will discuss empirical findings of the cases.
6.1 General observations As the cases reveal, there are very specific and vital issues that have affected the banks’ internationalization processes. Since both the theoretical view and the empirical facts evince a process perspective, the cases disclose interest-ing facts that require further analysis. Studying 16 years of the banks’ inter-nationalization behavior would naturally include periods of both stability and crisis. As the cases elucidate, the behavior of the firms in such a long process involves both smooth and radical changes in the market. If the study had focused only on the periods, for example 1990-1995 (smooth market change), the results would likely have been completely different. However, the cases specifically manifest not only similarities and differences in the banks’ behavior but also how similarly or differently the two banks behaved in periods of stable and critical market changes. At the time of the outbreak of the financial crisis in 2008 researchers dis-cussed banks’ managerial knowledge and adaptation to financial crises cy-cles (Kroszner et al., 2007; Hoffman, 2010; Hoffman & Schnabl, 2011). This reveals an interesting observation about the two banks’ vulnerability to cri-ses during financial instability in economies. When the market is stable the banks are able to make profits, but when the market is turning downward or is in turbulence so do the banks. This means that the two banks were de-
126
127
6 Analytical discussion
The intention in this chapter is to analyze the two cases using the analytical frame. This chapter is divided into three subchapters. In the first subchapter (6.1) the discussion concerns general comments on the internationalization behavior of the two banks. The second subchapter (6.2) is devoted to a dis-cussion of the overall dynamics of the process and growth and heterogeneity in the banks’ internationalization behavior. Since the empirical study con-cerns processes, market stability has indicated that market turbulence has affected the banks’ internationalization behavior. A portion of the subchapter is about the banks’ behavior under (6.2.1) stable market conditions while the second portion (6.2.2) is devoted to the banks’ behavior during critical peri-ods in the market, and the final section (6.3) will discuss empirical findings of the cases.
6.1 General observations As the cases reveal, there are very specific and vital issues that have affected the banks’ internationalization processes. Since both the theoretical view and the empirical facts evince a process perspective, the cases disclose interest-ing facts that require further analysis. Studying 16 years of the banks’ inter-nationalization behavior would naturally include periods of both stability and crisis. As the cases elucidate, the behavior of the firms in such a long process involves both smooth and radical changes in the market. If the study had focused only on the periods, for example 1990-1995 (smooth market change), the results would likely have been completely different. However, the cases specifically manifest not only similarities and differences in the banks’ behavior but also how similarly or differently the two banks behaved in periods of stable and critical market changes. At the time of the outbreak of the financial crisis in 2008 researchers dis-cussed banks’ managerial knowledge and adaptation to financial crises cy-cles (Kroszner et al., 2007; Hoffman, 2010; Hoffman & Schnabl, 2011). This reveals an interesting observation about the two banks’ vulnerability to cri-ses during financial instability in economies. When the market is stable the banks are able to make profits, but when the market is turning downward or is in turbulence so do the banks. This means that the two banks were de-
128
pendent on a sustainable market and knowledge to reduce uncertainty by having a high degree of market predictability (Hunt, 1991; Oliver, 1980). As the cases illuminate this knowledge dependence becomes even clearer when the banks were about to or already were in the process of internationalizing. The urgent issue was increased uncertainty in the unstable financial market that the banks were to manage. Although the focal issue informing this study has not been crises but the process of the two Swedish banks’ internationali-zation, these crisis effects cannot be disregarded. As the cases show, finan-cial crises have had a strong impact on the banks’ internationalization pro-cess. Throughout the case both banks experienced different crises and set-backs that in different ways affected their internationalization process. These aspects will be more carefully analyzed in this chapter. Some similarities and dissimilarities can be discerned in the two banks’ be-havior as they progressed. In line with Engwall’s (1997; Engwall and Wal-lenstål, 1988) findings, both banks show a degree of mimetic behavior in their market commitments. They followed each other and established offices wherever the other one did (in several countries but not all) and both banks followed their customers to new markets. The banks made market commit-ments in new markets but did so in different degrees. Handelsbanken had a low degree of market commitment in, for example, the Baltic region since it allowed only representative offices and for some time a small-share broker business, where Swedbank instead committed a high level of resources. Swedbank followed Handelsbanken wherever it established representative offices (in China, France, Germany, India, Spain, etcetera). This can also support Engwall and Wallenstål’s (1988) study that the banks follow their customers that, as service providers, they likely want to keep and that the banks were less influenced, contradicting Kogut and Singh’s (1988) explana-tion, by cultural factors. Also interesting is the fact that managers in Han-delsbanken discussed expanding in markets that the bank had low psychic distance towards, which it also did (Engwall & Wallenstål, 1988). Swedbank expanded initially in the Nordic region and later on committed to markets with greater psychic distance, which validates the establishment chain model (Johanson & Wiedersheim-Paul, 1975), the Uppsala model (Johanson & Vahlne, 1977) and the POM model (Luostarinen, 1979). Furthermore the cases reveal that the internationalization process differs a bit in the different routes that the two banks took. Handelsbanken focused on expanding in stable markets such as Great Britain, while Swedbank commit-ted more resources to expand in the emerging markets of Baltic region, Rus-sia, and Ukraine that were expected to deliver larger profits. This is even more evident as Handelsbanken continued to expand in the Nordic region and Great Britain while keeping a low profile in the Baltic region and Rus-sia, where its competitors went. The bank expected the Baltic countries mar-ket to be too uncertain and hazardous, whereas Swedbank focused almost
129
exclusively on the Baltic region, Russia, and later in Ukraine and as time passed emphasized the Nordic region less and less. This description of Han-delsbanken seems to fit the internationalization path outlined by the Johan-son and Vahlne’s (1977) Uppsala model. The tables presented in the case presentation show that Handelsbanken increased its market commitment and market knowledge in an incremental fashion on the basis of the bank’s ex-pectations. Swedbank’s behavior is only partially possible to explain with a theoretical base of market commitment and knowledge, while the explanato-ry power increases with the addition of expectation. Why this is so will be elaborated on in the following subchapters.
6.2 Overall dynamics of the process Handelsbanken had learned and incorporated knowledge from its earlier commitment mistakes in the 1970s into its strategy. The organization has adopted a more cautious approach ever since. Even if the bank found oppor-tunities to seize, it did not. In the case of the Baltic region the bank later expressed regrets about as a missed opportunity. Moreover Handelsbanken did not make sudden large investments, because its expectations wwere that the future was uncertain. The search for suitable foreign banks to invest in was a continuous process though the bank was very selective. Most of the time hesitations or unwillingness kept the bank from taking what it actually regarded as an opportunity. Though expectation was the engine in Handels-banken’s internationalization process, the bank’s market knowledge made it inert, e.g. Handelsbanken continuously reported that it had great expecta-tions for Poland. Handelsbanken followed the precept of maximizing control (Stopford & Wells, 1972), but the knowledge that it was a risky market to invest in made its expansion in Poland slow. Handelsbanken had an incorpo-rated cautiousness towards the future, which was considered as uncertain. The strategy of organic development was to minimize the risk and conse-quently followed Johanson and Vahlne’s (1977) presumptions of only in-creasing investment when risk is lower than maximum tolerable risk. This maximum tolerable risk might be considered as rather low, as the bank avoided risky markets and invested mainly in full ownership of foreign banks, opened offices on its own only when there was the right staff availa-ble, region by region and in e.g. Great Britain mainly in larger industrial cities that were expected to deliver more and faster profitability. This led the bank to believe it was in control of its operations. This was a strategy that Handelsbanken repeatedly stated was applicable worldwide and a strategy the bank also applied worldwide e.g. Great Britain, Netherlands, the Nordic region, Poland, and Russia. In other words expectations for the future com-bined with the bank’s kind of knowledge made the bank increase its type of commitment towards e.g. Great Britain, which it expected to be profitable and safer. But the expectation of lack of knowledge also made the bank
128
pendent on a sustainable market and knowledge to reduce uncertainty by having a high degree of market predictability (Hunt, 1991; Oliver, 1980). As the cases illuminate this knowledge dependence becomes even clearer when the banks were about to or already were in the process of internationalizing. The urgent issue was increased uncertainty in the unstable financial market that the banks were to manage. Although the focal issue informing this study has not been crises but the process of the two Swedish banks’ internationali-zation, these crisis effects cannot be disregarded. As the cases show, finan-cial crises have had a strong impact on the banks’ internationalization pro-cess. Throughout the case both banks experienced different crises and set-backs that in different ways affected their internationalization process. These aspects will be more carefully analyzed in this chapter. Some similarities and dissimilarities can be discerned in the two banks’ be-havior as they progressed. In line with Engwall’s (1997; Engwall and Wal-lenstål, 1988) findings, both banks show a degree of mimetic behavior in their market commitments. They followed each other and established offices wherever the other one did (in several countries but not all) and both banks followed their customers to new markets. The banks made market commit-ments in new markets but did so in different degrees. Handelsbanken had a low degree of market commitment in, for example, the Baltic region since it allowed only representative offices and for some time a small-share broker business, where Swedbank instead committed a high level of resources. Swedbank followed Handelsbanken wherever it established representative offices (in China, France, Germany, India, Spain, etcetera). This can also support Engwall and Wallenstål’s (1988) study that the banks follow their customers that, as service providers, they likely want to keep and that the banks were less influenced, contradicting Kogut and Singh’s (1988) explana-tion, by cultural factors. Also interesting is the fact that managers in Han-delsbanken discussed expanding in markets that the bank had low psychic distance towards, which it also did (Engwall & Wallenstål, 1988). Swedbank expanded initially in the Nordic region and later on committed to markets with greater psychic distance, which validates the establishment chain model (Johanson & Wiedersheim-Paul, 1975), the Uppsala model (Johanson & Vahlne, 1977) and the POM model (Luostarinen, 1979). Furthermore the cases reveal that the internationalization process differs a bit in the different routes that the two banks took. Handelsbanken focused on expanding in stable markets such as Great Britain, while Swedbank commit-ted more resources to expand in the emerging markets of Baltic region, Rus-sia, and Ukraine that were expected to deliver larger profits. This is even more evident as Handelsbanken continued to expand in the Nordic region and Great Britain while keeping a low profile in the Baltic region and Rus-sia, where its competitors went. The bank expected the Baltic countries mar-ket to be too uncertain and hazardous, whereas Swedbank focused almost
129
exclusively on the Baltic region, Russia, and later in Ukraine and as time passed emphasized the Nordic region less and less. This description of Han-delsbanken seems to fit the internationalization path outlined by the Johan-son and Vahlne’s (1977) Uppsala model. The tables presented in the case presentation show that Handelsbanken increased its market commitment and market knowledge in an incremental fashion on the basis of the bank’s ex-pectations. Swedbank’s behavior is only partially possible to explain with a theoretical base of market commitment and knowledge, while the explanato-ry power increases with the addition of expectation. Why this is so will be elaborated on in the following subchapters.
6.2 Overall dynamics of the process Handelsbanken had learned and incorporated knowledge from its earlier commitment mistakes in the 1970s into its strategy. The organization has adopted a more cautious approach ever since. Even if the bank found oppor-tunities to seize, it did not. In the case of the Baltic region the bank later expressed regrets about as a missed opportunity. Moreover Handelsbanken did not make sudden large investments, because its expectations wwere that the future was uncertain. The search for suitable foreign banks to invest in was a continuous process though the bank was very selective. Most of the time hesitations or unwillingness kept the bank from taking what it actually regarded as an opportunity. Though expectation was the engine in Handels-banken’s internationalization process, the bank’s market knowledge made it inert, e.g. Handelsbanken continuously reported that it had great expecta-tions for Poland. Handelsbanken followed the precept of maximizing control (Stopford & Wells, 1972), but the knowledge that it was a risky market to invest in made its expansion in Poland slow. Handelsbanken had an incorpo-rated cautiousness towards the future, which was considered as uncertain. The strategy of organic development was to minimize the risk and conse-quently followed Johanson and Vahlne’s (1977) presumptions of only in-creasing investment when risk is lower than maximum tolerable risk. This maximum tolerable risk might be considered as rather low, as the bank avoided risky markets and invested mainly in full ownership of foreign banks, opened offices on its own only when there was the right staff availa-ble, region by region and in e.g. Great Britain mainly in larger industrial cities that were expected to deliver more and faster profitability. This led the bank to believe it was in control of its operations. This was a strategy that Handelsbanken repeatedly stated was applicable worldwide and a strategy the bank also applied worldwide e.g. Great Britain, Netherlands, the Nordic region, Poland, and Russia. In other words expectations for the future com-bined with the bank’s kind of knowledge made the bank increase its type of commitment towards e.g. Great Britain, which it expected to be profitable and safer. But the expectation of lack of knowledge also made the bank
130
avoid expansion, i.e. as many managers stated over the years, Handelsbank-en was reluctant to open new offices unless the right staff with experiential knowledge were found, which its internationalization strategy depended on. This made the internationalization process slow, in for example Denmark and Great Britain. As the case evolves, even if the bank expected that in-creasing the market commitment would be beneficial, the lack of market knowledge kept the bank from e.g. opening a new office. Over time Han-delsbanken decentralized more and more in its foreign commitments, in for example Denmark and Great Britain, in an effort to utilize market-specific knowledge by making market commitments. In line with the theoretical ex-planations in the Uppsala model (Johanson & Vahlne, 1977) Handelsbank-en’s internationalization process in Great Britain was incremental, but the degree of market knowledge was usually higher than its market commitment. Or at the very least the bank expected a lack of knowledge as it often com-mented on cities/regions in inter alia Great Britain that it wanted to increase its commitment to or enter, but the lack of ‘right’ staff available for recruit-ment hindered commitment. But the internationalization of Swedbank, as the case illustrates, was com-pletely different from that of Handelsbanken. In the early 1990s the bank faced a severe crisis (Furusten, 2009). Without governmental financial sup-port the bank could have disappeared from the market. One fundamental presumption in the Uppsala model (Johanson & Vahlne, 1977) is the role of earlier experience. According to this view the experience in the 1990s, for example the uncertainty and risk in providing extensive credits, could have forced managers not to fall into critical circumstances again due to similar actions. The new managers after the crisis in the 1990s understood uncer-tainty but lacked the knowledge of earlier managers, all the more so as man-agers replaced each other at regular intervals, which might mean that some of the bank’s tacit knowledge was lost as well. The idea of learning from the crisis nevertheless corresponded with the Uppsala model’s idea as the bank begun to restructure the organization. Primarily by adopting a policy of be-ing customer oriented and placing greater focus on the risk analyst group. Much of the bank’s market knowledge was likely obtained through the de-velopment of mergers and acquisitions in different countries. With increas-ing knowledge about the merged partners, Swedbank increased its invest-ments in the foreign firms. Through these partners the aim was to gain knowledge about local bank customers and to make further commitments. This also supports inter alia Forsgren (2002) in that imitative learning and learning from networks was important in the bank’s internationalization process. Over time Swedbank started to aggregate resources in the Baltic region and thus made market commitments. Swedbank’s expansion has some similarities to Handelsbanken’s but in-volves more rapid internationalization. In the early 1990s Swedbank’s inter-
131
nationalization commitment was low, unstructured and unfocused. The oper-ations in the US, Luxembourg and Great Britain were close in terms of cul-tural and financial systems, but with increasing experience the bank had the vision of increasing commitment in some countries and decommitting (re-ducing commitments) in others. This incremental behavior can further be observed when the new managers in the 1990s decided to focus on the Baltic region. Swedbank started with low levels of investments in Eesti Hoiupank and later Hansabank, only to later increase by merging with other local banks in other countries, alhough this forced interruptions with a handful of previous partners along the way, since they were no longer expected to match Swedbank’s vision and envision reaching the banks goals. The fun-damental driving force for the bank’s commitments was expectations of fur-ther growth and larger profit gains. Unlike Swedbank, Handelsbanken selected organic growth as its internation-alization strategy and did not increase investment unless Handelsbanken expected the investment to be ‘safe,’ hence also supporting the presumption of ‘maximum tolerable risk’ but hinting at variations in it depending on ex-pected outcomes. Handelsbanken showed knowledge of opportunities over time as it was interested in a number of banks to acquire, e.g. Fokus Bank, Den Norske Bank, and Kreditkassen in Norway. The bank was nevertheless unwilling to invest unless it had a high expectation for profitability in the long-term, and the risk was expected to be low. In this sense the bank had been active for a long time in the markets, e.g. Norway, and had market commitments that should have increased the bank’s tacit and explicit knowledge. Therefore it can be argued that Handelsbanken had knowledge but did not use it to increase its commitments, as the Uppsala model (Johan-son & Vahlne, 1977) explains; instead, increasing or decreasing commit-ments were made mainly under the influence of expectations. Similarly Handelsbanken continuously regarded the market in Poland as a highly prof-itable market and aimed to increase commitments, but this never really came to pass. Market knowledge together with Handelsbanken’s expectation pushed the bank forward in its market commitments. But the bank also ren-dered its commitment inert and cautious due to knowledge and expectations of what could go wrong. Market knowledge played an integral role in Han-delsbanken’s internationalization process since it affected its market com-mitments in all aspects. As mentioned, market commitments depended on market knowledge and expectations that acted equally as driving forces and as hindering forces. Thus the case illustrates variations in market commit-ments, far from them being deterministic or regular (Bell, 1995; Reid, 1983; Pedersen & Petersen, 1998; Malhotra & Hinings, 2010). It is interesting that Handelsbanken began its internationalization process in the Nordic region. Once it felt ready and accordingly had gathered sufficient internationaliza-tion knowledge, the bank turned towards Great Britain, a country that the bank held high expectations for and saw as being a safe market to invest in.
130
avoid expansion, i.e. as many managers stated over the years, Handelsbank-en was reluctant to open new offices unless the right staff with experiential knowledge were found, which its internationalization strategy depended on. This made the internationalization process slow, in for example Denmark and Great Britain. As the case evolves, even if the bank expected that in-creasing the market commitment would be beneficial, the lack of market knowledge kept the bank from e.g. opening a new office. Over time Han-delsbanken decentralized more and more in its foreign commitments, in for example Denmark and Great Britain, in an effort to utilize market-specific knowledge by making market commitments. In line with the theoretical ex-planations in the Uppsala model (Johanson & Vahlne, 1977) Handelsbank-en’s internationalization process in Great Britain was incremental, but the degree of market knowledge was usually higher than its market commitment. Or at the very least the bank expected a lack of knowledge as it often com-mented on cities/regions in inter alia Great Britain that it wanted to increase its commitment to or enter, but the lack of ‘right’ staff available for recruit-ment hindered commitment. But the internationalization of Swedbank, as the case illustrates, was com-pletely different from that of Handelsbanken. In the early 1990s the bank faced a severe crisis (Furusten, 2009). Without governmental financial sup-port the bank could have disappeared from the market. One fundamental presumption in the Uppsala model (Johanson & Vahlne, 1977) is the role of earlier experience. According to this view the experience in the 1990s, for example the uncertainty and risk in providing extensive credits, could have forced managers not to fall into critical circumstances again due to similar actions. The new managers after the crisis in the 1990s understood uncer-tainty but lacked the knowledge of earlier managers, all the more so as man-agers replaced each other at regular intervals, which might mean that some of the bank’s tacit knowledge was lost as well. The idea of learning from the crisis nevertheless corresponded with the Uppsala model’s idea as the bank begun to restructure the organization. Primarily by adopting a policy of be-ing customer oriented and placing greater focus on the risk analyst group. Much of the bank’s market knowledge was likely obtained through the de-velopment of mergers and acquisitions in different countries. With increas-ing knowledge about the merged partners, Swedbank increased its invest-ments in the foreign firms. Through these partners the aim was to gain knowledge about local bank customers and to make further commitments. This also supports inter alia Forsgren (2002) in that imitative learning and learning from networks was important in the bank’s internationalization process. Over time Swedbank started to aggregate resources in the Baltic region and thus made market commitments. Swedbank’s expansion has some similarities to Handelsbanken’s but in-volves more rapid internationalization. In the early 1990s Swedbank’s inter-
131
nationalization commitment was low, unstructured and unfocused. The oper-ations in the US, Luxembourg and Great Britain were close in terms of cul-tural and financial systems, but with increasing experience the bank had the vision of increasing commitment in some countries and decommitting (re-ducing commitments) in others. This incremental behavior can further be observed when the new managers in the 1990s decided to focus on the Baltic region. Swedbank started with low levels of investments in Eesti Hoiupank and later Hansabank, only to later increase by merging with other local banks in other countries, alhough this forced interruptions with a handful of previous partners along the way, since they were no longer expected to match Swedbank’s vision and envision reaching the banks goals. The fun-damental driving force for the bank’s commitments was expectations of fur-ther growth and larger profit gains. Unlike Swedbank, Handelsbanken selected organic growth as its internation-alization strategy and did not increase investment unless Handelsbanken expected the investment to be ‘safe,’ hence also supporting the presumption of ‘maximum tolerable risk’ but hinting at variations in it depending on ex-pected outcomes. Handelsbanken showed knowledge of opportunities over time as it was interested in a number of banks to acquire, e.g. Fokus Bank, Den Norske Bank, and Kreditkassen in Norway. The bank was nevertheless unwilling to invest unless it had a high expectation for profitability in the long-term, and the risk was expected to be low. In this sense the bank had been active for a long time in the markets, e.g. Norway, and had market commitments that should have increased the bank’s tacit and explicit knowledge. Therefore it can be argued that Handelsbanken had knowledge but did not use it to increase its commitments, as the Uppsala model (Johan-son & Vahlne, 1977) explains; instead, increasing or decreasing commit-ments were made mainly under the influence of expectations. Similarly Handelsbanken continuously regarded the market in Poland as a highly prof-itable market and aimed to increase commitments, but this never really came to pass. Market knowledge together with Handelsbanken’s expectation pushed the bank forward in its market commitments. But the bank also ren-dered its commitment inert and cautious due to knowledge and expectations of what could go wrong. Market knowledge played an integral role in Han-delsbanken’s internationalization process since it affected its market com-mitments in all aspects. As mentioned, market commitments depended on market knowledge and expectations that acted equally as driving forces and as hindering forces. Thus the case illustrates variations in market commit-ments, far from them being deterministic or regular (Bell, 1995; Reid, 1983; Pedersen & Petersen, 1998; Malhotra & Hinings, 2010). It is interesting that Handelsbanken began its internationalization process in the Nordic region. Once it felt ready and accordingly had gathered sufficient internationaliza-tion knowledge, the bank turned towards Great Britain, a country that the bank held high expectations for and saw as being a safe market to invest in.
