Handelsbanken
AST talks to Jonas Modigh of Handelsbanken about the importance of risk and T2S
You have said that customers have switched from looking at long-term commitment to being more concerned with risk and stability. Do you see still this trend?
Long-term commitment is always important for the bigger clients, but now, almost everyone I speak to say that risk and stability are often at the top of their list. And I would say that the same goes for Handelsbanken. We are looking more at selective partners that we feel comfortable with expanding our existing relationships or building new long-term ones.
What challenges are Nordic countries facing when creating growth on their own?
There are some differences between the Nordic countries, but in general, creating growth on their own is very difficult, since they are to a large extent export driven economies. We are very dependent on the environment around us, and with the problems we are facing today in the eurozone and the US, it