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In harmony with the Uppsala model explanation (Johanson & Vahlne, 1977) Handelsbanken incrementally increased its market knowledge in the Nordic region and in Great Britain. In line with Johanson and Vahlne’s (1977) ex-planation, Handelsbanken increased its market knowledge through purchas-ing banks in the Nordic region and handpicking staff from local competitors, such as when the bank acquired staff from Danish bank Unibank for its of-fices in Denmark in order to rapidly gain market knowledge. In Great Britain the bank entered industrial cities that were expected to be profitable, and, as discussed above, the bank did not open a new offices unless it was able to attract local staff. Unlike Swedbank, Handelsbanken mainly expanded or-ganically by establishing on its own rather than focusing on acquiring banks, particularly in Great Britain, Poland, and Russia. Moreover, as mentioned, market knowledge was expected by Handelsbanken to be applicable in a generic way, as the bank tried to apply market knowledge from the Nordic region in Great Britain and then the generated market knowledge from these regions into the Netherlands, Poland, and Russia. Handelsbanken’s expan-sion strategy in Great Britain was expected to be a strategic approach appli-cable worldwide to attain market knowledge and increase commitment, sug-gesting that the bank applied general internationalization knowledge based on experiential knowledge (Eriksson et al., 2007). The approach in Great Britain was replicated first in Poland and later on in all of the bank’s foreign market commitments (Netherlands, Russia, and so forth) as Andersen (1993) study suggests. Thus, as the Uppsala model explains, market knowledge played an integral role in Handelsbanken’s internationalization process, as it normally advanced by establishing organically, region by region, an expan-sion strategy Handelsbanken strongly believed would work anywhere, as numerous of managers and CEOs declared. On the basis of this expectation that the bank had gained from previous experiences, it considered that its general internationalization knowledge was so great it could be applied worldwide. Interestingly this general internationalization knowledge that Handelsbanken expected to work worldwide was mainly established from experiences in stable markets (the Nordic region and Great Britain and later in the Netherlands). However, as time passed, this knowledge was used in less stable markets such as Poland and Russia to increase market knowledge and market commitment. Consequently Handelsbanken applied its previous experiences in all markets to increase market commitments and expected this strategy to work, as many managers noted, once again indicating the applica-tion of general internationalization knowledge (Eriksson et al., 1997; Johan-son & Vahlne, 2009).
6.2.1 The internationalization process under stable conditions Both Handelsbanken and Swedbank initially expanded incrementally, in accordance with the Uppsala model’s (Johanson & Vahlne, 1977) logic.
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When entering foreign markets like the Baltic region, Poland, Russia, and Ukraine, Swedbank made acquisitions while Handelsbanken did so only in the Nordic region. Swedbank later sold and made a number of market de-commitments and market exits, confirming studies of disruptive and irregu-lar commitments (Pedersen & Petersen, 1998; Malhotra & Hinings, 2010). Consequently Swedbank’s internationalization path was only partially in-cremental. The strategy of market decommitments was successful in making profits for Swedbank, aside from the Firstviewbank venture in Denmark. Without its market decommitments, for example Bank Handlowy, Erste Bank, FIH, it is plausible that Swedbank would not have been able to com-mit as much in the Baltic region as it did, since the profits made were used to incrementally invest for that purpose. In contrast to Swedbank’s focus on investing in the Baltic region Handelsbanken chose a different strategy. In this respect the managers of Handelsbanken stated that the Baltic region was unpredictable and not expected to carry more profitability than markets such as Great Britain. As many managers state in the case of Handelsbanken, the bank was to a large extent promoting or demoting future commitments on the basis of its expectation and experience, similar to what Hadjikhani and Johanson (1999) argue. Moreover, as mentioned, the bank was risk avoidant, as its strategy was one of cautious organic development. But while that is true, the case study also shows that in the beginning Handelsbanken was more experi-mental and willing to expand in different countries around the world such as India, South Africa but in the end the commitment to these markets remained rather limited. The same could be said about the bank’s investment in France, where it at some points seemed very interested in expanding, but the expectation that Great Britain was more lucrative meant the commitments in France as well remained rather low. The case also illustrates differences between the two banks’ internal organizations. Handelsbanken seldom changed its management over the years, and the internal organization seems to have remained rather untouched. When the CEO was changed the CEO usually became chairman of the board and remained in the organization. The management’s strategy of doing things remained in the same spirit as that of past managements. In contrast to Handelsbanken, Swedbank changed its management very often throughout the case. This most likely influenced the internationalization process of both banks and might to some extent explain the difference between the banks expectations and knowledge. Handelsbank-en’s strategy, activities and norms suggest that they might have been based on previous experiences. The strategy and norms reflected in the bank’s ac-tivities reveal that they changed based on earlier internationalization and ongoing internationalization but fundamentally from the experiences in the 1970s.
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In harmony with the Uppsala model explanation (Johanson & Vahlne, 1977) Handelsbanken incrementally increased its market knowledge in the Nordic region and in Great Britain. In line with Johanson and Vahlne’s (1977) ex-planation, Handelsbanken increased its market knowledge through purchas-ing banks in the Nordic region and handpicking staff from local competitors, such as when the bank acquired staff from Danish bank Unibank for its of-fices in Denmark in order to rapidly gain market knowledge. In Great Britain the bank entered industrial cities that were expected to be profitable, and, as discussed above, the bank did not open a new offices unless it was able to attract local staff. Unlike Swedbank, Handelsbanken mainly expanded or-ganically by establishing on its own rather than focusing on acquiring banks, particularly in Great Britain, Poland, and Russia. Moreover, as mentioned, market knowledge was expected by Handelsbanken to be applicable in a generic way, as the bank tried to apply market knowledge from the Nordic region in Great Britain and then the generated market knowledge from these regions into the Netherlands, Poland, and Russia. Handelsbanken’s expan-sion strategy in Great Britain was expected to be a strategic approach appli-cable worldwide to attain market knowledge and increase commitment, sug-gesting that the bank applied general internationalization knowledge based on experiential knowledge (Eriksson et al., 2007). The approach in Great Britain was replicated first in Poland and later on in all of the bank’s foreign market commitments (Netherlands, Russia, and so forth) as Andersen (1993) study suggests. Thus, as the Uppsala model explains, market knowledge played an integral role in Handelsbanken’s internationalization process, as it normally advanced by establishing organically, region by region, an expan-sion strategy Handelsbanken strongly believed would work anywhere, as numerous of managers and CEOs declared. On the basis of this expectation that the bank had gained from previous experiences, it considered that its general internationalization knowledge was so great it could be applied worldwide. Interestingly this general internationalization knowledge that Handelsbanken expected to work worldwide was mainly established from experiences in stable markets (the Nordic region and Great Britain and later in the Netherlands). However, as time passed, this knowledge was used in less stable markets such as Poland and Russia to increase market knowledge and market commitment. Consequently Handelsbanken applied its previous experiences in all markets to increase market commitments and expected this strategy to work, as many managers noted, once again indicating the applica-tion of general internationalization knowledge (Eriksson et al., 1997; Johan-son & Vahlne, 2009).
6.2.1 The internationalization process under stable conditions Both Handelsbanken and Swedbank initially expanded incrementally, in accordance with the Uppsala model’s (Johanson & Vahlne, 1977) logic.
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When entering foreign markets like the Baltic region, Poland, Russia, and Ukraine, Swedbank made acquisitions while Handelsbanken did so only in the Nordic region. Swedbank later sold and made a number of market de-commitments and market exits, confirming studies of disruptive and irregu-lar commitments (Pedersen & Petersen, 1998; Malhotra & Hinings, 2010). Consequently Swedbank’s internationalization path was only partially in-cremental. The strategy of market decommitments was successful in making profits for Swedbank, aside from the Firstviewbank venture in Denmark. Without its market decommitments, for example Bank Handlowy, Erste Bank, FIH, it is plausible that Swedbank would not have been able to com-mit as much in the Baltic region as it did, since the profits made were used to incrementally invest for that purpose. In contrast to Swedbank’s focus on investing in the Baltic region Handelsbanken chose a different strategy. In this respect the managers of Handelsbanken stated that the Baltic region was unpredictable and not expected to carry more profitability than markets such as Great Britain. As many managers state in the case of Handelsbanken, the bank was to a large extent promoting or demoting future commitments on the basis of its expectation and experience, similar to what Hadjikhani and Johanson (1999) argue. Moreover, as mentioned, the bank was risk avoidant, as its strategy was one of cautious organic development. But while that is true, the case study also shows that in the beginning Handelsbanken was more experi-mental and willing to expand in different countries around the world such as India, South Africa but in the end the commitment to these markets remained rather limited. The same could be said about the bank’s investment in France, where it at some points seemed very interested in expanding, but the expectation that Great Britain was more lucrative meant the commitments in France as well remained rather low. The case also illustrates differences between the two banks’ internal organizations. Handelsbanken seldom changed its management over the years, and the internal organization seems to have remained rather untouched. When the CEO was changed the CEO usually became chairman of the board and remained in the organization. The management’s strategy of doing things remained in the same spirit as that of past managements. In contrast to Handelsbanken, Swedbank changed its management very often throughout the case. This most likely influenced the internationalization process of both banks and might to some extent explain the difference between the banks expectations and knowledge. Handelsbank-en’s strategy, activities and norms suggest that they might have been based on previous experiences. The strategy and norms reflected in the bank’s ac-tivities reveal that they changed based on earlier internationalization and ongoing internationalization but fundamentally from the experiences in the 1970s.
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Even if Handelsbanken had a general strategy for expanding and acting, it also showed a similarity in its behavior to the assumptions in the Uppsala model (Johanson & Vahlne, 1977) e.g. that the bank learned from earlier mistakes. Market commitment was increased as the bank gained experience over time in for example Great Britain. It can be suggested that Swedbank too might have learned from earlier mistakes, but the final period in particu-lar shows that there were other things that played a more significant role. In the case of Swedbank expectation was of more importance since it manifest-ed itself more often and to a higher degree. Perhaps the bank learned from some of the market commitments but applying only market knowledge and commitment as an explanatory tool for Swedbank’s internationalization pro-cess is more difficult. Swedbank made too many market decommitments and exits largely driven by future expectations instead of a combination of mar-ket commitment and market knowledge alone. Unlike Handelsbanken, Swedbank had little international experience and lacked experience from markets such as Austria (Erste Bank) and Poland (Bank Handlowy), yet it still committed to these markets despite its lack of market knowledge. This could perhaps relate to Engwall and Wallenstål’s (1988) study that the bank went where it expected capital to be found. Thus instead the basis for the commitment was on the expectation that investments would be profitable. However, when operations no longer met expectations Swedbank sold for example Bank Handlowy, Erste Bank, FIH, Firstviewbank and thereby de-creased its market commitment, and made a market exit as it did in Austria, Denmark, Finland, Norway, and Poland. Clearly, the importance of expecta-tion in Swedbank’s internationalization process is not only as a driving force but also as a suppressing force. In the early 1990s, as Engwall and Wallenstål (1988) also suggest, Swedbank noted that its customers were seeking business in the Baltic re-gion. Swedbank followed them, but in competition with another Swedish bank, SEB. As discussed in the case study, once Swedbank won the bidding war over Hansabank (in the Baltic region), Hansabank was put up for sale to non-Nordic banks. But nothing materialized, maybe since SEB increased its commitments in the region, and in response Swedbank instead continued to invest in Hansabank and increased its market commitments in the Baltic region. Hence Swedbank expected that not increasing market commitments in the region would be more dangerous due to the competition with SEB, as Cardone-Riportella and Cazorla-Papis (2001) also discuss. For the rapid and extensive internationalization efforts, the manager of Swedbank stated that it was ‘now or never’ to expand and establish in Eastern Europe and a neces-sary move in order to survive. Handelsbanken’s internationalization process does seem able to possible to understand with the logic of incremental-like models such as the Uppsala model (Johanson & Vahlne, 1977), especially with the addition of expectation concept. Swedbank’s internationalization process during stable periods in the Baltic region also seems to have a logic
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similar to that of the Uppsala model (ibid.), but when the market is unstable, that logic is no longer applicable. Moreover Swedbank’s internationalization process in general is difficult to understand solely on the basis of the dynam-ics of market knowledge and market commitment but can be better under-stood once expectation is added, since it has been the foremost driving en-gine in Swedbank’s internationalization, aligning it with thoughts of Hadjikhani and Johanson (1999). Like Handelsbanken, Swedbank feared for the future but did so for a differ-ent reason. Handelsbanken was cautious due to risk and uncertainty, and the organization had the strategy of risk-avoidance. Swedbank also feared for the future. But the initial push towards the Baltic region and Russia was the expectation that commitment was necessary due to competitors and future possibilities. As numerous managers’ statements establish, internationalizing was not only a sound decision but also a necessity for Swedbank. Interest-ingly Swedbank’s internationalization process in the Baltic region is more reminiscent of the logic, as explained by most, in the Uppsala model e.g. incrementality in commitment and knowledge. In its statements, annual re-ports, and quotations, the bank spoke of high expectations of profits in the Baltic region that over time came to be considered a home market. Incre-mentally Swedbank allocated more resources i.e. through increased invest-ments, opening more offices year by year, which likely led to accumulated knowledge. Nevertheless the first steps in the Baltic region seem to have been prompted by a fear of the future, i.e. what would happen if the bank did not commit to the market. But the internationalization process in other for-eign markets was completely different as they were much more irregular and driven by expectation, which aligns well with Hadjikhani and Johanson’s (1999) explanation. In comparison with Handelsbanken, Swedbank’s internationalization process was much more heterogeneous, as it committed differently in different mar-kets, while Handelsbanken had one way of doing things. Whereas Swedbank increased its commitments incrementally in the Baltic region, it increased its commitment in the Nordic region irregularly. For example Swedbank in-creased its commitments in Finland and continued to do so for about ten years until Swedbank finally exited the market as it sold its ownership in Aktia Sparebank 1. Swedbank increased ownership or acquired full owner-ship in a number of foreign banks, but for different reasons on the basis of future expectations it finally sold its ownership. Such was the case in for example Aktia Sparbank, Bank Handlowy, Bikuben Girobank, Erste Bank, FIH, Firstviewbank, Sparebank 1. As Swedbank on the basis of its expecta-tion committed in foreign markets, it sometimes decommitted. This is acute-ly evident in the banks mentioned above but also in the Baltic region, Russia and Ukraine, where the bank increased its market commitment when the market condition was stable and the bank’s future expectation was positive.
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Even if Handelsbanken had a general strategy for expanding and acting, it also showed a similarity in its behavior to the assumptions in the Uppsala model (Johanson & Vahlne, 1977) e.g. that the bank learned from earlier mistakes. Market commitment was increased as the bank gained experience over time in for example Great Britain. It can be suggested that Swedbank too might have learned from earlier mistakes, but the final period in particu-lar shows that there were other things that played a more significant role. In the case of Swedbank expectation was of more importance since it manifest-ed itself more often and to a higher degree. Perhaps the bank learned from some of the market commitments but applying only market knowledge and commitment as an explanatory tool for Swedbank’s internationalization pro-cess is more difficult. Swedbank made too many market decommitments and exits largely driven by future expectations instead of a combination of mar-ket commitment and market knowledge alone. Unlike Handelsbanken, Swedbank had little international experience and lacked experience from markets such as Austria (Erste Bank) and Poland (Bank Handlowy), yet it still committed to these markets despite its lack of market knowledge. This could perhaps relate to Engwall and Wallenstål’s (1988) study that the bank went where it expected capital to be found. Thus instead the basis for the commitment was on the expectation that investments would be profitable. However, when operations no longer met expectations Swedbank sold for example Bank Handlowy, Erste Bank, FIH, Firstviewbank and thereby de-creased its market commitment, and made a market exit as it did in Austria, Denmark, Finland, Norway, and Poland. Clearly, the importance of expecta-tion in Swedbank’s internationalization process is not only as a driving force but also as a suppressing force. In the early 1990s, as Engwall and Wallenstål (1988) also suggest, Swedbank noted that its customers were seeking business in the Baltic re-gion. Swedbank followed them, but in competition with another Swedish bank, SEB. As discussed in the case study, once Swedbank won the bidding war over Hansabank (in the Baltic region), Hansabank was put up for sale to non-Nordic banks. But nothing materialized, maybe since SEB increased its commitments in the region, and in response Swedbank instead continued to invest in Hansabank and increased its market commitments in the Baltic region. Hence Swedbank expected that not increasing market commitments in the region would be more dangerous due to the competition with SEB, as Cardone-Riportella and Cazorla-Papis (2001) also discuss. For the rapid and extensive internationalization efforts, the manager of Swedbank stated that it was ‘now or never’ to expand and establish in Eastern Europe and a neces-sary move in order to survive. Handelsbanken’s internationalization process does seem able to possible to understand with the logic of incremental-like models such as the Uppsala model (Johanson & Vahlne, 1977), especially with the addition of expectation concept. Swedbank’s internationalization process during stable periods in the Baltic region also seems to have a logic
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similar to that of the Uppsala model (ibid.), but when the market is unstable, that logic is no longer applicable. Moreover Swedbank’s internationalization process in general is difficult to understand solely on the basis of the dynam-ics of market knowledge and market commitment but can be better under-stood once expectation is added, since it has been the foremost driving en-gine in Swedbank’s internationalization, aligning it with thoughts of Hadjikhani and Johanson (1999). Like Handelsbanken, Swedbank feared for the future but did so for a differ-ent reason. Handelsbanken was cautious due to risk and uncertainty, and the organization had the strategy of risk-avoidance. Swedbank also feared for the future. But the initial push towards the Baltic region and Russia was the expectation that commitment was necessary due to competitors and future possibilities. As numerous managers’ statements establish, internationalizing was not only a sound decision but also a necessity for Swedbank. Interest-ingly Swedbank’s internationalization process in the Baltic region is more reminiscent of the logic, as explained by most, in the Uppsala model e.g. incrementality in commitment and knowledge. In its statements, annual re-ports, and quotations, the bank spoke of high expectations of profits in the Baltic region that over time came to be considered a home market. Incre-mentally Swedbank allocated more resources i.e. through increased invest-ments, opening more offices year by year, which likely led to accumulated knowledge. Nevertheless the first steps in the Baltic region seem to have been prompted by a fear of the future, i.e. what would happen if the bank did not commit to the market. But the internationalization process in other for-eign markets was completely different as they were much more irregular and driven by expectation, which aligns well with Hadjikhani and Johanson’s (1999) explanation. In comparison with Handelsbanken, Swedbank’s internationalization process was much more heterogeneous, as it committed differently in different mar-kets, while Handelsbanken had one way of doing things. Whereas Swedbank increased its commitments incrementally in the Baltic region, it increased its commitment in the Nordic region irregularly. For example Swedbank in-creased its commitments in Finland and continued to do so for about ten years until Swedbank finally exited the market as it sold its ownership in Aktia Sparebank 1. Swedbank increased ownership or acquired full owner-ship in a number of foreign banks, but for different reasons on the basis of future expectations it finally sold its ownership. Such was the case in for example Aktia Sparbank, Bank Handlowy, Bikuben Girobank, Erste Bank, FIH, Firstviewbank, Sparebank 1. As Swedbank on the basis of its expecta-tion committed in foreign markets, it sometimes decommitted. This is acute-ly evident in the banks mentioned above but also in the Baltic region, Russia and Ukraine, where the bank increased its market commitment when the market condition was stable and the bank’s future expectation was positive.
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When the market condition became unstable in these regions, Swedbank’s future expectations turned negative, and Swedbank’s behavior changed, as the bank reduced its lending, number of staff and offices in the markets. In contrast, Handelsbanken employed another strategy. For internationalization the managers at Handelsbanken stated that expansion abroad was a necessity for long-term survival and that if the business model worked in Sweden it would work internationally as well. As the case study reveals, many times Handelsbanken found interesting ob-jects but expanded organically instead of acquiring them due to its cautious nature, deeming the objects to be overpriced. Handelsbanken seemingly wanted to do things in its own way and in doing so to have control over its operations. The bank wanted to increase its market commitments in the Nor-dic region, Poland, Russia, and Great Britain but did so at a slow pace. Mar-ket commitments were incrementally increased and in the process the em-phasis was put on market knowledge rather than commitment. In accordance with the logic of the Uppsala model, market commitments influenced market knowledge as the latter increased the other and vice versa. Handelsbanken put more effort than Swedbank in attaining market knowledge and applying knowledge in commitments to accomplish its expectation. According to the logic of the Uppsala model, if a market opportunity arises the firm will leap and commit. Yet when all Swedish competitors entered the Baltic region and Russia, Handelsbanken did not follow the extent of the competitors’ com-mitment. Handelsbanken did make a market commitment, but its investment in the Russian market was low, as was the number of allocated staff and offices. Handelsbanken stood firm and resisted many temptations due to negative expectations. Instead of buying its way out of Sweden, most of the time Handelsbanken tried to develop its own establishments. In its initial phase Handelsbanken acquired other banks in Denmark, Finland, and Norway in order to enter the markets and subsequently increase market knowledge and market commitment. Likewise when the bank wanted to boost its expansion pace or enter regions that the bank thus far had difficulty getting established in, Handelsbanken acquired banks in Denmark, Norway, and Finland, such as Midtbank and Lokalbanken. For example, the bank expected Skopbank in Finland and Bergensbanken in Norway to be profitable purchases and also to help to penetrate the Finnish and Norwegian markets. But in its other mar-kets (Great Britain, Poland, and Russia) Handelsbanken increased commit-ments through organic growth. Following the rapid expansion in the Nordic markets, Handelsbanken adopted an organic growth strategy. If the market commitments did not meet the expectations for the Nordic region Handels-banken searched for possible acquisitions. Hence most of the investments, aside from organic growth, were made in order to enter foreign markets. Handelsbanken seemed to be determined that if the bank had to do some-
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thing, it wanted to do it its own way, even though Handelsbanken refers in various statements to a struggle to be more profitable in the Nordic region. As in 2008 when Handelsbanken purchased Lokalbanken in Denmark. The reason for this purchase was that Handelsbanken’s market commitment did not meet the bank’s expectation. The intention was to reach the bank’s antic-ipated level of expectation. Swedbank’s approach in the Baltic region was incremental but in a sense also rapid and acute. During the first period the bank’s foreign market com-mitments increased incrementally, typically with minor investments in for example ODIN Forvaltning AS, Sparebank 1 Gruppen, Bikuben Girobank, Aktia Sparbank and so on. But as time passed Swedbank seized opportuni-ties and found its commitment many times low, i.e. low degree of allocated resources that were not market-specific. In Austria, Denmark, Finland, Nor-way, Poland, and Russia the bank entered and exited with no incremental growth. Knowledge might have guided Swedbank to review its possibilities. But it was still the bank’s expectations that drove it to invest. When the short-term expectation was not fulfilled, the bank decreased its market com-mitment or even left (as in inter alia Denmark, Finland, and Poland). Beside the expansion in the Baltic region Swedbank investments were aimed to bring immediate profitability, as the Board and CEO stated on different oc-casions. However, together with expectation, the bank’s investments in the Baltic region seemed more long-term, befitting the Uppsala model’s expla-nation. When the opportunity to invest in Polish Bank Handlowy arose, Swedbank’s long-term expectation was to build from scratch. Yet only two years later Swedbank exited the Polish market when its expectations had changed to making a significant profit in the deal and it became clear that it would be difficult to increase ownership in the bank. While Handelsbanken was com-mitting for the long term, Swedbank looked for short-term opportunities for profit, such as the attempt in Denmark with Firstviewbank. However, the incremental growth in the Baltic region would perhaps not have been possi-ble without the short-term profits in the attempts abroad, such as in Austria and Poland, where the bank came and left. In Denmark Swedbank increased its commitments during the first period by increasing ownership in Bikuben Girobank but sold its ownership and made a market exit a few years later. A year later Swedbank re-entered Denmark when it acquired 60 percent own-ership in FIH. In the coming years Swedbank incrementally increased its commitment in Denmark by investing in FIH. Simultaneously in year 2000 Firstviewbank was launched but shut down half a year later, as the experi-ment did not fulfill the bank’s expectations. The commitment was not as profitable in as expected the short term, and instead the bank shut it down and decreased its market commitment. On the other hand, its market com-mitment in Denmark also increased, as its ownership in FIH increased.
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When the market condition became unstable in these regions, Swedbank’s future expectations turned negative, and Swedbank’s behavior changed, as the bank reduced its lending, number of staff and offices in the markets. In contrast, Handelsbanken employed another strategy. For internationalization the managers at Handelsbanken stated that expansion abroad was a necessity for long-term survival and that if the business model worked in Sweden it would work internationally as well. As the case study reveals, many times Handelsbanken found interesting ob-jects but expanded organically instead of acquiring them due to its cautious nature, deeming the objects to be overpriced. Handelsbanken seemingly wanted to do things in its own way and in doing so to have control over its operations. The bank wanted to increase its market commitments in the Nor-dic region, Poland, Russia, and Great Britain but did so at a slow pace. Mar-ket commitments were incrementally increased and in the process the em-phasis was put on market knowledge rather than commitment. In accordance with the logic of the Uppsala model, market commitments influenced market knowledge as the latter increased the other and vice versa. Handelsbanken put more effort than Swedbank in attaining market knowledge and applying knowledge in commitments to accomplish its expectation. According to the logic of the Uppsala model, if a market opportunity arises the firm will leap and commit. Yet when all Swedish competitors entered the Baltic region and Russia, Handelsbanken did not follow the extent of the competitors’ com-mitment. Handelsbanken did make a market commitment, but its investment in the Russian market was low, as was the number of allocated staff and offices. Handelsbanken stood firm and resisted many temptations due to negative expectations. Instead of buying its way out of Sweden, most of the time Handelsbanken tried to develop its own establishments. In its initial phase Handelsbanken acquired other banks in Denmark, Finland, and Norway in order to enter the markets and subsequently increase market knowledge and market commitment. Likewise when the bank wanted to boost its expansion pace or enter regions that the bank thus far had difficulty getting established in, Handelsbanken acquired banks in Denmark, Norway, and Finland, such as Midtbank and Lokalbanken. For example, the bank expected Skopbank in Finland and Bergensbanken in Norway to be profitable purchases and also to help to penetrate the Finnish and Norwegian markets. But in its other mar-kets (Great Britain, Poland, and Russia) Handelsbanken increased commit-ments through organic growth. Following the rapid expansion in the Nordic markets, Handelsbanken adopted an organic growth strategy. If the market commitments did not meet the expectations for the Nordic region Handels-banken searched for possible acquisitions. Hence most of the investments, aside from organic growth, were made in order to enter foreign markets. Handelsbanken seemed to be determined that if the bank had to do some-
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thing, it wanted to do it its own way, even though Handelsbanken refers in various statements to a struggle to be more profitable in the Nordic region. As in 2008 when Handelsbanken purchased Lokalbanken in Denmark. The reason for this purchase was that Handelsbanken’s market commitment did not meet the bank’s expectation. The intention was to reach the bank’s antic-ipated level of expectation. Swedbank’s approach in the Baltic region was incremental but in a sense also rapid and acute. During the first period the bank’s foreign market com-mitments increased incrementally, typically with minor investments in for example ODIN Forvaltning AS, Sparebank 1 Gruppen, Bikuben Girobank, Aktia Sparbank and so on. But as time passed Swedbank seized opportuni-ties and found its commitment many times low, i.e. low degree of allocated resources that were not market-specific. In Austria, Denmark, Finland, Nor-way, Poland, and Russia the bank entered and exited with no incremental growth. Knowledge might have guided Swedbank to review its possibilities. But it was still the bank’s expectations that drove it to invest. When the short-term expectation was not fulfilled, the bank decreased its market com-mitment or even left (as in inter alia Denmark, Finland, and Poland). Beside the expansion in the Baltic region Swedbank investments were aimed to bring immediate profitability, as the Board and CEO stated on different oc-casions. However, together with expectation, the bank’s investments in the Baltic region seemed more long-term, befitting the Uppsala model’s expla-nation. When the opportunity to invest in Polish Bank Handlowy arose, Swedbank’s long-term expectation was to build from scratch. Yet only two years later Swedbank exited the Polish market when its expectations had changed to making a significant profit in the deal and it became clear that it would be difficult to increase ownership in the bank. While Handelsbanken was com-mitting for the long term, Swedbank looked for short-term opportunities for profit, such as the attempt in Denmark with Firstviewbank. However, the incremental growth in the Baltic region would perhaps not have been possi-ble without the short-term profits in the attempts abroad, such as in Austria and Poland, where the bank came and left. In Denmark Swedbank increased its commitments during the first period by increasing ownership in Bikuben Girobank but sold its ownership and made a market exit a few years later. A year later Swedbank re-entered Denmark when it acquired 60 percent own-ership in FIH. In the coming years Swedbank incrementally increased its commitment in Denmark by investing in FIH. Simultaneously in year 2000 Firstviewbank was launched but shut down half a year later, as the experi-ment did not fulfill the bank’s expectations. The commitment was not as profitable in as expected the short term, and instead the bank shut it down and decreased its market commitment. On the other hand, its market com-mitment in Denmark also increased, as its ownership in FIH increased.
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Four years later (2004) Swedbank made its second market exit in Denmark, as all commitments in Denmark were sold. The profit made was applied to increase market commitments in the Baltic region, which Swedbank ex-pected to be more profitable. Another year later Swedbank opened five new offices as it returned to the Danish market. As the case shows, this interna-tionalization process depicted in Denmark was the same in Austria, Finland, Norway, Poland, and Russia as well. Ukraine was also expected to be profit-able, so Swedbank invested in TAS-Kommerzbank and continued to in-crease its commitments in Ukraine (and the Baltic region and Russia) even when the markets were unstable in 2007 and forward. The investment in Ukraine was expected to be highly profitable, as the CEO stated. Swedbank expected the markets to continue to be profitable, and it was not until things really turned downwards that Swedbank rapidly decreased its commitments. Swedbank tried to reduce its risk by decentralizing, because it thought that the local offices had better market knowledge than HQ. However, by the end of the final period, as mentioned, all market commitments were reduced drastically when Swedbank’s expectations dropped. Throughout the years Swedbank made a numerous of experiments in its internationalization. Early on Swedbank attempted to build from scratch in Poland but lacked market knowledge and also control, according to its managers’ statements. Soon the bank left Poland and a few years later, as mentioned above, experimented again with the Internet bank Firstviewbank in Denmark. But the experiment failed to meet Swedbank’s expectation and was dismantled only six months later. Later on in 2004 Swedbank discussed that there was a need to have control over commitments in order to reach its expectations. At the time, and thus far most of Swedbank’s ownership was only partial, the bank did not possess full ownerships (except for LTB). This drove Swedbank to decrease market commitments in Finland and Denmark and invest in full ownership in Hansabank. Swedbank started to consider whether it should change its inter-nationalization approach and invest more in organic growth rather than ac-quiring banks. In Denmark and Finland Swedbank tried to invest in organic growth rather than acquiring banks but continued in other countries to ac-quire foreign banks (TAS-Kommerzbank in Ukraine and Kvest Bank in Rus-sia) to increase commitments.
6.2.2 Reacting to crises Analyzing the case shows that Swedbank had three different periods in its internationalization: in the first period, Swedbank returns from its previous difficulties and launches its internationalization; in the second, Swedbank thrives and is running at full speed, while in the third period the bank is ex-periencing the consequences of its earlier commitments, particularly from investments in the Baltic region, Russia, and Ukraine. The latter country was
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commented on as Swedbank’s future goldmine a few years earlier, and its current goldmine in the Baltic region was expected to continue to prosper. Only a few months later in 2008 things changed drastically and moved the bank close to bankruptcy, prompting the description by Swedbank’s CEO that the situation in the Baltic region was ‘very troublesome’ and evolving to worse than expected. Swedbank revised its expectation that the future did not look bright and therefore drastically decreased its staff and offices in the region as well as its lending, which it had drastically increased only months prior to this. As stated in the case study, Handelsbanken’s expansion has some similarities in the way it started its expansion during the first period and continued and increased its pace in the second one. But unlike Swedbank, Handelsbanken was much more restricted in its internationalization process and went about things differently, as the case study has revealed. From the case presentation it is also evident that Handelsbanken (and Swedbank) acted heterogeneously. When the market was stable, the bank increased its market commitment, but when the market was unstable, the bank was less willing to increase its commitment. Unlike Swedbank, most of the time Handelsbanken sought to make long-term commitments. However, when it expected to suffer losses, the bank was willing to reduce its commitment to the market, as it did in Japan (1998), Russia (between 1998-2004) and the US (2008). In Great Brit-ain Handelsbanken expected to open 35-45 new offices in 2008 but opened only 14 (most of which opened prior to the outbreak of the financial crisis) and the following year only 6 offices, as the bank revised its future expecta-tion and was uncertain about what to expect. When the markets were unsta-ble Handelsbanken remained unprofitable for a long time but did not incur significant losses either. As discussed, Handelsbanken increased its commitments incrementally, generally region by region. It is likely that, as the Uppsala model posits, the more the bank committed, the more it learned. Over time Handelsbanken increased its tempo in the increase of market commitment in Great Britain as it learned to manage its commitments in the region and gained the know-how to expand organically. The bank increased its commitments on the basis that it expected to increase its revenues, but when the financial crisis hit the bank slowed down and remained idle in its commitments until it expected that investing would be profitable. This is particularly evident between 2008-2009 (see for example Table 4) when the market was unstable. Handels-banken reduced commitments in some markets (inter alia in the US) and remained rather idle in the rest of its commitments. Handelsbanken stressed the importance of being cautious. Though the bank in 2010 tried to make up for lost time and drastically increased its expansion pace in Great Britain for the expectation of profitable investments. This can
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Four years later (2004) Swedbank made its second market exit in Denmark, as all commitments in Denmark were sold. The profit made was applied to increase market commitments in the Baltic region, which Swedbank ex-pected to be more profitable. Another year later Swedbank opened five new offices as it returned to the Danish market. As the case shows, this interna-tionalization process depicted in Denmark was the same in Austria, Finland, Norway, Poland, and Russia as well. Ukraine was also expected to be profit-able, so Swedbank invested in TAS-Kommerzbank and continued to in-crease its commitments in Ukraine (and the Baltic region and Russia) even when the markets were unstable in 2007 and forward. The investment in Ukraine was expected to be highly profitable, as the CEO stated. Swedbank expected the markets to continue to be profitable, and it was not until things really turned downwards that Swedbank rapidly decreased its commitments. Swedbank tried to reduce its risk by decentralizing, because it thought that the local offices had better market knowledge than HQ. However, by the end of the final period, as mentioned, all market commitments were reduced drastically when Swedbank’s expectations dropped. Throughout the years Swedbank made a numerous of experiments in its internationalization. Early on Swedbank attempted to build from scratch in Poland but lacked market knowledge and also control, according to its managers’ statements. Soon the bank left Poland and a few years later, as mentioned above, experimented again with the Internet bank Firstviewbank in Denmark. But the experiment failed to meet Swedbank’s expectation and was dismantled only six months later. Later on in 2004 Swedbank discussed that there was a need to have control over commitments in order to reach its expectations. At the time, and thus far most of Swedbank’s ownership was only partial, the bank did not possess full ownerships (except for LTB). This drove Swedbank to decrease market commitments in Finland and Denmark and invest in full ownership in Hansabank. Swedbank started to consider whether it should change its inter-nationalization approach and invest more in organic growth rather than ac-quiring banks. In Denmark and Finland Swedbank tried to invest in organic growth rather than acquiring banks but continued in other countries to ac-quire foreign banks (TAS-Kommerzbank in Ukraine and Kvest Bank in Rus-sia) to increase commitments.
6.2.2 Reacting to crises Analyzing the case shows that Swedbank had three different periods in its internationalization: in the first period, Swedbank returns from its previous difficulties and launches its internationalization; in the second, Swedbank thrives and is running at full speed, while in the third period the bank is ex-periencing the consequences of its earlier commitments, particularly from investments in the Baltic region, Russia, and Ukraine. The latter country was
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commented on as Swedbank’s future goldmine a few years earlier, and its current goldmine in the Baltic region was expected to continue to prosper. Only a few months later in 2008 things changed drastically and moved the bank close to bankruptcy, prompting the description by Swedbank’s CEO that the situation in the Baltic region was ‘very troublesome’ and evolving to worse than expected. Swedbank revised its expectation that the future did not look bright and therefore drastically decreased its staff and offices in the region as well as its lending, which it had drastically increased only months prior to this. As stated in the case study, Handelsbanken’s expansion has some similarities in the way it started its expansion during the first period and continued and increased its pace in the second one. But unlike Swedbank, Handelsbanken was much more restricted in its internationalization process and went about things differently, as the case study has revealed. From the case presentation it is also evident that Handelsbanken (and Swedbank) acted heterogeneously. When the market was stable, the bank increased its market commitment, but when the market was unstable, the bank was less willing to increase its commitment. Unlike Swedbank, most of the time Handelsbanken sought to make long-term commitments. However, when it expected to suffer losses, the bank was willing to reduce its commitment to the market, as it did in Japan (1998), Russia (between 1998-2004) and the US (2008). In Great Brit-ain Handelsbanken expected to open 35-45 new offices in 2008 but opened only 14 (most of which opened prior to the outbreak of the financial crisis) and the following year only 6 offices, as the bank revised its future expecta-tion and was uncertain about what to expect. When the markets were unsta-ble Handelsbanken remained unprofitable for a long time but did not incur significant losses either. As discussed, Handelsbanken increased its commitments incrementally, generally region by region. It is likely that, as the Uppsala model posits, the more the bank committed, the more it learned. Over time Handelsbanken increased its tempo in the increase of market commitment in Great Britain as it learned to manage its commitments in the region and gained the know-how to expand organically. The bank increased its commitments on the basis that it expected to increase its revenues, but when the financial crisis hit the bank slowed down and remained idle in its commitments until it expected that investing would be profitable. This is particularly evident between 2008-2009 (see for example Table 4) when the market was unstable. Handels-banken reduced commitments in some markets (inter alia in the US) and remained rather idle in the rest of its commitments. Handelsbanken stressed the importance of being cautious. Though the bank in 2010 tried to make up for lost time and drastically increased its expansion pace in Great Britain for the expectation of profitable investments. This can
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be demonstrated by tracking how often the bank opened a new office. In 2009 it opened a new office every 45th day, while in comparison with 2010 the bank opened a new office every 20th day. Another curious subject is that in the beginning of the last period the bank had reached its level of expec-tancy in most parts of the Nordic region in terms of the ratio of distributed offices. Thus the numbers of offices remained rather unchanged and instead most attention was devoted towards Great Britain. The tables in the case for the number of staff and offices indicate an interest-ing point in Swedbank’s internationalization process. Swedbank early on expanded its home market from Sweden and the Nordic region to include the Baltic region. But as time passed, early in the second period (year 2001-2007), the bank excluded the Nordic region and instead put the emphasis on the Baltic region and even later on Russia and Ukraine. While market knowledge was an important factor in Handelsbanken’s market commit-ments Swedbank most likely learned from earlier market commitments but did not apply that knowledge to the same extent as Handelsbanken. Instead expectation was the engine towards market commitments and decommit-ments. Swedbank decreased, increased, or decommitted (left the market) for the expected profits or losses, while Handelsbanken increased, decreased, or decommitted from market commitments also on the basis of expectation but with more emphasis placed on market knowledge. The discussion on the behavior of these two banks reveals the explicit connection between the three concepts and how they can help us further understand the diversity in the behavior of firms, despite the fact that the two banks behavior in the process of internationalization is not similar. One of the more interesting issues that the cases show is the two banks’ lev-els of market knowledge and commitment between years 2007-2008. Han-delsbanken, which had learned from earlier mistakes in the 1970s, comment-ed on the outbreak of the financial crisis as part of a financial crisis cycle that occurred every 15th year or so. On the basis of this expectation Handels-banken had a cautious approach despite having market knowledge, which made its internationalization process incremental but inert. However, it was also financially stable and able to cope when the market became unstable precisely because it was inert and did not take high risks. Swedbank, on the other hand, seems either to have forgotten its past experiences (such as the crisis in late 1980s) or, more likely, to have been completely driven by its expectations. This was the case despite its experience from the crisis in late 1980s and also market knowledge gained from several internal and external organizations that hinted that the market was about to become unstable dur-ing year 2007-2008. Swedbank continued to increase its commitments through increased investments, lending, staff members and offices in the Baltic region and especially in Ukraine and Russia. It drastically increased its commitments in latter two markets until the outbreak of the financial cri-
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sis. The expectation to continue to be profitable and the expectation of op-portunities for short-term profits outweighed the alarming warnings. Swedbank might have had the market knowledge but did not apply that part of its market knowledge to its future expectation. Instead the expectation was that the future would bring prosperity if the bank continued to invest, as it had so far. Meanwhile Handelsbanken remained more or less idle for two years but, due to its earlier cautious approach, it was able to increase market commitments in some markets e.g. purchase Lokalbanken and open offices in the Netherlands.
6.3 Empirical findings The differences in behavior during market stability and market turbulence are surprisingly great, especially the degree of irregular commitments, e.g. decommitments. Both banks’ internationalization process can be described by the concepts of market commitment, knowledge, and expectation but in different ways and in different contexts. The banks not only faced different situations but also made significantly different interpretations of the situa-tions and had very different expectations of markets and strategies. This led the banks to have completely different internationalization paths and chal-lenges. To understand Handelsbanken’s cautious internationalization behav-ior the three concepts are needed. The behavior stems from previous com-mitments that generated a set of knowledge that changed the organization and its way of doing things on the basis of what was expected to reduce risk. When Handelsbanken invested, the investment was based on an expectation that it was sound, safe, and profitable. Increasing market commitment was thus based on current and previous knowledge, in line with the logic of the Uppsala model (Johanson & Vahlne, 1977). But expectation was also an important aspect, as the bank did not increase market commitments unless it expected the investment to be valuable. Moreover, as Engwall and Wal-lenstål (1988) show, the banks where more governed by expected profitabil-ity instead of cultural distance in the internationalization process. Interest-ingly, regardless of the bank’s high expectations for a market, Handelsbank-en’s expansion strategy often limited the bank’s expansion. Handelsbanken strongly believed in its strategy and expected it to work and did not want to experiment in rapid/extensive internationalization because these strategies were anticipated to be too dangerous. Instead Handelsbanken aimed to limit uncertainty and reduce risk. Expectation was the driving force in the bank’s internationalization process, while its market knowledge, in contrast with what the Uppsala model (Johanson & Vahlne, 1977) argues, often acted as a suppressing force. Swedbank’s investment was also on the basis of expecta-tion generated by market knowledge and market commitment, but it was more related to issues like a high level of profit expectation or fear generated by the the behavior of its competitors, as previously discussed, that if
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be demonstrated by tracking how often the bank opened a new office. In 2009 it opened a new office every 45th day, while in comparison with 2010 the bank opened a new office every 20th day. Another curious subject is that in the beginning of the last period the bank had reached its level of expec-tancy in most parts of the Nordic region in terms of the ratio of distributed offices. Thus the numbers of offices remained rather unchanged and instead most attention was devoted towards Great Britain. The tables in the case for the number of staff and offices indicate an interest-ing point in Swedbank’s internationalization process. Swedbank early on expanded its home market from Sweden and the Nordic region to include the Baltic region. But as time passed, early in the second period (year 2001-2007), the bank excluded the Nordic region and instead put the emphasis on the Baltic region and even later on Russia and Ukraine. While market knowledge was an important factor in Handelsbanken’s market commit-ments Swedbank most likely learned from earlier market commitments but did not apply that knowledge to the same extent as Handelsbanken. Instead expectation was the engine towards market commitments and decommit-ments. Swedbank decreased, increased, or decommitted (left the market) for the expected profits or losses, while Handelsbanken increased, decreased, or decommitted from market commitments also on the basis of expectation but with more emphasis placed on market knowledge. The discussion on the behavior of these two banks reveals the explicit connection between the three concepts and how they can help us further understand the diversity in the behavior of firms, despite the fact that the two banks behavior in the process of internationalization is not similar. One of the more interesting issues that the cases show is the two banks’ lev-els of market knowledge and commitment between years 2007-2008. Han-delsbanken, which had learned from earlier mistakes in the 1970s, comment-ed on the outbreak of the financial crisis as part of a financial crisis cycle that occurred every 15th year or so. On the basis of this expectation Handels-banken had a cautious approach despite having market knowledge, which made its internationalization process incremental but inert. However, it was also financially stable and able to cope when the market became unstable precisely because it was inert and did not take high risks. Swedbank, on the other hand, seems either to have forgotten its past experiences (such as the crisis in late 1980s) or, more likely, to have been completely driven by its expectations. This was the case despite its experience from the crisis in late 1980s and also market knowledge gained from several internal and external organizations that hinted that the market was about to become unstable dur-ing year 2007-2008. Swedbank continued to increase its commitments through increased investments, lending, staff members and offices in the Baltic region and especially in Ukraine and Russia. It drastically increased its commitments in latter two markets until the outbreak of the financial cri-
141
sis. The expectation to continue to be profitable and the expectation of op-portunities for short-term profits outweighed the alarming warnings. Swedbank might have had the market knowledge but did not apply that part of its market knowledge to its future expectation. Instead the expectation was that the future would bring prosperity if the bank continued to invest, as it had so far. Meanwhile Handelsbanken remained more or less idle for two years but, due to its earlier cautious approach, it was able to increase market commitments in some markets e.g. purchase Lokalbanken and open offices in the Netherlands.
6.3 Empirical findings The differences in behavior during market stability and market turbulence are surprisingly great, especially the degree of irregular commitments, e.g. decommitments. Both banks’ internationalization process can be described by the concepts of market commitment, knowledge, and expectation but in different ways and in different contexts. The banks not only faced different situations but also made significantly different interpretations of the situa-tions and had very different expectations of markets and strategies. This led the banks to have completely different internationalization paths and chal-lenges. To understand Handelsbanken’s cautious internationalization behav-ior the three concepts are needed. The behavior stems from previous com-mitments that generated a set of knowledge that changed the organization and its way of doing things on the basis of what was expected to reduce risk. When Handelsbanken invested, the investment was based on an expectation that it was sound, safe, and profitable. Increasing market commitment was thus based on current and previous knowledge, in line with the logic of the Uppsala model (Johanson & Vahlne, 1977). But expectation was also an important aspect, as the bank did not increase market commitments unless it expected the investment to be valuable. Moreover, as Engwall and Wal-lenstål (1988) show, the banks where more governed by expected profitabil-ity instead of cultural distance in the internationalization process. Interest-ingly, regardless of the bank’s high expectations for a market, Handelsbank-en’s expansion strategy often limited the bank’s expansion. Handelsbanken strongly believed in its strategy and expected it to work and did not want to experiment in rapid/extensive internationalization because these strategies were anticipated to be too dangerous. Instead Handelsbanken aimed to limit uncertainty and reduce risk. Expectation was the driving force in the bank’s internationalization process, while its market knowledge, in contrast with what the Uppsala model (Johanson & Vahlne, 1977) argues, often acted as a suppressing force. Swedbank’s investment was also on the basis of expecta-tion generated by market knowledge and market commitment, but it was more related to issues like a high level of profit expectation or fear generated by the the behavior of its competitors, as previously discussed, that if
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Swedbank did not invest someone else would, and Swedbank’s survival would be at stake. The expectation was that investment was necessary or that selling would be profitable and the profits could be applied to generating larger profits. Market knowledge and market commitment generated Swedbank’s expectations, but even if its market knowledge was low the bank was willing to take risks on the basis of future expectations. Future expectations that were more loosely based on market knowledge. When oth-ers warned (in all three periods) against investments in the Baltic region, Russia and Ukraine, the bank knew that these investments were risky but acted upon positive future expectations instead. In general, as the cases illustrate, both banks expanded during stable periods yet in very different ways and also different in different markets. When the market was unstable the banks decreased their market commitments or re-mained idle in them. In 2008 when the financial crisis broke out, Handels-banken reduced its internationalization pace and remained idle during the oncoming months. Although Handelsbanken noted there was no cause for alarm for its own part, the future was unclear, which made the bank cautious. Once Handelsbanken expected market commitments to be profitable and the future was regarded as more predictable and therefore less uncertain/risky, Handelsbanken started to increase its commitments. This is particularly evi-dent in 2009-2010: although the market was unstable, Handelsbanken in-creased market commitments in Denmark, Great Britain and in the Nether-lands. Handelsbanken stated that it wanted to make up for lost time and opened more offices in Great Britain than ever before. This was due to its stability, which had been enabled by its risk-avoidance behavior. Swedbank, however, was an opportunity seeker that had taken higher risks by investing in emerging markets, and many of its investments were short-term oriented. When the market was unstable Swedbank made radical moves and drastical-ly reduced market commitments in order to reduce commitment losses. Swedbank suffered significant losses and expected to continue to do so and therefore reduced its allocated resources to the markets in Baltic region, Russia, and Ukraine. As the cases show, the two banks acted very different-ly, but both banks’ behavior was strongly affected by the financial crisis, as both banks changed their behavior completely. Swedbank’s internationaliza-tion process turned backwards based on expectations of future losses and Handelsbanken since it considered the future unpredictable. This behavior also shows the dynamics of the internationalization process and the clear difference between internationalization behavior in stable times and critical times and supports studies such as Hadjikhani and Johanson (1999).
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7 Conclusion
Although this study applies its own analytical framework, it is interesting to note that the banks’ internationalization processes can to some extent be described by applying the theoretical concepts of the Uppsala model (Johan-son & Vahlne, 1977). The study presents a view including three concepts of commitment, knowledge and expectation to generate an understanding of the internationalization process of firms in a service setting as well. But without the addition of the concept of expectation, the cases would have been more difficult to explain within e.g. the Uppsala model’s framework. Further, and unlike previous research on the internationalization process, which focuses on the behavior of few firms in one or a few markets, the main concern of this study was on the two banks’ internationalization in almost all of their foreign markets. The aim was to describe and analyze the two banks’ inter-nationalization process in the most important foreign markets over 16 years of internationalization. This geographically broad and longitudinal perspec-tive enriches the study’s power to understand how and why a business firms undertakes different behaviors in regard to different foreign markets, i.e. mature and emerging, and also to see if they act differently in foreign mar-kets. Covering the two banks’ market activities in their most important for-eign countries has disclosed a number of interesting conclusions for this study. As the study reveals, while the banks had incremental behavior in some markets, the banks had also non-incremental behavior in others. In other words, the study covers important markets, providing a deeper understanding of the diversities in the behavior of the firms. The heterogeneity of the be-havior, behaving both incrementally and non-incrementally, is a crucial con-tribution of this study. If the study had been limited to the behavior of the Swedbank during the period 1995-2006, the conclusion could have been that the bank employs a rapid incremental internationalization process. The re-sults have shown the validity of the explanations of a large number of re-searchers on incrementality in knowledge and commitment. Further, if the study had focused only on the behavior of the same bank in countries outside the Baltic region or during the period 2006-2010, then the conclusion could verify the opportunistic behavior of the bank and verify researchers against incremental behavior of the firms. As the study shows, the banks had both short-term and long-term commitment in different countries. Although, studying a particular country and a particular period could have led us to
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Swedbank did not invest someone else would, and Swedbank’s survival would be at stake. The expectation was that investment was necessary or that selling would be profitable and the profits could be applied to generating larger profits. Market knowledge and market commitment generated Swedbank’s expectations, but even if its market knowledge was low the bank was willing to take risks on the basis of future expectations. Future expectations that were more loosely based on market knowledge. When oth-ers warned (in all three periods) against investments in the Baltic region, Russia and Ukraine, the bank knew that these investments were risky but acted upon positive future expectations instead. In general, as the cases illustrate, both banks expanded during stable periods yet in very different ways and also different in different markets. When the market was unstable the banks decreased their market commitments or re-mained idle in them. In 2008 when the financial crisis broke out, Handels-banken reduced its internationalization pace and remained idle during the oncoming months. Although Handelsbanken noted there was no cause for alarm for its own part, the future was unclear, which made the bank cautious. Once Handelsbanken expected market commitments to be profitable and the future was regarded as more predictable and therefore less uncertain/risky, Handelsbanken started to increase its commitments. This is particularly evi-dent in 2009-2010: although the market was unstable, Handelsbanken in-creased market commitments in Denmark, Great Britain and in the Nether-lands. Handelsbanken stated that it wanted to make up for lost time and opened more offices in Great Britain than ever before. This was due to its stability, which had been enabled by its risk-avoidance behavior. Swedbank, however, was an opportunity seeker that had taken higher risks by investing in emerging markets, and many of its investments were short-term oriented. When the market was unstable Swedbank made radical moves and drastical-ly reduced market commitments in order to reduce commitment losses. Swedbank suffered significant losses and expected to continue to do so and therefore reduced its allocated resources to the markets in Baltic region, Russia, and Ukraine. As the cases show, the two banks acted very different-ly, but both banks’ behavior was strongly affected by the financial crisis, as both banks changed their behavior completely. Swedbank’s internationaliza-tion process turned backwards based on expectations of future losses and Handelsbanken since it considered the future unpredictable. This behavior also shows the dynamics of the internationalization process and the clear difference between internationalization behavior in stable times and critical times and supports studies such as Hadjikhani and Johanson (1999).
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7 Conclusion
Although this study applies its own analytical framework, it is interesting to note that the banks’ internationalization processes can to some extent be described by applying the theoretical concepts of the Uppsala model (Johan-son & Vahlne, 1977). The study presents a view including three concepts of commitment, knowledge and expectation to generate an understanding of the internationalization process of firms in a service setting as well. But without the addition of the concept of expectation, the cases would have been more difficult to explain within e.g. the Uppsala model’s framework. Further, and unlike previous research on the internationalization process, which focuses on the behavior of few firms in one or a few markets, the main concern of this study was on the two banks’ internationalization in almost all of their foreign markets. The aim was to describe and analyze the two banks’ inter-nationalization process in the most important foreign markets over 16 years of internationalization. This geographically broad and longitudinal perspec-tive enriches the study’s power to understand how and why a business firms undertakes different behaviors in regard to different foreign markets, i.e. mature and emerging, and also to see if they act differently in foreign mar-kets. Covering the two banks’ market activities in their most important for-eign countries has disclosed a number of interesting conclusions for this study. As the study reveals, while the banks had incremental behavior in some markets, the banks had also non-incremental behavior in others. In other words, the study covers important markets, providing a deeper understanding of the diversities in the behavior of the firms. The heterogeneity of the be-havior, behaving both incrementally and non-incrementally, is a crucial con-tribution of this study. If the study had been limited to the behavior of the Swedbank during the period 1995-2006, the conclusion could have been that the bank employs a rapid incremental internationalization process. The re-sults have shown the validity of the explanations of a large number of re-searchers on incrementality in knowledge and commitment. Further, if the study had focused only on the behavior of the same bank in countries outside the Baltic region or during the period 2006-2010, then the conclusion could verify the opportunistic behavior of the bank and verify researchers against incremental behavior of the firms. As the study shows, the banks had both short-term and long-term commitment in different countries. Although, studying a particular country and a particular period could have led us to
144
reach completely different conclusions. This conclusion does not have the same strength when considering the behavior of Handelsbanken, but the heterogeneity of the behavior is still there. Thus, the method selected in this study, i.e. covering all the important foreign markets aids the conclusion that these firms’ internationalization behavior is heterogeneous. It can be stated that while firms in some markets conduct incremental commitments, com-mitments in other markets may be short-term to develop new opportunities and entail loss of knowledge and commitment or behaviour like exiting, decommitment, and re-internationalization or environmental contingencies. These thoughts are at an initial stage and need further research. But the theo-retical view presented in this study permits us to simply uncover these be-haviors. The view offers the explanation power to understand how and why firms behave so heterogeneously in different periods of times and different foreign markets. It provides conceptual tools for a deeper understanding of the firms’ foreign market behaviour. It may also provide a conduit for those who are for or against the Uppsala model to come closer to each other. The study also concludes that the issue of heterogeneity is not only related to changes in decisions to follow the incrementality path or to be short-term oriented. It is also relates to changes in the environment. It can be concluded that as long as changes in the environment are smooth and predictable, the firm can use its knowledge to invest and reach an expected outcome. But the critical problem is when the environmental changes are not predictable, as stated by Hadjikhani and Johanson (1999). Or, as the cases manifested, the changes are interpreted as an uncertainty that is far from the banks. As ex-plained, a critical condition somewhere can shake the firm’s knowledge and commitment even though they have little to do with. This situation rapid proliferates the development of uncertainties beyond experiential knowledge. It can be concluded that in some situations, e.g. where the changes are radical, firms, no matter whether they are in the service or indus-trial sectors, can lose their commitments and knowledge. Positive expecta-tion loses its strength, and predictions become negative. Thus, the develop-ments in the three concepts of the presented view gain an opposing force. It can be concluded that while internationalization brings about new opportuni-ties, it also entails the rapid diffusion of negative development beyond ex-pectation, like crisis. Experiences, available knowledge and institutions can aid the process of avoidance that is clearly evident in the case of Handels-banken. The bank also lost commitment and knowledge in the crisis period, but the strategy of organic development helped the bank lose much less than e.g. Swedbank. The bank avoided as much turbulence as possible by devel-oping expectations far beyond reaching and training people within the organ-ization in risk avoidance. Another interesting observation specifically concerns the impact of short- and long-term behavior in stable and critical market conditions, specifically
145
referring to the behavior of Swedbank. While the short-term commitments delivered profits, the long-term commitment in stable market conditions delivered profits too. But in critical market conditions the latter ones deliv-ered significant losses. Incrementality is connected to the increasing depend-ency between actors and to allocating resources in a way that increases the difficulty of exiting. In this sense applying the incrementality view in the Uppsala model and other internationalization process studies is less prob-lematic if the market situation is stable. Therefore the size and speed of in-cremental commitments are decisive for a future that might hold critical market changes. What follows below a presentation of some conclusion re-lated to the concept of expectation.
7.1 The role of expectation The concept of expectation in combination with the concepts of market commitment and knowledge, as the cases reveal, offers a strong degree of explanatory power regarding the banks’ internationalization process and facilitates an understanding of their behavior aside from incremental-like behavior. As suggested, in some markets the banks increased their market commitment incrementally and in some markets behaved with rapid interna-tionalization, decommitment or exits. The cases provide evidence that expec-tation brings forward the future dimension of every type of commitment, incremental and non-incremental. It is an analytical tool that allows a deeper understanding of reasons that drive the firms to commit to, decommit from, or avoid a market. Furthermore, as the cases manifest, expectation provides a degree of knowledge about past and present but also introduces the uncer-tainty of the future. The analysis has shown that a firm may conduct a com-mitment based on pure expectation and exclude earlier experiences. Thus the driving force for commitment was the firms’ visions and aims, and the ex-pected gains or losses in the future, regardless of whether firms act like Swedbank, that is, extensively follow their future visions, or behave like Handelsbanken and follow conservative expectation development. As the cases reveal, the concept of expectation together with knowledge and com-mitment can clearly grasp the past, present and future dimensions to explain the banks’ behavior. At the same time, this conceptual tool makes a contri-bution to the Uppsala model, as it permits the model to go beyond incremen-tality and respond to critics who have raised issues of born-global-like be-haviors (Lin & Chaney, 2007; Zhou et al., 2007), pending internationaliza-tion (Hadjikhani, 1996), disruption and irregular commitments (Malhotra & Hinings, 2010; Pedersen & Petersen, 1998), decommitment and exit (Bian-chi & Ostale, 2006). Without this concept it would have been difficult to understand why the firms behave so differently, as the behavior stems future expectations of benefits and losses or survival.
144
reach completely different conclusions. This conclusion does not have the same strength when considering the behavior of Handelsbanken, but the heterogeneity of the behavior is still there. Thus, the method selected in this study, i.e. covering all the important foreign markets aids the conclusion that these firms’ internationalization behavior is heterogeneous. It can be stated that while firms in some markets conduct incremental commitments, com-mitments in other markets may be short-term to develop new opportunities and entail loss of knowledge and commitment or behaviour like exiting, decommitment, and re-internationalization or environmental contingencies. These thoughts are at an initial stage and need further research. But the theo-retical view presented in this study permits us to simply uncover these be-haviors. The view offers the explanation power to understand how and why firms behave so heterogeneously in different periods of times and different foreign markets. It provides conceptual tools for a deeper understanding of the firms’ foreign market behaviour. It may also provide a conduit for those who are for or against the Uppsala model to come closer to each other. The study also concludes that the issue of heterogeneity is not only related to changes in decisions to follow the incrementality path or to be short-term oriented. It is also relates to changes in the environment. It can be concluded that as long as changes in the environment are smooth and predictable, the firm can use its knowledge to invest and reach an expected outcome. But the critical problem is when the environmental changes are not predictable, as stated by Hadjikhani and Johanson (1999). Or, as the cases manifested, the changes are interpreted as an uncertainty that is far from the banks. As ex-plained, a critical condition somewhere can shake the firm’s knowledge and commitment even though they have little to do with. This situation rapid proliferates the development of uncertainties beyond experiential knowledge. It can be concluded that in some situations, e.g. where the changes are radical, firms, no matter whether they are in the service or indus-trial sectors, can lose their commitments and knowledge. Positive expecta-tion loses its strength, and predictions become negative. Thus, the develop-ments in the three concepts of the presented view gain an opposing force. It can be concluded that while internationalization brings about new opportuni-ties, it also entails the rapid diffusion of negative development beyond ex-pectation, like crisis. Experiences, available knowledge and institutions can aid the process of avoidance that is clearly evident in the case of Handels-banken. The bank also lost commitment and knowledge in the crisis period, but the strategy of organic development helped the bank lose much less than e.g. Swedbank. The bank avoided as much turbulence as possible by devel-oping expectations far beyond reaching and training people within the organ-ization in risk avoidance. Another interesting observation specifically concerns the impact of short- and long-term behavior in stable and critical market conditions, specifically
145
referring to the behavior of Swedbank. While the short-term commitments delivered profits, the long-term commitment in stable market conditions delivered profits too. But in critical market conditions the latter ones deliv-ered significant losses. Incrementality is connected to the increasing depend-ency between actors and to allocating resources in a way that increases the difficulty of exiting. In this sense applying the incrementality view in the Uppsala model and other internationalization process studies is less prob-lematic if the market situation is stable. Therefore the size and speed of in-cremental commitments are decisive for a future that might hold critical market changes. What follows below a presentation of some conclusion re-lated to the concept of expectation.
7.1 The role of expectation The concept of expectation in combination with the concepts of market commitment and knowledge, as the cases reveal, offers a strong degree of explanatory power regarding the banks’ internationalization process and facilitates an understanding of their behavior aside from incremental-like behavior. As suggested, in some markets the banks increased their market commitment incrementally and in some markets behaved with rapid interna-tionalization, decommitment or exits. The cases provide evidence that expec-tation brings forward the future dimension of every type of commitment, incremental and non-incremental. It is an analytical tool that allows a deeper understanding of reasons that drive the firms to commit to, decommit from, or avoid a market. Furthermore, as the cases manifest, expectation provides a degree of knowledge about past and present but also introduces the uncer-tainty of the future. The analysis has shown that a firm may conduct a com-mitment based on pure expectation and exclude earlier experiences. Thus the driving force for commitment was the firms’ visions and aims, and the ex-pected gains or losses in the future, regardless of whether firms act like Swedbank, that is, extensively follow their future visions, or behave like Handelsbanken and follow conservative expectation development. As the cases reveal, the concept of expectation together with knowledge and com-mitment can clearly grasp the past, present and future dimensions to explain the banks’ behavior. At the same time, this conceptual tool makes a contri-bution to the Uppsala model, as it permits the model to go beyond incremen-tality and respond to critics who have raised issues of born-global-like be-haviors (Lin & Chaney, 2007; Zhou et al., 2007), pending internationaliza-tion (Hadjikhani, 1996), disruption and irregular commitments (Malhotra & Hinings, 2010; Pedersen & Petersen, 1998), decommitment and exit (Bian-chi & Ostale, 2006). Without this concept it would have been difficult to understand why the firms behave so differently, as the behavior stems future expectations of benefits and losses or survival.
146
As discussed in the analysis, the varieties in the relations between these three concepts elaborated on the heterogeneity in the behavior of banks. The main difference between the banks is that Handelsbanken followed a risk-avoidant strategy and Swedbank an opportunity-seeking strategy. Handelsbanken’s market commitments were driven by the bank’s market knowledge and what the bank expected from its commitments. As the analysis reveals, the bank’s expectation was connected to the bank’s market knowledge. Commitment avoidance was driven by the lack of market knowledge and the perception of high-risk expectation, prompting Handelsbanken to remain idle in its com-mitment or to decline to enter a region or market. It can be concluded that firms’ cautious behavior is based on the expectation that something could go wrong, which make the firms remain inert in terms of increasing market commitments. Expectation and market knowledge are the driving forces in increasing market commitments but are also strongly involved as a hindering force. However, in line with the Uppsala model, as explained by most, firms like Handelsbanken can incrementally increase their market knowledge and market commitments. As mentioned earlier, the strategy can become an or-ganizational facet less connected to the accumulated knowledge. In contrast with Handelsbanken, as discussed earlier, Swedbank was also extensively driven by expectation, except market knowledge was not as closely tied to its expectation. It can be so that firms like Swedbank are often driven to invest by expectations for rapid gains or fear of competition, as when Swedbank purchased Hansabank for fear of letting SEB gain control over it. This is particularly evident before and during the outbreak of the financial crisis, when Swedbank continued to invest despite the knowledge that the market was unstable and was about to become even more unstable. Instead of mar-ket knowledge as a suppressing or driving force Swedbank was driven by its expectations. However, the expectation to gain or lose varies across different firms and over time, leading them to commit differently. Because Handels-banken was cautious, it did not invest much in emerging markets and instead increased its market commitments in ‘stable markets’ such as Great Britain and the Nordic region, while Swedbank invested major resources in emerg-ing markets such as the Baltic region, Russia, and Ukraine. Another conclusion concerning expectation regards the internationalization behavior of the firm under stable or critical market conditions. Expectation played different roles for the banks and was also related to how the market was changing. When the market was stable both banks had a positive expec-tation and expanded. But when the market was unstable market, their expec-tations were changed and both banks remained idle, decreased or lost their commitments. Because of the uncertainty about the future, firms do not know what to expect. Simultaneously as they coped with losses or gains, they had to analyze what kind of sacrifices in commitment are necessary and which commitments are expected to be profitable in the long term and need-ed to be held onto. To increase its market knowledge, Handelsbanken usual-
147
ly increased its market commitments through organic growth. Hence the bank actively sought out local staff whenever an office was expected to open. To boost market commitments in the Nordic region and to penetrate markets, a few times Handelsbanken acquired regional banks. However, most of the time the bank’s market commitment and expectation was linked to its organic development. Swedbank’s expansion in several markets was driven by expectation of short-term profits in order to survive in internation-al markets. Unlike Handelsbanken, Swedbank incrementally increased its market commitment and market knowledge in the Baltic region. Swedbank’s explicitly high positive expectation led it to increase its market commitments abroad through purchasing banks. As discussed, expectation has different roles and contains different elements for different firms and in different peri-ods of time. However, it can be concluded that the concept of expectation in the study’s theoretical framework offers strong explanatory power when analyzing the two banks’ foreign market behavior. Over time Handelsbanken expected that it had found a generic way of in-creasing market commitment. This was achieved by a certain way of gener-ating market knowledge. The more it learned from its market commitments, the more this expectation grew. Soon Handelsbanken increased all market its commitments and entered markets in the same way. Consequently Handels-banken’s behavior is ‘almost’ similar to Johanson & Vahlne’s (1977) idea of ‘learning by doing.’ But remarkably, in several cases the bank had knowledge but did not increase its commitment. Hence it can be concluded that expectation for future losses can make firms act conservatively, which makes the link between knowledge and commitment weaker. Handelsbanken had incorporated organic behavior into the organization, thus weakening the logic of the connection between commitment and knowledge. This is also evident when considering Handelsbanken’s earlier international experience and experience where the bank had learned from its previous mistakes in the 1970s and adapted its organization and its way of investing. Swedbank also learned from earlier mistakes but did not apply that knowledge in the same extent. Yet the trials and errors made by Swedbank often proved to be prof-itable. Investments made in the Baltic region, Ukraine, and Russia would likely not have been made without profits gained from the sales of earlier investments in other markets. While the investments made by Handelsbank-en were expected to be profitable in the long term, most of the market com-mitments made by Swedbank were short-term oriented. In regions where Swedbank tried to increase its commitments and market knowledge incre-mentally (mainly the Baltic region but also to some extent in Ukraine) the bank’s expectation was long-term oriented. But in the other markets where Swedbank was short-term oriented (Austria, Nordic region, Poland, and Russia) the bank’s market commitment increased and decreased on the ex-pectation of immediate profitability. Accordingly, one can conclude that, in
146
As discussed in the analysis, the varieties in the relations between these three concepts elaborated on the heterogeneity in the behavior of banks. The main difference between the banks is that Handelsbanken followed a risk-avoidant strategy and Swedbank an opportunity-seeking strategy. Handelsbanken’s market commitments were driven by the bank’s market knowledge and what the bank expected from its commitments. As the analysis reveals, the bank’s expectation was connected to the bank’s market knowledge. Commitment avoidance was driven by the lack of market knowledge and the perception of high-risk expectation, prompting Handelsbanken to remain idle in its com-mitment or to decline to enter a region or market. It can be concluded that firms’ cautious behavior is based on the expectation that something could go wrong, which make the firms remain inert in terms of increasing market commitments. Expectation and market knowledge are the driving forces in increasing market commitments but are also strongly involved as a hindering force. However, in line with the Uppsala model, as explained by most, firms like Handelsbanken can incrementally increase their market knowledge and market commitments. As mentioned earlier, the strategy can become an or-ganizational facet less connected to the accumulated knowledge. In contrast with Handelsbanken, as discussed earlier, Swedbank was also extensively driven by expectation, except market knowledge was not as closely tied to its expectation. It can be so that firms like Swedbank are often driven to invest by expectations for rapid gains or fear of competition, as when Swedbank purchased Hansabank for fear of letting SEB gain control over it. This is particularly evident before and during the outbreak of the financial crisis, when Swedbank continued to invest despite the knowledge that the market was unstable and was about to become even more unstable. Instead of mar-ket knowledge as a suppressing or driving force Swedbank was driven by its expectations. However, the expectation to gain or lose varies across different firms and over time, leading them to commit differently. Because Handels-banken was cautious, it did not invest much in emerging markets and instead increased its market commitments in ‘stable markets’ such as Great Britain and the Nordic region, while Swedbank invested major resources in emerg-ing markets such as the Baltic region, Russia, and Ukraine. Another conclusion concerning expectation regards the internationalization behavior of the firm under stable or critical market conditions. Expectation played different roles for the banks and was also related to how the market was changing. When the market was stable both banks had a positive expec-tation and expanded. But when the market was unstable market, their expec-tations were changed and both banks remained idle, decreased or lost their commitments. Because of the uncertainty about the future, firms do not know what to expect. Simultaneously as they coped with losses or gains, they had to analyze what kind of sacrifices in commitment are necessary and which commitments are expected to be profitable in the long term and need-ed to be held onto. To increase its market knowledge, Handelsbanken usual-
147
ly increased its market commitments through organic growth. Hence the bank actively sought out local staff whenever an office was expected to open. To boost market commitments in the Nordic region and to penetrate markets, a few times Handelsbanken acquired regional banks. However, most of the time the bank’s market commitment and expectation was linked to its organic development. Swedbank’s expansion in several markets was driven by expectation of short-term profits in order to survive in internation-al markets. Unlike Handelsbanken, Swedbank incrementally increased its market commitment and market knowledge in the Baltic region. Swedbank’s explicitly high positive expectation led it to increase its market commitments abroad through purchasing banks. As discussed, expectation has different roles and contains different elements for different firms and in different peri-ods of time. However, it can be concluded that the concept of expectation in the study’s theoretical framework offers strong explanatory power when analyzing the two banks’ foreign market behavior. Over time Handelsbanken expected that it had found a generic way of in-creasing market commitment. This was achieved by a certain way of gener-ating market knowledge. The more it learned from its market commitments, the more this expectation grew. Soon Handelsbanken increased all market its commitments and entered markets in the same way. Consequently Handels-banken’s behavior is ‘almost’ similar to Johanson & Vahlne’s (1977) idea of ‘learning by doing.’ But remarkably, in several cases the bank had knowledge but did not increase its commitment. Hence it can be concluded that expectation for future losses can make firms act conservatively, which makes the link between knowledge and commitment weaker. Handelsbanken had incorporated organic behavior into the organization, thus weakening the logic of the connection between commitment and knowledge. This is also evident when considering Handelsbanken’s earlier international experience and experience where the bank had learned from its previous mistakes in the 1970s and adapted its organization and its way of investing. Swedbank also learned from earlier mistakes but did not apply that knowledge in the same extent. Yet the trials and errors made by Swedbank often proved to be prof-itable. Investments made in the Baltic region, Ukraine, and Russia would likely not have been made without profits gained from the sales of earlier investments in other markets. While the investments made by Handelsbank-en were expected to be profitable in the long term, most of the market com-mitments made by Swedbank were short-term oriented. In regions where Swedbank tried to increase its commitments and market knowledge incre-mentally (mainly the Baltic region but also to some extent in Ukraine) the bank’s expectation was long-term oriented. But in the other markets where Swedbank was short-term oriented (Austria, Nordic region, Poland, and Russia) the bank’s market commitment increased and decreased on the ex-pectation of immediate profitability. Accordingly, one can conclude that, in
148
terms of time and foreign markets, the concept of expectation can be either very explicit or implicit in the behavior of the firms.
7.2 Future research In chapter three it is stated that this study is part of the first step in laying the foundation for deeper future studies that might employ other methods such as interviews. Fortunately the empirical data presented in this study is rich and invites further interpretations and in-depth studies. In this respect some researchers state that:
“In the early stages of many research programmes, exploration is needed to develop research ideas and questions. Many doctoral theses begin with one or more case studies in order to generate a list of research questions that are worth pursuing further (e.g. Frohlich, 1998).” (Voss et al., 2002)
As Voss et al. (2002) suggest, this has been a learning process that in its development have revealed a number of questions as it unfolded. The aim of the second step is to follow up on these questions. This longitudinal cross-case study has uncovered a number of interesting areas that this study has not been able to explore. On the basis of this study some questions can be raised that are interest for future research. Perhaps the most obvious and pressing issue is gathering primary data to complement, enhance, and broad-en the view of the Uppsala model with the injection of the concept of expec-tation concept, as Johanson and Vahlne (2009) welcome. One of the reasons for doing this study was to get a broad picture of the Swedish banks in order to plan for interviews for further observations in future studies. This study was needed since it provides a general picture revealing interesting data that can be supplemented with interviews for examining narrower issues. The secondary data that has been applied is rich but has its limitations, for exam-ple, the network picture can be difficult to describe in detail. But it has pro-vided insights into where to go next and what to do. Applying a network perspective in internationalization process of banks can yield a deeper or different understanding. In general and closest to heart is studying how the concept of expectation can be implemented and contribute to the develop-ment of Johanson and Vahlne’s Uppsala model. Some of the things that would be interesting to explore in future are like:
1) Referring to further research on expectation, the idea is that everything
we do is based on our expectations, which is derived from our knowledge since expectations stem from bounded rationality. With a high degree of knowledge what we expect is more likely to happen and we will likely commit. During stable periods when the future is rather
149
clear and predictability is high (what you expect is more likely to hap-pen) knowledge from yesterday can most likely be applied tomorrow. But when the environment is unstable the unknown variables become imminent. Knowledge from yesterday is no longer applicable since we do not know what exactly to expect. The connection between expecta-tion and market changes indeed needs further research.
2) One interesting topic of concern for future research is the banks’ knowledge and how much emphasis ought to be put on the area of the unknown (for example, neither of the banks knew about the drastic market change), which is related to uncertainty. This is another type of uncertainty alongside the uncertainty that can be managed with knowledge. The unknown has several dimensions that naturally affect the banks. Further studies on how much impact the unknown uncer-tainty has on the banks’ behavior and to what extent banks are aware of these implications may enable a better understanding of internationali-zation. Such research is urgent due to rapid globalization and its ac-companying increasing uncertainty. Such a study can also aid business firms in their investment decisions in foreign markets.
3) Another interesting subject for further research concerns studying, for example, both of the banks’ behaviors in a specific market like Poland, Russia or Ukraine. Both of the banks have entered the emerging Rus-sian market. Such a study can provide a better understanding of heter-ogeneity in internationalization behavior. Further, a closer observation of how the banks behaved in one or two specific markets could reveal if there is any difference in the banks’ behavior in emerging markets and mature markets and also how socio-political factors have influ-enced their internationalization behavior.
4) This study applies an actors’ perspective and does not deal with net-works, however, it would be interesting to see what a network view could add to this study. As sated above, this study’s result can recom-mend further investigation by gathering primary data to study the banks’ network development in connection with the concept of expec-tation. Further questions like how the banks’ networks have affected the banks internationalization can yield answers to some studies on ‘banks always follow their customers.’ This may also provide some an-swers to the question of non-incremental behavior like born global and rapid internationalization. Moreover, in the Uppsala model the concept of trust is taken for granted as a silent participant that is mandatory for any business to occur. The cases, particular the case of Handelsbanken, manifest that trust played a vital role when the bank internationalized. When Handelsbanken opened an office it searched for people with
148
terms of time and foreign markets, the concept of expectation can be either very explicit or implicit in the behavior of the firms.
7.2 Future research In chapter three it is stated that this study is part of the first step in laying the foundation for deeper future studies that might employ other methods such as interviews. Fortunately the empirical data presented in this study is rich and invites further interpretations and in-depth studies. In this respect some researchers state that:
“In the early stages of many research programmes, exploration is needed to develop research ideas and questions. Many doctoral theses begin with one or more case studies in order to generate a list of research questions that are worth pursuing further (e.g. Frohlich, 1998).” (Voss et al., 2002)
As Voss et al. (2002) suggest, this has been a learning process that in its development have revealed a number of questions as it unfolded. The aim of the second step is to follow up on these questions. This longitudinal cross-case study has uncovered a number of interesting areas that this study has not been able to explore. On the basis of this study some questions can be raised that are interest for future research. Perhaps the most obvious and pressing issue is gathering primary data to complement, enhance, and broad-en the view of the Uppsala model with the injection of the concept of expec-tation concept, as Johanson and Vahlne (2009) welcome. One of the reasons for doing this study was to get a broad picture of the Swedish banks in order to plan for interviews for further observations in future studies. This study was needed since it provides a general picture revealing interesting data that can be supplemented with interviews for examining narrower issues. The secondary data that has been applied is rich but has its limitations, for exam-ple, the network picture can be difficult to describe in detail. But it has pro-vided insights into where to go next and what to do. Applying a network perspective in internationalization process of banks can yield a deeper or different understanding. In general and closest to heart is studying how the concept of expectation can be implemented and contribute to the develop-ment of Johanson and Vahlne’s Uppsala model. Some of the things that would be interesting to explore in future are like:
1) Referring to further research on expectation, the idea is that everything
we do is based on our expectations, which is derived from our knowledge since expectations stem from bounded rationality. With a high degree of knowledge what we expect is more likely to happen and we will likely commit. During stable periods when the future is rather
149
clear and predictability is high (what you expect is more likely to hap-pen) knowledge from yesterday can most likely be applied tomorrow. But when the environment is unstable the unknown variables become imminent. Knowledge from yesterday is no longer applicable since we do not know what exactly to expect. The connection between expecta-tion and market changes indeed needs further research.
2) One interesting topic of concern for future research is the banks’ knowledge and how much emphasis ought to be put on the area of the unknown (for example, neither of the banks knew about the drastic market change), which is related to uncertainty. This is another type of uncertainty alongside the uncertainty that can be managed with knowledge. The unknown has several dimensions that naturally affect the banks. Further studies on how much impact the unknown uncer-tainty has on the banks’ behavior and to what extent banks are aware of these implications may enable a better understanding of internationali-zation. Such research is urgent due to rapid globalization and its ac-companying increasing uncertainty. Such a study can also aid business firms in their investment decisions in foreign markets.
3) Another interesting subject for further research concerns studying, for example, both of the banks’ behaviors in a specific market like Poland, Russia or Ukraine. Both of the banks have entered the emerging Rus-sian market. Such a study can provide a better understanding of heter-ogeneity in internationalization behavior. Further, a closer observation of how the banks behaved in one or two specific markets could reveal if there is any difference in the banks’ behavior in emerging markets and mature markets and also how socio-political factors have influ-enced their internationalization behavior.
4) This study applies an actors’ perspective and does not deal with net-works, however, it would be interesting to see what a network view could add to this study. As sated above, this study’s result can recom-mend further investigation by gathering primary data to study the banks’ network development in connection with the concept of expec-tation. Further questions like how the banks’ networks have affected the banks internationalization can yield answers to some studies on ‘banks always follow their customers.’ This may also provide some an-swers to the question of non-incremental behavior like born global and rapid internationalization. Moreover, in the Uppsala model the concept of trust is taken for granted as a silent participant that is mandatory for any business to occur. The cases, particular the case of Handelsbanken, manifest that trust played a vital role when the bank internationalized. When Handelsbanken opened an office it searched for people with
150
market knowledge, but trust also played a significant role in the bank’s internationalization activities. This requires new research to understand the role of trust in the banking business.
5) Swedbank started an Internet bank (Firstviewbank) in Denmark and invested heavily every year, as did Handelsbanken, in IT. It would be interesting to research how much of Internet banking has been applied in the banks’ internationalization and also to conduct a comparative study on several banks’ internationalization via Internet banking, or how the Internet has affected different banks’ internationalization pro-cesses.
6) Another crucial area for further research is the connection between the internationalization process and organization management. As far as the study reveals, for example, Handelsbanken’s ownership and man-agement are closely linked, and the decision-makers often remain the same over a very long period. Moreover, its managers often come from within the organization, and once the CEO’s term is over s/he usually becomes chairman of the board. The case revealed that Handelsbanken is similar to what Penrose (1959, p. 6) calls cautious and risk-avoidant. Meanwhile, Swedbank was and opportunity seeker, more risk-tolerant as managers come and go, and the ownership and management of the organization are separated, and their positions were short-term orient-ed. A study of the connection between two may uncover new knowledge on internationalization.
7) This study has provided a broad illustration of how the two Swedish
banks have internationalized over the last two decades. However there are two other large Swedish banks that could complement this study. It could prove beneficial in complementing previously discussed research suggestions with two additional cases of the two Swedish banks Nordea and SEB. This would also allow greater generalizability of the conclusions drawn (see Voss et al., 2002).
151
References
Agnal, H. & Chetty, S. (2007). The impact of relationships on changes in internationalisation strategies of SMEs. European Journal of Marketing. Vol. 41, Iss. 11/12, pp. 1449-1474
Aharoni, Y. (2011). Fifty years of case research in international business: the power of outliers and black swans (pp. 41-54). In Piekkari, R. & Welch, C. (Ed.). Rethinking the Case Study in International Business and Man-agement Research. Cheltenham: Edward Elgar
Amdam, R. P. (2009). The internationalisation process theory and the inter-nationalisation of Norwegian firms, 1945 to 1980. Business History. Vol. 51, No. 3, pp. 445-461
Andersen, O. (1993). On the Internationalization Process of Firms: A Criti-cal Analysis. Journal of International Business Studies. Vol. 24, No. 2, pp. 209-231
Andersen, O. & Buvik, A. (2002). Firms’ internationalization and alternative approaches to the international customer/market selection. International Business Review. Vol. 11, pp. 347-363
Andersson, D. (2012). Bankerna behöver delas upp. Skånskan, 11 June
Andersson, U. (2013). Bankerna har blivit ett ekonomiskt hot. Svenska Dagbladet, 8 February
Andersson, U. & Forsgren, M. (2000). In Search of Centre of Excellence: Network Embeddedness and Subsidiary Roles in Multinational Corpora-tions. Management International Review. Vol. 40, No. 4, pp. 329-350
Andersson, U. Forsgren, M. & Holm, U. (2002). The Strategic Impact of External Networks: Subsidiary Performance and Competence Develop-ment in the Multinational Corporation. Strategic Management Journal. Vol. 23, pp. 979-996
Andersson, U., Johanson, J. & Vahlne, J.-E. (1997). Organic Acquisitions in the Internationalization Process of the Business Firm. Management Inter-national Review. Vol. 37, Special Issue, pp. 67-84
Arnold, S. J. & Fischer, E. (1994). Hermeneutics and Consumer Research. Journal of Consumer Research. Vol. 21, No. 1, pp. 55-70
150
market knowledge, but trust also played a significant role in the bank’s internationalization activities. This requires new research to understand the role of trust in the banking business.
5) Swedbank started an Internet bank (Firstviewbank) in Denmark and invested heavily every year, as did Handelsbanken, in IT. It would be interesting to research how much of Internet banking has been applied in the banks’ internationalization and also to conduct a comparative study on several banks’ internationalization via Internet banking, or how the Internet has affected different banks’ internationalization pro-cesses.
6) Another crucial area for further research is the connection between the internationalization process and organization management. As far as the study reveals, for example, Handelsbanken’s ownership and man-agement are closely linked, and the decision-makers often remain the same over a very long period. Moreover, its managers often come from within the organization, and once the CEO’s term is over s/he usually becomes chairman of the board. The case revealed that Handelsbanken is similar to what Penrose (1959, p. 6) calls cautious and risk-avoidant. Meanwhile, Swedbank was and opportunity seeker, more risk-tolerant as managers come and go, and the ownership and management of the organization are separated, and their positions were short-term orient-ed. A study of the connection between two may uncover new knowledge on internationalization.
7) This study has provided a broad illustration of how the two Swedish
banks have internationalized over the last two decades. However there are two other large Swedish banks that could complement this study. It could prove beneficial in complementing previously discussed research suggestions with two additional cases of the two Swedish banks Nordea and SEB. This would also allow greater generalizability of the conclusions drawn (see Voss et al., 2002).
151
References
Agnal, H. & Chetty, S. (2007). The impact of relationships on changes in internationalisation strategies of SMEs. European Journal of Marketing. Vol. 41, Iss. 11/12, pp. 1449-1474
Aharoni, Y. (2011). Fifty years of case research in international business: the power of outliers and black swans (pp. 41-54). In Piekkari, R. & Welch, C. (Ed.). Rethinking the Case Study in International Business and Man-agement Research. Cheltenham: Edward Elgar
Amdam, R. P. (2009). The internationalisation process theory and the inter-nationalisation of Norwegian firms, 1945 to 1980. Business History. Vol. 51, No. 3, pp. 445-461
Andersen, O. (1993). On the Internationalization Process of Firms: A Criti-cal Analysis. Journal of International Business Studies. Vol. 24, No. 2, pp. 209-231
Andersen, O. & Buvik, A. (2002). Firms’ internationalization and alternative approaches to the international customer/market selection. International Business Review. Vol. 11, pp. 347-363
Andersson, D. (2012). Bankerna behöver delas upp. Skånskan, 11 June
Andersson, U. (2013). Bankerna har blivit ett ekonomiskt hot. Svenska Dagbladet, 8 February
Andersson, U. & Forsgren, M. (2000). In Search of Centre of Excellence: Network Embeddedness and Subsidiary Roles in Multinational Corpora-tions. Management International Review. Vol. 40, No. 4, pp. 329-350
Andersson, U. Forsgren, M. & Holm, U. (2002). The Strategic Impact of External Networks: Subsidiary Performance and Competence Develop-ment in the Multinational Corporation. Strategic Management Journal. Vol. 23, pp. 979-996
Andersson, U., Johanson, J. & Vahlne, J.-E. (1997). Organic Acquisitions in the Internationalization Process of the Business Firm. Management Inter-national Review. Vol. 37, Special Issue, pp. 67-84
Arnold, S. J. & Fischer, E. (1994). Hermeneutics and Consumer Research. Journal of Consumer Research. Vol. 21, No. 1, pp. 55-70
152
Bae, K-H., Kang, J-K. & Lim, C-W. (2002). The value of durable bank rela-tionships: evidence from Korean banking shocks. Journal of Financial Economics. Vol. 64, No. 2, pp. 181-214
Baffour Awuah, G., Abraha Gebrekidan, D. & Osarenkhoe, A. (2011). Inter-active (networked) internationalization: the case of Swedish firms. Euro-pean Journal of Marketing. Vol. 45, Iss. 7/8, pp. 1112-1129
Ball, D. A., Lindsay, V. J. & Rose, E. L. (2008). Rethinking the Paradigm of Service Internationalisation: Less Resource-intensive Market Entry Modes for Information-intensive Soft Services. Management International Re-view. Vol. 48, No. 4, pp. 413-431
Barkema, H. G., Bell, J. H. J. & Pennings, J. M. (1996). Foreign entry, cul-tural barriers, and learning. Strategic Management Journal. Vol. 17, No. 2, pp. 151-166
Barkema, H. G. & Vermeulen, F. (1998). International Expansion through Start up or Acquisition: A Learning perspective. Academy of Management Journal. Vol. 41, No. 1, pp. 7-26
Baruch, Y. & Holtom, B. C. (2008). Survey response rate levels and trends in organizational research. Human Relations. Vol. 61, No. 8, pp. 1139-1160
Beamish, P. W., Morrison, A. & Rosenzweig, P. M. (1997). International Management. Text and Cases. Homewood: Irwin
Bell, J. H. J. (1995). The internationalisation of small computer software firms: a further challenge to stage theory. European Journal of Marketing. Vol. 29, No. 8, pp. 60-75
Bell, J., Crick, D. & Young, S. (2004). Small Firm Internationalization and Business Strategy: An Exploratory Study of ‘Knowledge-Intensive’ and ‘Traditional’ Manufacturing Firms in the UK. International Small Busi-ness Journal. Vol. 22, No. 1, pp. 23-56
Bell, J. H. J. & Young, S. (1998). Toward an integrative framework on the internationalisation of the firm, in Hooley, G., Loveridge, R. & Wilson, D. (Eds), Internationalisation: Process, Context and Markets. London: Macmillan, pp. 5-28
Beltratti, A. & Stulz, R. M. (2009). Why Did Some Banks Perform Better during the Credit Crisis? A Cross-Country Study of the Impact of Gov-ernance and Regulation. ECGI Working Paper Series in Finance. No. 254
Benito, G. R. G. & Gripsrud, G. (1992). The Expansion of Foreign Direct Investments: Discrete Rational Location Choices or a Cultural Learning Process? Journal of International Business Studies. Vol. 23, No. 3, pp. 461-476
153
Bergström, R., Engwall, L. & Wallerstedt, E. (1994). Organizational founda-tions and closures in a regulated environment: Swedish commercial banks 1831-1990. Scandinavian Journal of Management. Vol. 10, No. 1, pp. 29-48
Bianchi, C. C. & Ostale, E. (2006). Lessons learned from unsuccessful inter-nationalization attempts: Example of multinational retailers in Chile. Journal of Business Research. Vol. 59, No. 1, pp. 140-147
Birkinshaw, J., Brannen, M. Y. & Tung, R. L. (2011). From a distance and a generalizable to up close and grounded: Reclaiming a place for qualitative methods in international business research. Journal of International Busi-ness Studies. Vol. 42, pp. 573-581
Blazejewski, S. (2011). When truth is the daughter of time: longitudinal case studies in international business research (pp. 251-276). In Piekkari, R. & Welch, C. (Ed.). Rethinking the Case Study in International Business and Management Research. Cheltenham: Edward Elgar
Brouthers, K. D. & Brouthers, L. E. (2000). Acquisition or greenfield start-up? Institutional, cultural and transaction cost influences. Strategic Man-agement Journal. Vol. 21, No. 1, pp. 87-97
Bryman, A. & Burgess, R. G. (1999). Qualitative Research. London: Sage Publications Ltd
Buch, C. M. & Lipponer, A. (2007). FDI versus exports: Evidence from German banks. Journal of Banking & Finance. Vol. 31, No. 3, pp. 805-826
Buckley, P. J. & Casson, M. (1976). The Future of the Multinational Enter-prise. London: MacMillan
Buckley, P. J. & Ghauri, P. N. (1999). The Internationalization of the Firm: A Reader (2nd ed.). London: International Thompson Business Press
Bygrave, W. D. & Zacharakis, A. (2010). The Portable MBA in Entrepre-neurship. New Jersey: John Wiley & Sons
Calof, J. C. & Beamish, P. (1995). Adapting to foreign markets: explaining internationalisation. International Business Review. Vol. 4, No. 2, pp. 115-31
Campello, M., Graham, J. R & Harvey, C. R. (2010). The real effects of financial constraints: Evidence from a financial crisis. Journal of Finan-cial Economics. Vol. 97, No. 3, pp. 470-487
Cardone-Riportella, C. & Cazorla-Papis, L. (2001). The internationalization process of Spanish banks: a tale of two times. International Journal of Bank Marketing, Vol. 19, No. 2, pp. 53-68
152
Bae, K-H., Kang, J-K. & Lim, C-W. (2002). The value of durable bank rela-tionships: evidence from Korean banking shocks. Journal of Financial Economics. Vol. 64, No. 2, pp. 181-214
Baffour Awuah, G., Abraha Gebrekidan, D. & Osarenkhoe, A. (2011). Inter-active (networked) internationalization: the case of Swedish firms. Euro-pean Journal of Marketing. Vol. 45, Iss. 7/8, pp. 1112-1129
Ball, D. A., Lindsay, V. J. & Rose, E. L. (2008). Rethinking the Paradigm of Service Internationalisation: Less Resource-intensive Market Entry Modes for Information-intensive Soft Services. Management International Re-view. Vol. 48, No. 4, pp. 413-431
Barkema, H. G., Bell, J. H. J. & Pennings, J. M. (1996). Foreign entry, cul-tural barriers, and learning. Strategic Management Journal. Vol. 17, No. 2, pp. 151-166
Barkema, H. G. & Vermeulen, F. (1998). International Expansion through Start up or Acquisition: A Learning perspective. Academy of Management Journal. Vol. 41, No. 1, pp. 7-26
Baruch, Y. & Holtom, B. C. (2008). Survey response rate levels and trends in organizational research. Human Relations. Vol. 61, No. 8, pp. 1139-1160
Beamish, P. W., Morrison, A. & Rosenzweig, P. M. (1997). International Management. Text and Cases. Homewood: Irwin
Bell, J. H. J. (1995). The internationalisation of small computer software firms: a further challenge to stage theory. European Journal of Marketing. Vol. 29, No. 8, pp. 60-75
Bell, J., Crick, D. & Young, S. (2004). Small Firm Internationalization and Business Strategy: An Exploratory Study of ‘Knowledge-Intensive’ and ‘Traditional’ Manufacturing Firms in the UK. International Small Busi-ness Journal. Vol. 22, No. 1, pp. 23-56
Bell, J. H. J. & Young, S. (1998). Toward an integrative framework on the internationalisation of the firm, in Hooley, G., Loveridge, R. & Wilson, D. (Eds), Internationalisation: Process, Context and Markets. London: Macmillan, pp. 5-28
Beltratti, A. & Stulz, R. M. (2009). Why Did Some Banks Perform Better during the Credit Crisis? A Cross-Country Study of the Impact of Gov-ernance and Regulation. ECGI Working Paper Series in Finance. No. 254
Benito, G. R. G. & Gripsrud, G. (1992). The Expansion of Foreign Direct Investments: Discrete Rational Location Choices or a Cultural Learning Process? Journal of International Business Studies. Vol. 23, No. 3, pp. 461-476
153
Bergström, R., Engwall, L. & Wallerstedt, E. (1994). Organizational founda-tions and closures in a regulated environment: Swedish commercial banks 1831-1990. Scandinavian Journal of Management. Vol. 10, No. 1, pp. 29-48
Bianchi, C. C. & Ostale, E. (2006). Lessons learned from unsuccessful inter-nationalization attempts: Example of multinational retailers in Chile. Journal of Business Research. Vol. 59, No. 1, pp. 140-147
Birkinshaw, J., Brannen, M. Y. & Tung, R. L. (2011). From a distance and a generalizable to up close and grounded: Reclaiming a place for qualitative methods in international business research. Journal of International Busi-ness Studies. Vol. 42, pp. 573-581
Blazejewski, S. (2011). When truth is the daughter of time: longitudinal case studies in international business research (pp. 251-276). In Piekkari, R. & Welch, C. (Ed.). Rethinking the Case Study in International Business and Management Research. Cheltenham: Edward Elgar
Brouthers, K. D. & Brouthers, L. E. (2000). Acquisition or greenfield start-up? Institutional, cultural and transaction cost influences. Strategic Man-agement Journal. Vol. 21, No. 1, pp. 87-97
Bryman, A. & Burgess, R. G. (1999). Qualitative Research. London: Sage Publications Ltd
Buch, C. M. & Lipponer, A. (2007). FDI versus exports: Evidence from German banks. Journal of Banking & Finance. Vol. 31, No. 3, pp. 805-826
Buckley, P. J. & Casson, M. (1976). The Future of the Multinational Enter-prise. London: MacMillan
Buckley, P. J. & Ghauri, P. N. (1999). The Internationalization of the Firm: A Reader (2nd ed.). London: International Thompson Business Press
Bygrave, W. D. & Zacharakis, A. (2010). The Portable MBA in Entrepre-neurship. New Jersey: John Wiley & Sons
Calof, J. C. & Beamish, P. (1995). Adapting to foreign markets: explaining internationalisation. International Business Review. Vol. 4, No. 2, pp. 115-31
Campello, M., Graham, J. R & Harvey, C. R. (2010). The real effects of financial constraints: Evidence from a financial crisis. Journal of Finan-cial Economics. Vol. 97, No. 3, pp. 470-487
Cardone-Riportella, C. & Cazorla-Papis, L. (2001). The internationalization process of Spanish banks: a tale of two times. International Journal of Bank Marketing, Vol. 19, No. 2, pp. 53-68
154
Carley, K. (1993). Coding Choices for Textual analysis: A Comparison of Content Analysis and Map analysis. Sociological Methodology. Vol. 23, pp. 75-126
Carlson, S. (1966). International Business Research. Studie Oeconomiae Negotiorum, Vol. 1
Carlson, S. (1974). International Transmission of Information and the Busi-ness Firm. Annals of the American Academy of Political and Social Sci-ence. Vol. 412, pp. 55-63
Carlson, S. (1975). How foreign is foreign trade? A problem in international business research. Studie Oeconomiae Negotiorum, Vol. 11
Cavusgil, S. T. (1982). Some Observations on the Relevance of Critical Var-iables for Internationalization Stages. In Czinkota, M. R. & Tesar, G. (Eds.). Export management: An international context. New York: Praeger Publications, pp. 124-141
Chen, H. & Hu, M. (2002). An analysis of determinants of entry mode and its impact on performance. International Business Review. Vol. 11, No. 2, pp. 193-210
Chetty, S. & Blankenburg Holm, D. (2000). Internationalisation of small to medium-sized manufacturing firms: a network approach. International Business Review. Vol. 9, No. 1, pp. 77-93
Chetty, S. & Campbell-Hunt, C. (2004). A Strategic Approach to Interna-tionalization: A Traditional Versus a ”Born Global” Approach. Journal of International marketing. Vol. 12, No. 1, pp. 57-81
Claessens, S., Dombusch, R. & Chul Park, Y. (2001). Why Crises Spread and How This Can Be Stopped (pp. 19-42). In Claessens, S. & Forbes, K. J. (eds.). International Financial Contagion. Norwell: Kluwer Academic Publishers
Coviello, N. E. & Munro, H. J. (1995). Growing the entrepreneurial firm: networking for international market development. European Journal of Marketing. Vol. 29, No. 7, pp. 49-61
Coviello, N. E. & Munro, H. J. (1997). Network Relationships and the Inter-nationalisation Process of Small Software Firms. International Business Review. Vol. 6, No. 2, pp. 361-386
Cyert, R. M. & March, J. G. (1963). A Behavioral Theory of the Firm. Eng-lewood Cliffs. New Jersey: Prentice-Hall
Davidson, W. H. (1993) Market similarity and market selection: Implica-tions of international marketing strategy. Journal of Business Research. Vol. 11, pp. 439-456
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Delios, A. & Beamish, P. W. (2001). Survival and profitability: The roles of experience and intangible assets in foreign subsidiary performance. Acad-emy of Management Journal. Vol. 44, No. 5, pp. 1028-1038
Delios, A., Beamish, P. W. & Zhao, X. (2009). The evolution of Japanese investment in China: from toys to textiles to business process outsourcing. Asia Pacific Business Review. Vol. 15, No. 3, pp. 323-345
Denis, J.-E. & Depelteau, D. (1985). Market Knowledge, Diversification and Export Expansion. Journal of International Business Studies. Vol. 16, No. 3, pp. 77-89
Dunning, J. H. (1971). The multinational enterprise. New York: Praeger
Dunning, J. H. (1980). Toward an eclectic theory of international produc-tion: Some empirical tests. Journal of International Business Studies. Vol. 11, pp. 9-31
Dunning, J. H. (1981). International Production and the Multinational En-terprise. London: Allen and Unwin
Dunning, J. H. (1988). The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions. Journal of International Business Studies. Vol. XIX, No. 1, Spring
Dye, R. A. (1985). Disclosure of Nonproprietary Information. Journal of Accounting Research. Vol. 23, No. 1, pp. 123-145
E24 (2008). Baltikum guldgruva för Swedbank. E24, 14 February
Eisenhardt, K. M. (1989). Building Theories from Case Study Research. Academy of Management Review. Vol. 14, No. 4, pp. 532-550
Eisenhardt, K. M. & Graebner, M. E. (2007). Theory building from cases: opportunities and challenges. Academy of Management Journal. Vol. 50, No. 1, pp. 25-32
Enderwick, P. (1989). Some economics of service-sector multinational en-terprise, in Enderwick (Ed.), Multinational Service Firms. London: Routledge
Engwall, L. (1992). Barriers in International Banking Networks. In Forsgren, M. & Johanson, J. (eds.), Managing Networks in International Business. New York: Gordon & Breach, pp. 167-177
Engwall, L. (1994). The Invisible Hand Shaking the Visible Hand: Bank Organization in a Deregulated Environment. Uppsala Universitet, Företagsekonomiska Institutionen
Engwall, L. (1995a). Bankkris och bankorganisation (pp. 131-206). In Bank-erna under krisen. Fyra rapporter till Bankkriskommittén. Stockholm: Fritzes
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Carley, K. (1993). Coding Choices for Textual analysis: A Comparison of Content Analysis and Map analysis. Sociological Methodology. Vol. 23, pp. 75-126
Carlson, S. (1966). International Business Research. Studie Oeconomiae Negotiorum, Vol. 1
Carlson, S. (1974). International Transmission of Information and the Busi-ness Firm. Annals of the American Academy of Political and Social Sci-ence. Vol. 412, pp. 55-63
Carlson, S. (1975). How foreign is foreign trade? A problem in international business research. Studie Oeconomiae Negotiorum, Vol. 11
Cavusgil, S. T. (1982). Some Observations on the Relevance of Critical Var-iables for Internationalization Stages. In Czinkota, M. R. & Tesar, G. (Eds.). Export management: An international context. New York: Praeger Publications, pp. 124-141
Chen, H. & Hu, M. (2002). An analysis of determinants of entry mode and its impact on performance. International Business Review. Vol. 11, No. 2, pp. 193-210
Chetty, S. & Blankenburg Holm, D. (2000). Internationalisation of small to medium-sized manufacturing firms: a network approach. International Business Review. Vol. 9, No. 1, pp. 77-93
Chetty, S. & Campbell-Hunt, C. (2004). A Strategic Approach to Interna-tionalization: A Traditional Versus a ”Born Global” Approach. Journal of International marketing. Vol. 12, No. 1, pp. 57-81
Claessens, S., Dombusch, R. & Chul Park, Y. (2001). Why Crises Spread and How This Can Be Stopped (pp. 19-42). In Claessens, S. & Forbes, K. J. (eds.). International Financial Contagion. Norwell: Kluwer Academic Publishers
Coviello, N. E. & Munro, H. J. (1995). Growing the entrepreneurial firm: networking for international market development. European Journal of Marketing. Vol. 29, No. 7, pp. 49-61
Coviello, N. E. & Munro, H. J. (1997). Network Relationships and the Inter-nationalisation Process of Small Software Firms. International Business Review. Vol. 6, No. 2, pp. 361-386
Cyert, R. M. & March, J. G. (1963). A Behavioral Theory of the Firm. Eng-lewood Cliffs. New Jersey: Prentice-Hall
Davidson, W. H. (1993) Market similarity and market selection: Implica-tions of international marketing strategy. Journal of Business Research. Vol. 11, pp. 439-456
155
Delios, A. & Beamish, P. W. (2001). Survival and profitability: The roles of experience and intangible assets in foreign subsidiary performance. Acad-emy of Management Journal. Vol. 44, No. 5, pp. 1028-1038
Delios, A., Beamish, P. W. & Zhao, X. (2009). The evolution of Japanese investment in China: from toys to textiles to business process outsourcing. Asia Pacific Business Review. Vol. 15, No. 3, pp. 323-345
Denis, J.-E. & Depelteau, D. (1985). Market Knowledge, Diversification and Export Expansion. Journal of International Business Studies. Vol. 16, No. 3, pp. 77-89
Dunning, J. H. (1971). The multinational enterprise. New York: Praeger
Dunning, J. H. (1980). Toward an eclectic theory of international produc-tion: Some empirical tests. Journal of International Business Studies. Vol. 11, pp. 9-31
Dunning, J. H. (1981). International Production and the Multinational En-terprise. London: Allen and Unwin
Dunning, J. H. (1988). The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions. Journal of International Business Studies. Vol. XIX, No. 1, Spring
Dye, R. A. (1985). Disclosure of Nonproprietary Information. Journal of Accounting Research. Vol. 23, No. 1, pp. 123-145
E24 (2008). Baltikum guldgruva för Swedbank. E24, 14 February
Eisenhardt, K. M. (1989). Building Theories from Case Study Research. Academy of Management Review. Vol. 14, No. 4, pp. 532-550
Eisenhardt, K. M. & Graebner, M. E. (2007). Theory building from cases: opportunities and challenges. Academy of Management Journal. Vol. 50, No. 1, pp. 25-32
Enderwick, P. (1989). Some economics of service-sector multinational en-terprise, in Enderwick (Ed.), Multinational Service Firms. London: Routledge
Engwall, L. (1992). Barriers in International Banking Networks. In Forsgren, M. & Johanson, J. (eds.), Managing Networks in International Business. New York: Gordon & Breach, pp. 167-177
Engwall, L. (1994). The Invisible Hand Shaking the Visible Hand: Bank Organization in a Deregulated Environment. Uppsala Universitet, Företagsekonomiska Institutionen
Engwall, L. (1995a). Bankkris och bankorganisation (pp. 131-206). In Bank-erna under krisen. Fyra rapporter till Bankkriskommittén. Stockholm: Fritzes
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Engwall, L. (1997). The Swedish Banking Crisis: The Invisible Hand Shak-ing the Visible. Uppsala Universitet, Företagsekonomiska Institutionen
Engwall, L. & Johanson, J. (1990). Banks in Industrial Networks. Scandina-vian Journal of Management. Vol. 6, No. 3, pp. 231-244
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Forsgren, M. (1989). Managing the Internationalization Process – The Swe-dish Case. London: Routledge
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Furusten, K. (2009). Det förändrade kontraktet. Banker och företag-skonkurser under 1990-talets finanskris. Uppsala: Universitetstryckeriet
Föreningsbanken (1994). Annual Report 1994 Föreningsbanken. Stockholm: Arne Löfgren Offset
Gabrielsson, M. & Kirpalani, M. V. H. (2004). Born globals: how to reach new business space rapidly. International Business Review. Vol. 13, No. 5, pp. 555-571
Gankema, H. G. J., Snuif, H. R. & Zwart, P. S. (2000). The Internationaliza-tion Process of Small and Medium-sized Enterprises: An Evaluation of Stage Theory. Journal of Small Business Management. Vol. 38, No. 4, pp. 15-47
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Ghauri, P. N. & Grønhaug, K. (2005). Research methods in business studies: A practical guide. Harlow: Prentice Hall
Ghauri, P. N. & Firth, R. (2009). The formalization of case study research in international business. Der Markt – Journal für Marketing. Vol. 18, No. 1-2, pp. 29-40
Gibbert, M., Ruigrok, W. & Wicki, B. (2008). What passes as a rigorous case study? Strategic Management Journal. Vol. 29, pp. 1465-1474
Gidhagen, M. & Thunman, C.-G. (1998). Improve Banking Relationships with Small Companies. Journal of Professional Services Marketing. Vol. 18, No. 1, pp. 65-75
Glaser, B. G. & Strauss, A. L. (1967). The Discovery of Grounded Theory: Strategies for Qualitative Research. New York: Aldine De Gruyter
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Hadjikhani, A. & Johanson, J. (1996). Facing Market Turbulence: Three Swedish Multinationals. Journal of International Marketing. Vol. 4, No. 4, pp. 53-73
Hadjikhani, A. & Johanson, M. (1999). Expectation as the Driving Force for Entry and Exit in the Turbulent Russian Market. Journal of East-West Business. Vol. 5, No. 1-2, pp. 99-122
Hadjikhani, A. & Johanson, M. (2001). Expectation – The Missing Link in the Internationalization Process Model (pp. 146-168). In Håkansson, H. and Johanson, J. (eds.). Business Network Learning. Amsterdam: Elsevier Science Ltd
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Hennart, J-F. & Park, Y-R. (1993). Greenfield vs. Acquisition: The strategy of Japanese Investors in the United States. Management Science. Vol. 39, No. 9, pp. 1054-1070
Hoffman, A. (2010). An overinvestment cycle in Central and Eastern Eu-rope? Metroeconomica. Vol. 61, No. 4, pp. 710-734
Hoffman, A. & Schnabl, G. (2011). A Vicious Cycle of Manias, Crises and Asymmetric Policy Responses – An Overinvestment View. The World Economy. Vol. 34, No. 3, pp. 382-403
Hörnell, E., Vahlne, J-E. & Wiedersheim-Paul, F. (1972). Export och ut-landsetableringar [Export and foreign establishments]. Uppsala: Almqvist & Wicksell
Houman Andersen, P. & Kragh, H. (2011). Beyond the inductive myth: new approaches to the role of existing theory in case research (pp. 146-167). In Piekkari, R. & Welch, C. (Ed.). Rethinking the Case Study in Internation-al Business and Management Research. Cheltenham: Edward Elgar
Hunt, S. D. (1991). Modern Marketing Theory: Critical Issues in the Philos-ophy of Marketing Science. Cincinnati, Ohio: South-Western Pub
Johanson, M. (2001). Searching the Known, Discovering the Unknown: The Russian Transition from Plan to Market as Network Change Processes. Uppsala University: Department of Business Studies
Johanson, M. & Johanson, J. (2006). Turbulence, Discovery and Foreign Market Entry: A Longitudinal Study of an Entry into the Russian market. Management International Review. Vol. 46, No. 2, pp. 179-205
Johanson, J. & Mattsson, L.-G. (1988). Internationalisation in Industrial Systems – A Network Approach, in Hood, N. & Vahlne, J.-E. (eds.), Strategies in Global Competition. New York: Global Helm, pp. 287-314
Johanson, J. & Vahlne, J.-E. (1977). The Internationalization Process of the Firm - A Model of Knowledge Development and Increasing Foreign Mar-ket Commitments. Journal of International Business Studies. Vol. 8, No. 1, pp. 23-32
Johanson, J. & Vahlne, J.-E. (1990). The Mechanism of Internationalisation. International Marketing Review. Vol. 7, No. 4, pp. 11-24
Johanson, J. & Vahlne, J.-E. (2009). The Uppsala internationalization pro-cess model revisited: From liability of foreignness to liability of outsid-ership. Journal of International Business Studies. Vol. 40, No. 9, pp. 1411-1431
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Malhotra, N. & Hinings, B. (2010). An Organizational Model for Under-standing Internationalization Process. Journal of International Business Studies. Vol. 41, Vol. 2, pp. 330-349
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Johnson, G. (1988). Rethinking incrementalism. Strategic Management Journal. Vol. 9, No. 1, pp. 75-91
Kathuria, R., Joshi, M. P. & Dellande, S. (2008). International growth strate-gies of service and manufacturing firms: The case of banking and chemi-cal industries. International Journal of Operations & Production Man-agement. Vol. 28, No. 10, pp. 968-990
Katsikeas, C. S. & Morgan, R. E. (1994). Differences in Perceptions of Ex-porting Problems Based on Firm Size and Export Market Experience. Eu-ropean Journal of Marketing. Vol. 28, No. 5, pp. 17-35
Keeble, D., Lawson, C., Lawton Smith, H., Moore, B. & Wilkinson, F. (1998). Internationalisation processes, networking and local embed-dedness in technology-intensive small firms. Small Business Economics. Vol. 11, pp. 327-342
Kho, B. C. & Stulz, R. M. (2000). Banks, the IMF, and the Asian crisis. Pa-cific-Basin Finance Journal. Vol. 8, pp. 177-216
Knight, G. A. & Cavusgil, S. T. (1996). The Born Global Firm: A Challenge to Traditional Internationalization Theory. In Cavusgil, S. T. & Madsen, T. (Eds.). Advances in International Marketing. Vol. 8. JAI Press: Green-wich CT. pp. 11-26
Kogut, B. & Singh, H. (1988). The Effect of National Culture on the Choice of Entry Mode. Journal of International Business Studies. Vol. 19, No. 3, pp. 411-432
Kroszner, R. S., Laeven, L. & Klingebiel, D. (2007). Banking crises, finan-cial dependence, and growth. Journal of Financial Economics. Vol. 84, No. 1, pp. 187-228
Laeven, L & Levine, R. (2009). Bank governance, regulation and risk taking. Journal of Financial Economics. Vol. 93, pp. 259-275
Lam, A. (2000). Tacit Knowledge, Organizational Learning and Societal Institutions: An Integrated Framework. Organization Studies. Vol. 21, No. 3, pp. 487-513
Lamb, P. W. & Liesch, P. W. (2002). The Internationalization Process of the Smaller Firm: Re-framing the Relationship between Market Commitment, Knowledge and Involvement. Management International Review. Vol. 42, No. 1, pp. 7-26
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Li, L., Li, D. & Dalgic, T. (2004). Internationalization Process of Small and Medium-sized Enterprises: Toward a Hybrid Model of Experiential Learning and Planning. Management International Review. Vol. 44, No. 1, pp. 93-116
Lin, K.-H. & Chaney, I. (2007). The Influence of Domestic Interfirm Net-works on the Internationalization Process of Taiwanese SMEs. Asia Pacif-ic Business Review. Vol. 13, No. 4, pp. 565-583
Lindblom, C. E. (1959). The science of muddling through. Public Admin-istration Review. Vol. 19, No. 1, pp. 79-88
Lindstrand, A., Sharma, D. D. & Eriksson, K. (2012). The perceived useful-ness of SMEs previous customer networks in the internationalization pro-cess of firms. International Journal of Entrepreneurship and Small Busi-ness. Vol. 15, No. 3, pp. 285-307
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Luostarinen, R. (1979). The Internationalization of the Firm, Acta Academic Oeconomica Helsingiensis. Helsinki: Helsinki School of Economics
Majkgård, A. & Sharma, D. D. (1998). Client-following and market-seeking in the internationalization of service firms. Journal of Business-to-Business Marketing. Vol. 4, No. 3, pp. 1-41
Malhotra, N. & Hinings, B. (2010). An Organizational Model for Under-standing Internationalization Process. Journal of International Business Studies. Vol. 41, Vol. 2, pp. 330-349
Maaninen-Olsson, E., Wismén, M. & Carlsson, S. A. (2008). Permanent and temporary work practices: knowledge integration and the meaning of boundary activities. Knowledge Management Research & Practice. Vol. 6, pp. 260-273
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McNaughton, R. B. (2003). The number of export markets that a firm serves: process models versus the born-global phenomenon. Journal of Interna-tional Entrepreneurship. Vol. 1, No. 3, pp. 297-311
Meredith, J. (1998). Building operations management theory through case and field research. Journal of Operations Management. Vol. 16, No. 4, pp. 441-454
Miles, H. & Huberman, M. (1994). Qualitative Data Analysis: A Source-book. Beverly Hills: Sage Publications
Miller, D. & Friesen, P. H. (1982). The Longitudinal Analysis of Organiza-tions: A Methodological Perspective. Management Science. Vol. 28, No. 9, pp. 1013-1034
Millington, A. & Bayliss, B. T. (1990). The Process of Internationalization: UK Companies in the EC. Management International Review. Vol. 30, pp. 151-161
Monge, P. R. (1995). Theoretical and analytical issues in studying organiza-tional processes (pp. 267-299). In Huber, G. P. and Van de Ven, A. H. (eds). Longitudinal Field Research Methods: Studying Processes of Or-ganizational Change. Thousand Oaks, CA Page
Nordström, K. A. (1991). The Internationalization Process of the Firm: Searching for New Patterns and Explanations. Stockholm: Stockholm School of Business
Oliver, R. L. (1980). A Cognitive Model of the Antecedents and Conse-quences of Satisfaction Decisions. Journal of Marketing Research. Vol. 17, No. 4, pp. 460-469
Oviatt, B. M. & McDougall, P. (1994). Toward a theory of international new ventures. Journal of International Business Studies. Vol. 25, No. 1, pp. 45-64
Oviatt, B. M. & McDougall, P. (1995). Global start-ups: Entrepreneurs on a worldwide stage. Acadamy of Management Executive. Vol. 9, No. 2, pp. 30-43
Oviatt, B. M. & McDougall, P. (2005). The internationalization of entrepre-neurship. Journal of International Business Studies. Vo. 36, No. 1, pp. 2-8
163
Owusu, R. A., Sandhu, M. & Kock, S. (2007). Project business: a distinct mode of internationalization. International Marketing Review. Vol. 24, Iss. 6, pp. 695-714
Pangarkar, N. (2007). Survival during a Crisis: Alliances by Singapore Firms. British Journal of Management. Vol. 18, No. 3, pp. 209-223
Pedersen, T. (2000). The Internationalisation Process of Danish Firms - Gradual Learning or Discrete. Rational Choices? Journal of Transnational Management. Vol. 5, pp. 75-89
Pedersen, T. & Petersen, B. (1998). Explaining Gradually Increasing Re-source Commitment to a Foreign Market. International Business Review. Vol. 7, No. 3, pp. 483-501
Penrose, E. (1959). The Theory of the Growth of the Firm. New York: Wiley
Petrou, A. P. (2009). Foreign Market Entry Strategies in Retail Banking: Choosing an Entry Mode in a Landscape of Constraints. Long Range Planning. Vol. 42, No. 5/6, pp. 614-632
Pettigrew, A. M., Woodman, R. W. & Cameron, K. S. (2001). Studying or-ganizational change and development: challenges for future research. Academy of Management Journal. Vol. 44, No. 4, pp. 697-713
Piekkari, R. & Welch, C. (2011). Pluralism in international business and international management research: making the case (pp. 3-23). In Piekka-ri, R. & Welch, C. (Ed.). Rethinking the Case Study in International Busi-ness and Management Research. Cheltenham: Edward Elgar
Ping, R. A. (1997). Voice in business-to-business relationships: Cost-of-exit and demographic antecedents. Journal of Retailing. Vol. 69, No. 3, pp. 261-281
Pitelis, C. (1991). Market and Non-Market Hierarchies: Theory of Institu-tional Failure. Oxford: Basil Blackwell
Porter, M. E. (1991). Towards a Dynamic Theory of Strategy. Strategic Management Journal. Vol. 12, pp. 95-117
Quinn, J. B. (1980). Strategies for change. Homewood, IL: Irwin
Reid, S. D. (1983). Firm internationalization transaction costs and strategic choice. International Marketing Review. Vol. 1, No. 2, pp. 45-55
Rugman, A. (1981). International Diversification and the Multinational En-terprise. Lexington MA: D.C. Heath
Sakarya, S., Eckman, M. & Hyllegard, K. H. (2007). Market selection for international expansion: Assessing opportunities in emerging markets. In-ternational Marketing Review. Vol. 24, No. 2, pp. 208-238
162
Marquardt, R. (1994). Banketableringar i främmande länder: [Bank estab-lishments in foreign countries]. Uppsala: Företagsekonomiska institu-tionen, Univ. [distributor]
Maxwell, J. A. (1997). Designing a qualitative study (pp. 69-100). In Bick-man, L. & Rog, D. J. (Eds.), Handbook of Applied Social Research Meth-ods. London: Sage Publications
McNaughton, R. B. (2003). The number of export markets that a firm serves: process models versus the born-global phenomenon. Journal of Interna-tional Entrepreneurship. Vol. 1, No. 3, pp. 297-311
Meredith, J. (1998). Building operations management theory through case and field research. Journal of Operations Management. Vol. 16, No. 4, pp. 441-454
Miles, H. & Huberman, M. (1994). Qualitative Data Analysis: A Source-book. Beverly Hills: Sage Publications
Miller, D. & Friesen, P. H. (1982). The Longitudinal Analysis of Organiza-tions: A Methodological Perspective. Management Science. Vol. 28, No. 9, pp. 1013-1034
Millington, A. & Bayliss, B. T. (1990). The Process of Internationalization: UK Companies in the EC. Management International Review. Vol. 30, pp. 151-161
Monge, P. R. (1995). Theoretical and analytical issues in studying organiza-tional processes (pp. 267-299). In Huber, G. P. and Van de Ven, A. H. (eds). Longitudinal Field Research Methods: Studying Processes of Or-ganizational Change. Thousand Oaks, CA Page
Nordström, K. A. (1991). The Internationalization Process of the Firm: Searching for New Patterns and Explanations. Stockholm: Stockholm School of Business
Oliver, R. L. (1980). A Cognitive Model of the Antecedents and Conse-quences of Satisfaction Decisions. Journal of Marketing Research. Vol. 17, No. 4, pp. 460-469
Oviatt, B. M. & McDougall, P. (1994). Toward a theory of international new ventures. Journal of International Business Studies. Vol. 25, No. 1, pp. 45-64
Oviatt, B. M. & McDougall, P. (1995). Global start-ups: Entrepreneurs on a worldwide stage. Acadamy of Management Executive. Vol. 9, No. 2, pp. 30-43
Oviatt, B. M. & McDougall, P. (2005). The internationalization of entrepre-neurship. Journal of International Business Studies. Vo. 36, No. 1, pp. 2-8
163
Owusu, R. A., Sandhu, M. & Kock, S. (2007). Project business: a distinct mode of internationalization. International Marketing Review. Vol. 24, Iss. 6, pp. 695-714
Pangarkar, N. (2007). Survival during a Crisis: Alliances by Singapore Firms. British Journal of Management. Vol. 18, No. 3, pp. 209-223
Pedersen, T. (2000). The Internationalisation Process of Danish Firms - Gradual Learning or Discrete. Rational Choices? Journal of Transnational Management. Vol. 5, pp. 75-89
Pedersen, T. & Petersen, B. (1998). Explaining Gradually Increasing Re-source Commitment to a Foreign Market. International Business Review. Vol. 7, No. 3, pp. 483-501
Penrose, E. (1959). The Theory of the Growth of the Firm. New York: Wiley
Petrou, A. P. (2009). Foreign Market Entry Strategies in Retail Banking: Choosing an Entry Mode in a Landscape of Constraints. Long Range Planning. Vol. 42, No. 5/6, pp. 614-632
Pettigrew, A. M., Woodman, R. W. & Cameron, K. S. (2001). Studying or-ganizational change and development: challenges for future research. Academy of Management Journal. Vol. 44, No. 4, pp. 697-713
Piekkari, R. & Welch, C. (2011). Pluralism in international business and international management research: making the case (pp. 3-23). In Piekka-ri, R. & Welch, C. (Ed.). Rethinking the Case Study in International Busi-ness and Management Research. Cheltenham: Edward Elgar
Ping, R. A. (1997). Voice in business-to-business relationships: Cost-of-exit and demographic antecedents. Journal of Retailing. Vol. 69, No. 3, pp. 261-281
Pitelis, C. (1991). Market and Non-Market Hierarchies: Theory of Institu-tional Failure. Oxford: Basil Blackwell
Porter, M. E. (1991). Towards a Dynamic Theory of Strategy. Strategic Management Journal. Vol. 12, pp. 95-117
Quinn, J. B. (1980). Strategies for change. Homewood, IL: Irwin
Reid, S. D. (1983). Firm internationalization transaction costs and strategic choice. International Marketing Review. Vol. 1, No. 2, pp. 45-55
Rugman, A. (1981). International Diversification and the Multinational En-terprise. Lexington MA: D.C. Heath
Sakarya, S., Eckman, M. & Hyllegard, K. H. (2007). Market selection for international expansion: Assessing opportunities in emerging markets. In-ternational Marketing Review. Vol. 24, No. 2, pp. 208-238
164
Sanchez-Peinado, E. (2003). Internationalisation process of Spanish banks: strategic orientation after the mergers. European Business Review. Vol. 15, No. 4, pp. 245-261
Sharma, D. & Blomstermo, A. (2003). The internationalization process of Born globals: a networkview. International Business Review. 12, pp. 739-753
Sharma, D. & Johanson, J. (1987). Technical Consultancy in Internationali-zation. International Marketing Review. Vol. 4, pp. 20-29
Sinkovics, R. R., Penz, E. & Ghauri, P. N. (2005). Analysing textual data in international marketing research. Qualiative Market Research: An Inter-national Journal. Vol. 8, No. 1, pp. 9-38
Smith, D. (2005). Business (not) as usual: Crisis management, service re-covery and the vulnerability of organizations. Journal of Services Market-ing. Vol. 19, No. 5, pp. 309-320
Sparbanken (1990). Årsredovisning [Annual Report] 90 – Sparbankernas Bank Koncernen. Stockholm
Steen, J. T. & Liesch, P. W. (2007). A Note on Penrosean Growth, Resource Bundles and the Uppsala Model of Internationalisation. Management In-ternational Review. Vol. 47, No. 2, pp. 193-206
Stopford, J. M. & Wells, L. T. (1972). Managing the Multinational Enter-prise – Organization of the Firm and Ownership of the Subsidiaries (The Harvard Multinational Enterprise Series). New York: Basic Books
Sullivan, D. & Bauerschmidt, A. (1990). Incremental Internationalization: A Test of Johanson and Vahlne’s Thesis. Management International Review. Vol. 30, pp. 19-30
Swedish Bankers’ Association (2013). Bankerna i Sverige. Retrieved 22 February 2013 from http://www.swedishbankers.se/web/bf.nsf/$all/9F680ECBC3D677F1C1257618004541CE?open
Svenska Dagbladet (2009). Baltikum skapar förlust för bankerna. Svenska Dagbladet, 2 June
Swedbank (1994). Swedbank Annual Report 1994.
Swedbank (2010). Årsredovisning [Annual Report] 2010.
Szulanski, G. (1996). Exploring Internal Stickiness: Impediments to the Transfer of Best Practice Within the Firm. Strategic Management Journal. Vol. 17, Special issue, pp. 27-43
165
Sørensen, H. F., Sabroe, S. & Olsen, J. (1996). A Framework for Evaluation of Secondary Data Sources for Epidemiological Research. International Journal of Epidemiology. Vol. 25, No. 2, pp. 435-442
Tan, H. & Nojonen, M. (2011). Doing case studies in China: two perspec-tives (pp. 474-498). In Piekkari, R. & Welch, C. (Ed.). Rethinking the Case Study in International Business and Management Research. Chel-tenham: Edward Elgar
Thunman, C.-G. (1992). Corporate Banking: Services and Relationships. International Journal of Bank Marketing. Vol. 10, No. 2, pp. 10-16
Thunman, C.-G. (1999). Does Customer Size Influence Interfirm Relation-ships in Services? The Case of Swedish Banks and Corporate Customers. Journal of Euromarketing. Vol. 7, No. 4, pp. 87-105
Thunman, C.-G. & Eriksson, I. (1990). Bankmarknader i förvandling. Lund: Studentlitteratur
Tschoegl, A. E. (1982). Foreign Bank Entry into Japan and California, in Rugman, A. M. (Ed.), New Theories of the Multinational Enterprise. Lon-don: Croom Helm
Tschoegl, A. E. (2002). FDI and Internationalization: Evidence from U.S. Subsidiaries of Foreign Banks. Journal of International Business Studies. Vol. 33, No. 4, pp. 805-815
Turnbull, P. W. (1982). International Aspects of Bank Marketing. European Journal of Marketing. Vol. 16, No. 3, pp. 102-105
Turnbull, P. W. (1987). A challenge to the stages theory of the international-isation process, in Rosson, P. and Reid, S. (eds.), Managing Export Entry and Expansion. New York: Praeger
ul-Haq, R. & Howcroft, B. (2007). An examination of strategic alliances and the origins of international banking in Europe. International Journal of Service Industry Management. Vol. 18, No. 2, pp. 120-139
Uusitalo, O. (2004). Competitive reactions to market entry: The case of the Finnish grocery retailing industry. British Food Journal. Vol. 106, No. 9 pp. 663-672
Van Maanen, J. (1979). Reclaiming qualitative methods for organizational research: A preface. Administrative Science Quarterly. Vol. 24, No. 4, pp. 520-526
Voss, C., Tsikriktsis, N. & Frohlich, M. (2002). Case research in operations management. International Journal of Operations & Production Man-agement. Vol. 22, No. 2, pp. 195-219
Welch, L. S. & Luostarinen, R. (1988). Internationalization: Evolution of a Concept. Journal of General Management. Vol. 34, pp. 34-57
164
Sanchez-Peinado, E. (2003). Internationalisation process of Spanish banks: strategic orientation after the mergers. European Business Review. Vol. 15, No. 4, pp. 245-261
Sharma, D. & Blomstermo, A. (2003). The internationalization process of Born globals: a networkview. International Business Review. 12, pp. 739-753
Sharma, D. & Johanson, J. (1987). Technical Consultancy in Internationali-zation. International Marketing Review. Vol. 4, pp. 20-29
Sinkovics, R. R., Penz, E. & Ghauri, P. N. (2005). Analysing textual data in international marketing research. Qualiative Market Research: An Inter-national Journal. Vol. 8, No. 1, pp. 9-38
Smith, D. (2005). Business (not) as usual: Crisis management, service re-covery and the vulnerability of organizations. Journal of Services Market-ing. Vol. 19, No. 5, pp. 309-320
Sparbanken (1990). Årsredovisning [Annual Report] 90 – Sparbankernas Bank Koncernen. Stockholm
Steen, J. T. & Liesch, P. W. (2007). A Note on Penrosean Growth, Resource Bundles and the Uppsala Model of Internationalisation. Management In-ternational Review. Vol. 47, No. 2, pp. 193-206
Stopford, J. M. & Wells, L. T. (1972). Managing the Multinational Enter-prise – Organization of the Firm and Ownership of the Subsidiaries (The Harvard Multinational Enterprise Series). New York: Basic Books
Sullivan, D. & Bauerschmidt, A. (1990). Incremental Internationalization: A Test of Johanson and Vahlne’s Thesis. Management International Review. Vol. 30, pp. 19-30
Swedish Bankers’ Association (2013). Bankerna i Sverige. Retrieved 22 February 2013 from http://www.swedishbankers.se/web/bf.nsf/$all/9F680ECBC3D677F1C1257618004541CE?open
Svenska Dagbladet (2009). Baltikum skapar förlust för bankerna. Svenska Dagbladet, 2 June
Swedbank (1994). Swedbank Annual Report 1994.
Swedbank (2010). Årsredovisning [Annual Report] 2010.
Szulanski, G. (1996). Exploring Internal Stickiness: Impediments to the Transfer of Best Practice Within the Firm. Strategic Management Journal. Vol. 17, Special issue, pp. 27-43
165
Sørensen, H. F., Sabroe, S. & Olsen, J. (1996). A Framework for Evaluation of Secondary Data Sources for Epidemiological Research. International Journal of Epidemiology. Vol. 25, No. 2, pp. 435-442
Tan, H. & Nojonen, M. (2011). Doing case studies in China: two perspec-tives (pp. 474-498). In Piekkari, R. & Welch, C. (Ed.). Rethinking the Case Study in International Business and Management Research. Chel-tenham: Edward Elgar
Thunman, C.-G. (1992). Corporate Banking: Services and Relationships. International Journal of Bank Marketing. Vol. 10, No. 2, pp. 10-16
Thunman, C.-G. (1999). Does Customer Size Influence Interfirm Relation-ships in Services? The Case of Swedish Banks and Corporate Customers. Journal of Euromarketing. Vol. 7, No. 4, pp. 87-105
Thunman, C.-G. & Eriksson, I. (1990). Bankmarknader i förvandling. Lund: Studentlitteratur
Tschoegl, A. E. (1982). Foreign Bank Entry into Japan and California, in Rugman, A. M. (Ed.), New Theories of the Multinational Enterprise. Lon-don: Croom Helm
Tschoegl, A. E. (2002). FDI and Internationalization: Evidence from U.S. Subsidiaries of Foreign Banks. Journal of International Business Studies. Vol. 33, No. 4, pp. 805-815
Turnbull, P. W. (1982). International Aspects of Bank Marketing. European Journal of Marketing. Vol. 16, No. 3, pp. 102-105
Turnbull, P. W. (1987). A challenge to the stages theory of the international-isation process, in Rosson, P. and Reid, S. (eds.), Managing Export Entry and Expansion. New York: Praeger
ul-Haq, R. & Howcroft, B. (2007). An examination of strategic alliances and the origins of international banking in Europe. International Journal of Service Industry Management. Vol. 18, No. 2, pp. 120-139
Uusitalo, O. (2004). Competitive reactions to market entry: The case of the Finnish grocery retailing industry. British Food Journal. Vol. 106, No. 9 pp. 663-672
Van Maanen, J. (1979). Reclaiming qualitative methods for organizational research: A preface. Administrative Science Quarterly. Vol. 24, No. 4, pp. 520-526
Voss, C., Tsikriktsis, N. & Frohlich, M. (2002). Case research in operations management. International Journal of Operations & Production Man-agement. Vol. 22, No. 2, pp. 195-219
Welch, L. S. & Luostarinen, R. (1988). Internationalization: Evolution of a Concept. Journal of General Management. Vol. 34, pp. 34-57
166
Welch, L. S. & Luostarinen, R. K. (1993). Inward-Outward Connections in Internationalization. Journal of International Marketing. Vol. 1, No. 1, pp. 44-56
Wiedersheim-Paul, F., Olson, H-C. & Welch, L. S. (1978). Pre-Export Ac-tivity: The First Step in Internationalization. Journal of International Business Studies. Vol. 9, No. 1, pp. 47-58
Yin, R. K. (1994; 1999; 2009). Case study research: design and methods. 2 & 4. ed. Thousand Oaks, CA: Sage
Zahra, S. A. (2005). A Theory of International New Ventures: A Decade of Research. Journal of International Business Studies. Vol. 36, No. 1, pp. 20-28
Zahra, S. A., Ireland, R. D. & Hitt, M. A. (2000). International Expansion by New Venture Firms: International Diversity, Mode of Market Entry, Technological Learning, and Performance. The Acadamy of Management Journal. Vol. 43, No. 5, pp. 925-950
Zhou, L., Wu, W-p. & Lou, X. (2007). Internationalization and the perfor-mance of born-global SMEs: the mediating role of social networks. Jour-nal of International Business Studies. Vol. 38, No. 4, pp. 673-690
167
Appendix 1
Full list of exclusions in the search of data in database Affärsdata: BNP OR Hemtex OR SCA or telia* OR tele* OR ericsson OR Motorola OR Eniro OR IBS OR Atlas Copco OR Gambro OR Nokia OR Electrolux OR skanska OR Astra* OR Axfood* OR halvårsrapport OR kvartalsrapport OR Sandvik OR Assa OR Scania OR NSG OR ORK OR rån* OR pharmacia OR AMF OR Volvo OR SSAB OR h&m OR SKF OR ORC OR Trelleborg OR Intentia OR Tietoenator OR Autoliv OR Securitas OR Boliden OR Gunnebo OR Oriflame OR Skandia OR SAS OR NCC OR STB OR NB OR ORK OR Stora Enso OR Outokumpu OR Rautaruuki OR Holmen OR Intrum OR Nobia OR Swedish Match OR Proffice OR Rottneros OR Storebrand OR inbrott* OR polis* OR Biacore OR jysk* OR ventes OR Alfa OR Höganäs OR Raysearch OR ABB OR Unibet OR Mekonomen* OR Lundin* OR Wave OR Lindex OR Elekta OR Billerud OR Lagercrantz OR Beving OR Poolia OR Scribona OR Carnegie OR Beijer OR Tivox OR kornet OR Peab OR detaljhandel OR ICA* OR Cardo OR Riktkurs* OR Målkursen OR Kö-prekommendation. Most of these exclusions are of on organizations not related to the banks Handelsbanken and Swedbank. Exclusions that are not non-related organiza-tions are (in my own translation): halvårsrapport (semi-annual report), kvartalsrapport (quarterly report), rån (robbery), inbrott (burglary), polis (police), detaljhandel (retail), riktkurs (price earnings ratio), målkursen (goal price earnings ratio), and köprekommendation (buy recommendation).
166
Welch, L. S. & Luostarinen, R. K. (1993). Inward-Outward Connections in Internationalization. Journal of International Marketing. Vol. 1, No. 1, pp. 44-56
Wiedersheim-Paul, F., Olson, H-C. & Welch, L. S. (1978). Pre-Export Ac-tivity: The First Step in Internationalization. Journal of International Business Studies. Vol. 9, No. 1, pp. 47-58
Yin, R. K. (1994; 1999; 2009). Case study research: design and methods. 2 & 4. ed. Thousand Oaks, CA: Sage
Zahra, S. A. (2005). A Theory of International New Ventures: A Decade of Research. Journal of International Business Studies. Vol. 36, No. 1, pp. 20-28
Zahra, S. A., Ireland, R. D. & Hitt, M. A. (2000). International Expansion by New Venture Firms: International Diversity, Mode of Market Entry, Technological Learning, and Performance. The Acadamy of Management Journal. Vol. 43, No. 5, pp. 925-950
Zhou, L., Wu, W-p. & Lou, X. (2007). Internationalization and the perfor-mance of born-global SMEs: the mediating role of social networks. Jour-nal of International Business Studies. Vol. 38, No. 4, pp. 673-690
167
Appendix 1
Full list of exclusions in the search of data in database Affärsdata: BNP OR Hemtex OR SCA or telia* OR tele* OR ericsson OR Motorola OR Eniro OR IBS OR Atlas Copco OR Gambro OR Nokia OR Electrolux OR skanska OR Astra* OR Axfood* OR halvårsrapport OR kvartalsrapport OR Sandvik OR Assa OR Scania OR NSG OR ORK OR rån* OR pharmacia OR AMF OR Volvo OR SSAB OR h&m OR SKF OR ORC OR Trelleborg OR Intentia OR Tietoenator OR Autoliv OR Securitas OR Boliden OR Gunnebo OR Oriflame OR Skandia OR SAS OR NCC OR STB OR NB OR ORK OR Stora Enso OR Outokumpu OR Rautaruuki OR Holmen OR Intrum OR Nobia OR Swedish Match OR Proffice OR Rottneros OR Storebrand OR inbrott* OR polis* OR Biacore OR jysk* OR ventes OR Alfa OR Höganäs OR Raysearch OR ABB OR Unibet OR Mekonomen* OR Lundin* OR Wave OR Lindex OR Elekta OR Billerud OR Lagercrantz OR Beving OR Poolia OR Scribona OR Carnegie OR Beijer OR Tivox OR kornet OR Peab OR detaljhandel OR ICA* OR Cardo OR Riktkurs* OR Målkursen OR Kö-prekommendation. Most of these exclusions are of on organizations not related to the banks Handelsbanken and Swedbank. Exclusions that are not non-related organiza-tions are (in my own translation): halvårsrapport (semi-annual report), kvartalsrapport (quarterly report), rån (robbery), inbrott (burglary), polis (police), detaljhandel (retail), riktkurs (price earnings ratio), målkursen (goal price earnings ratio), and köprekommendation (buy recommendation).
168
169
The Swedish Research School of Management and Information Technology (MIT) is one of 16 national research schools supported by the Swedish Government. MIT is jointly operated by the following institutions: Blekinge Institute of Technology, IT-University, Göteborg, Jönköping International Business School, Karlstad University, Linköping University, Linnaeus University, Växjö, Lund University, Mälardalen University College, Stockholm University, Umeå University, Örebro University and Uppsala University, host to the research school. At the Swedish Research School of Management and Information Technology (MIT), research is conducted, and doctoral education provided, in three fields: management information systems, business administration, and informatics.
Licentiate Theses 1. Johansson, Niklas E. (2004) Self-Service Recovery - Towards a
Framework for Studying Service Recovery in a Self-Service Technology Context from a Management and IT Perspective, Licentiate Thesis KUS 2004:3, Karlstad University.
2. Ekman, Peter (2004) Affärssystem & Affärsrelationer - En fallstudie av en leverantörs användning av affärssystem i interaktionen med sina kunder, Licentiate Thesis No.25, Mälardalens universitet.
3. Wrenne, Anders (2004). Tjänsteplattformar - vid utveckling av mobila tjänster inom telekommunikation, Licentiatavhandling, KUS 2004:4, Karlstads universitet, Centrum för tjänsteforskning.
4. Wismén, May (2004). Kunskapsprocesser inom hälso- och sjukvård - en studie av kunskapsintegrering mellan laboratorium och dess kunder, Licentiatavhandling, KUS 2004:10, Karlstads universitet.
The Swedish Research School of Management and Information Technology
MIT
168
169
The Swedish Research School of Management and Information Technology (MIT) is one of 16 national research schools supported by the Swedish Government. MIT is jointly operated by the following institutions: Blekinge Institute of Technology, IT-University, Göteborg, Jönköping International Business School, Karlstad University, Linköping University, Linnaeus University, Växjö, Lund University, Mälardalen University College, Stockholm University, Umeå University, Örebro University and Uppsala University, host to the research school. At the Swedish Research School of Management and Information Technology (MIT), research is conducted, and doctoral education provided, in three fields: management information systems, business administration, and informatics.
Licentiate Theses 1. Johansson, Niklas E. (2004) Self-Service Recovery - Towards a
Framework for Studying Service Recovery in a Self-Service Technology Context from a Management and IT Perspective, Licentiate Thesis KUS 2004:3, Karlstad University.
2. Ekman, Peter (2004) Affärssystem & Affärsrelationer - En fallstudie av en leverantörs användning av affärssystem i interaktionen med sina kunder, Licentiate Thesis No.25, Mälardalens universitet.
3. Wrenne, Anders (2004). Tjänsteplattformar - vid utveckling av mobila tjänster inom telekommunikation, Licentiatavhandling, KUS 2004:4, Karlstads universitet, Centrum för tjänsteforskning.
4. Wismén, May (2004). Kunskapsprocesser inom hälso- och sjukvård - en studie av kunskapsintegrering mellan laboratorium och dess kunder, Licentiatavhandling, KUS 2004:10, Karlstads universitet.
The Swedish Research School of Management and Information Technology
MIT
170
5. Stoltz, Charlotte (2004). Calling for Call Centres - A Study of Call Centre Locations in a Swedish Rural Region, Licentiate Thesis, No. 1084, IDA-EIS, Linköping University, Institute of Technology.
6. Abelli, Björn (2004). Theatre Production - A System Development Process, Licentiate thesis No. 30, Mälardalen University.
7. Maaninen-Olsson, Eva (2004). Det gränslösa projektet - En studie om förmedling och skapande av kunskap i tid och rum, Licentiatavhandling nr. 41, Företagsekonomiska institutionen, Uppsala Universitet,.
8. Sällberg, Henrik (2004). On the value of customer loyalty programs – a study of point programs and switching costs, Licentiate Thesis, No. 1116, IDA-EIS, Linköping University, Institute of Technology.
9. Stockhult, Helén (2005). Medarbetaransvar - ett sätt att visa värderingar: En konceptualisering av medarbetarnas ansvar och ansvarstagande i callcenter, Licentiatavhandling nr. 1, Örebro universitet, Institutionen för ekonomi, statistik och informatik.
10. Vascós Palacios, Fidel (2005). On the information exchange between physicians and social insurance officers in the sick leave process: An Activity Theoretical perspective, Licentiate Thesis, No. 1165, IDA-EIS, Linköping University, Institute of Technology.
11. Keller, Christina (2005). Virtual Learning Environments in higher education. A study of students’ acceptance of educational technology, Licentiate Thesis, No. 1167, IDA-EIS, Linköping University, Institute of Technology.
12. Ahlström, Petter (2005), Affärsstrategier för seniorbostadsmarknaden, Licentiatavhandling, No. 1172, IDA-EIS, Linköpings universitet, Tekniska Högskolan.
13. Dahlin, Peter (2005). Structural Change of Business Networks – Developing a Structuration Technique, Licentiate Thesis No. 49, Mälardalen University.
171
14. Granebring, Annika (2005). ERP Migration Structure – an Innovation Process Perspective, Licentiate Thesis No. 50, Mälardalen University.
15. Cöster, Mathias (2005). Beyond IT and Productivity – How Digitization Transformed the Graphic Industry, Licentiate Thesis, No. 1183, IDA-EIS, Linköping University, Institute of Technology.
16. Horzella, Åsa (2005). Beyond IT and Productivity – Effects of Digitized Information Flows in Grocery Distribution, Licentiate Thesis, No. 1184, IDA-EIS, Linköping University, Institute of Technology.
17. Kollberg, Maria (2005). Beyond IT and Productivity – Effects of Digitized Information Flows in the Logging Industry, Licentiate Thesis, No. 1185, IDA-EIS, Linköping University, Institute of Technology.
18. Hansson, Magnus (2005). From Dusk till Dawn – Three Essays on Organizational Closedowns, Licentiate Thesis, No. 3, Örebro University.
19. Verma, Sanjay (2005). Product’s Newness and Benefits to the Firm – A qualitative study from the perspective of firms developing and marketing computer software products, Licentiate thesis, No. 54, Mälardalen University.
20. Sundén, Susanne & Wicander, Gudrun (2005). Information and Communication Technology Applied for Developing Countries in a Rural Context – Towards a Framework for Analyzing Factors Influencing Sustainable Use, Licentiate thesis, KUS 2006:69, Karlstad University.
21. Käll, Andreas (2005). Översättningar av en managementmodell – En studie av införandet av Balanced Scorecard i ett landsting, Licentiatavhandling, No.1209, IDA-EIS, Linköpings universitet, Tekniska Högskolan.
22. Mihailescu, Daniela (2006). Implementation Methodology In Action: A study of an Enterprise Systems implementation
170
5. Stoltz, Charlotte (2004). Calling for Call Centres - A Study of Call Centre Locations in a Swedish Rural Region, Licentiate Thesis, No. 1084, IDA-EIS, Linköping University, Institute of Technology.
6. Abelli, Björn (2004). Theatre Production - A System Development Process, Licentiate thesis No. 30, Mälardalen University.
7. Maaninen-Olsson, Eva (2004). Det gränslösa projektet - En studie om förmedling och skapande av kunskap i tid och rum, Licentiatavhandling nr. 41, Företagsekonomiska institutionen, Uppsala Universitet,.
8. Sällberg, Henrik (2004). On the value of customer loyalty programs – a study of point programs and switching costs, Licentiate Thesis, No. 1116, IDA-EIS, Linköping University, Institute of Technology.
9. Stockhult, Helén (2005). Medarbetaransvar - ett sätt att visa värderingar: En konceptualisering av medarbetarnas ansvar och ansvarstagande i callcenter, Licentiatavhandling nr. 1, Örebro universitet, Institutionen för ekonomi, statistik och informatik.
10. Vascós Palacios, Fidel (2005). On the information exchange between physicians and social insurance officers in the sick leave process: An Activity Theoretical perspective, Licentiate Thesis, No. 1165, IDA-EIS, Linköping University, Institute of Technology.
11. Keller, Christina (2005). Virtual Learning Environments in higher education. A study of students’ acceptance of educational technology, Licentiate Thesis, No. 1167, IDA-EIS, Linköping University, Institute of Technology.
12. Ahlström, Petter (2005), Affärsstrategier för seniorbostadsmarknaden, Licentiatavhandling, No. 1172, IDA-EIS, Linköpings universitet, Tekniska Högskolan.
13. Dahlin, Peter (2005). Structural Change of Business Networks – Developing a Structuration Technique, Licentiate Thesis No. 49, Mälardalen University.
171
14. Granebring, Annika (2005). ERP Migration Structure – an Innovation Process Perspective, Licentiate Thesis No. 50, Mälardalen University.
15. Cöster, Mathias (2005). Beyond IT and Productivity – How Digitization Transformed the Graphic Industry, Licentiate Thesis, No. 1183, IDA-EIS, Linköping University, Institute of Technology.
16. Horzella, Åsa (2005). Beyond IT and Productivity – Effects of Digitized Information Flows in Grocery Distribution, Licentiate Thesis, No. 1184, IDA-EIS, Linköping University, Institute of Technology.
17. Kollberg, Maria (2005). Beyond IT and Productivity – Effects of Digitized Information Flows in the Logging Industry, Licentiate Thesis, No. 1185, IDA-EIS, Linköping University, Institute of Technology.
18. Hansson, Magnus (2005). From Dusk till Dawn – Three Essays on Organizational Closedowns, Licentiate Thesis, No. 3, Örebro University.
19. Verma, Sanjay (2005). Product’s Newness and Benefits to the Firm – A qualitative study from the perspective of firms developing and marketing computer software products, Licentiate thesis, No. 54, Mälardalen University.
20. Sundén, Susanne & Wicander, Gudrun (2005). Information and Communication Technology Applied for Developing Countries in a Rural Context – Towards a Framework for Analyzing Factors Influencing Sustainable Use, Licentiate thesis, KUS 2006:69, Karlstad University.
21. Käll, Andreas (2005). Översättningar av en managementmodell – En studie av införandet av Balanced Scorecard i ett landsting, Licentiatavhandling, No.1209, IDA-EIS, Linköpings universitet, Tekniska Högskolan.
22. Mihailescu, Daniela (2006). Implementation Methodology In Action: A study of an Enterprise Systems implementation
172
methodology, Licentiate Thesis, No.1233, IDA-EIS, Linköping University, Institute of Technology.
23. Flodström, Raquel (2006). A Framework for the Strategic Management of Information Technology, Licentiate Thesis, No.1272, IDA-EIS, Linköping University, Institute of Technology.
24. Werelius, Sofie (2006). Consumer Business Relationship with Retailer and Etailer for the Purchase of Clothing – A Network Perspective, Licentiate Thesis No. 45, Uppsala University, Department of Business Studies.
25. Fryk, Pontus (2007). Beyond IT and Productivity – Effects of Digitized Information Flows in Health Care, Licentiate Thesis, No. 1328, Linköping University, Institute of Technology.
26. Sandström, Sara (2008). Technology-based service experiences - A study of the functional and emotional dimensions of telecom services, Licentiate Thesis, KUS 2008:3, Karlstad University, Faculty of Economic Sciences, Communication and IT.
27. Lundmark, Erik (2008). Organisational Adoption of Innovations – Management Practices and IT, Licentiate Thesis, No. 1352, Linköping University, Institute of Technology.
28. Anjou, Anette (2008). Scanias framgång - Betydelsen av strategisk kongruens och integrerad styrning, Licentiatavhandling, No. 1364, Linköpings universitet, Tekniska högskolan.
29. Numminen, Emil (2008). Software Investments under Uncertainty - Modeling Intangible Consequences as a Stochastic Process, Licentiate Dissertation Series, No. 2008:7, Blekinge Institute of Technology.
30. Bergqvist, Linda (2008). A Conceptual Framework for Studying the Successful Outcome of the IS Outsourcing Process from a Relationship Perspective, Licentiate Thesis, KUS 2008:30, Karlstad University, Information Systems, Faculty of Economic Sciences, Communication and IT.
31. Wingkvist, Anna (2008). The Quest for Equilibrium - Towards an Understanding of Scalability and Sustainability for Mobile
173
Learning, Licentiate Thesis, No. 08118, Växjö University, Center for Learning and Knowledge Technologies, Department of Information Systems, School of Mathematics and System Engineering.
32. Sundberg, Klas (2009). Atlas Copcos strategi och styrning - verktyg som ger guld, Licentiate Thesis, No. 48, Uppsala universitet, Företagsekonomiska institutionen.
33. Mörndal, Marie (2009). ”Hallå! Jag känner mig ensam här”. En studie om studieovana studenters interaktion på ett webbaserat diskussionsforum, Licentiate Thesis No. 113, Mälardalens högskola.
34. Svensson, Martin (2010). Routines for Engagement – Emotions and Routines when Communicating through ICTs, Linköping Studies in Science and Technology, Thesis No. 1444 LiU-TEK-LIC 2010:15.
35. Mansour, Osama (2011). Share with Social Media - The Case of a Wiki, Licentiate Thesis, School of Computer Science, Physics, and Mathematics, Linnaeus University, Växjö.
36. Gullberg, Cecilia (2011). Puzzle or Mosaic? On Managerial Information Patterns, Licentiate Thesis, Linköping University, In-stitute of Technology. Licentiate Thesis, ISSN 0280-7971; 1483.
37. Kajtazi, Miranda (2011). An Exploration of Information Inadequacy: Instances that Cause the Lack of Needed Information, Licentiate Thesis, School of Computer Science, Physics, and Mathematics, Linnaeus University, Växjö.
38. Eklinder-Frick, Jens (2011), Building Bridges and Breaking Bonds: Aspects of Social Capital in a Regional Strategic Network, Licentiate Thesis No 139, Mälardalen University.
39. Hansen, Therese (2012). Internet or Traditional Stores: Identifying Influences on Consumers’ Mobile Phone Purchases, Licentiate Thesis No. 50, Department of Business Studies, Uppsala University.
172
methodology, Licentiate Thesis, No.1233, IDA-EIS, Linköping University, Institute of Technology.
23. Flodström, Raquel (2006). A Framework for the Strategic Management of Information Technology, Licentiate Thesis, No.1272, IDA-EIS, Linköping University, Institute of Technology.
24. Werelius, Sofie (2006). Consumer Business Relationship with Retailer and Etailer for the Purchase of Clothing – A Network Perspective, Licentiate Thesis No. 45, Uppsala University, Department of Business Studies.
25. Fryk, Pontus (2007). Beyond IT and Productivity – Effects of Digitized Information Flows in Health Care, Licentiate Thesis, No. 1328, Linköping University, Institute of Technology.
26. Sandström, Sara (2008). Technology-based service experiences - A study of the functional and emotional dimensions of telecom services, Licentiate Thesis, KUS 2008:3, Karlstad University, Faculty of Economic Sciences, Communication and IT.
27. Lundmark, Erik (2008). Organisational Adoption of Innovations – Management Practices and IT, Licentiate Thesis, No. 1352, Linköping University, Institute of Technology.
28. Anjou, Anette (2008). Scanias framgång - Betydelsen av strategisk kongruens och integrerad styrning, Licentiatavhandling, No. 1364, Linköpings universitet, Tekniska högskolan.
29. Numminen, Emil (2008). Software Investments under Uncertainty - Modeling Intangible Consequences as a Stochastic Process, Licentiate Dissertation Series, No. 2008:7, Blekinge Institute of Technology.
30. Bergqvist, Linda (2008). A Conceptual Framework for Studying the Successful Outcome of the IS Outsourcing Process from a Relationship Perspective, Licentiate Thesis, KUS 2008:30, Karlstad University, Information Systems, Faculty of Economic Sciences, Communication and IT.
31. Wingkvist, Anna (2008). The Quest for Equilibrium - Towards an Understanding of Scalability and Sustainability for Mobile
173
Learning, Licentiate Thesis, No. 08118, Växjö University, Center for Learning and Knowledge Technologies, Department of Information Systems, School of Mathematics and System Engineering.
32. Sundberg, Klas (2009). Atlas Copcos strategi och styrning - verktyg som ger guld, Licentiate Thesis, No. 48, Uppsala universitet, Företagsekonomiska institutionen.
33. Mörndal, Marie (2009). ”Hallå! Jag känner mig ensam här”. En studie om studieovana studenters interaktion på ett webbaserat diskussionsforum, Licentiate Thesis No. 113, Mälardalens högskola.
34. Svensson, Martin (2010). Routines for Engagement – Emotions and Routines when Communicating through ICTs, Linköping Studies in Science and Technology, Thesis No. 1444 LiU-TEK-LIC 2010:15.
35. Mansour, Osama (2011). Share with Social Media - The Case of a Wiki, Licentiate Thesis, School of Computer Science, Physics, and Mathematics, Linnaeus University, Växjö.
36. Gullberg, Cecilia (2011). Puzzle or Mosaic? On Managerial Information Patterns, Licentiate Thesis, Linköping University, In-stitute of Technology. Licentiate Thesis, ISSN 0280-7971; 1483.
37. Kajtazi, Miranda (2011). An Exploration of Information Inadequacy: Instances that Cause the Lack of Needed Information, Licentiate Thesis, School of Computer Science, Physics, and Mathematics, Linnaeus University, Växjö.
38. Eklinder-Frick, Jens (2011), Building Bridges and Breaking Bonds: Aspects of Social Capital in a Regional Strategic Network, Licentiate Thesis No 139, Mälardalen University.
39. Hansen, Therese (2012). Internet or Traditional Stores: Identifying Influences on Consumers’ Mobile Phone Purchases, Licentiate Thesis No. 50, Department of Business Studies, Uppsala University.
174
40. El-Mekawy, Mohamed (2012), From Societal to Organizational Culture: The Impact on Business-IT Alignment, Licentiate Thesis, Department of Computer and Systems Sciences, Stockholm Uni-versity.
41. Hadjikhani, Annoch (2013), Expectations in the Internationaliza-tion Process: The case of two Swedish banks' foreign activities 1995-2010, Licentiate Thesis, Mälardalen University.
"#$%&'%!()*+#$,! !-*#.)++#*!-/*!01)*.&234!56*)'%#*!#.!7894!:((+&2&!:$6;)*+6%<!! !(&*=&1)*.&23>6?=@@=+)!!ABB*)++,! !9C)!DE)B6+C!F)+)&*'C!D'C##2!#.!7&$&1)?)$%!&$B!!! !8$.#*?&%6#$!9)'C$#2#1<4!5)(&*%?)$%!#.!G@+6$)++!D%@B6)+4!!! !:((+&2&!:$6;)*+6%<4!G#H!IJK4!LIJ!MN!:((+&2&!!!! !C%%(,OOEEE=.#*+3&*+3#2&$P?6%=$@O?6%O!!
174
40. El-Mekawy, Mohamed (2012), From Societal to Organizational Culture: The Impact on Business-IT Alignment, Licentiate Thesis, Department of Computer and Systems Sciences, Stockholm Uni-versity.
41. Hadjikhani, Annoch (2013), Expectations in the Internationaliza-tion Process: The case of two Swedish banks' foreign activities 1995-2010, Licentiate Thesis, Mälardalen University.
"#$%&'%!()*+#$,! !-*#.)++#*!-/*!01)*.&234!56*)'%#*!#.!7894!:((+&2&!:$6;)*+6%<!! !(&*=&1)*.&23>6?=@@=+)!!ABB*)++,! !9C)!DE)B6+C!F)+)&*'C!D'C##2!#.!7&$&1)?)$%!&$B!!! !8$.#*?&%6#$!9)'C$#2#1<4!5)(&*%?)$%!#.!G@+6$)++!D%@B6)+4!!! !:((+&2&!:$6;)*+6%<4!G#H!IJK4!LIJ!MN!:((+&2&!!!! !C%%(,OOEEE=.#*+3&*+3#2&$P?6%=$@O?6%O!!
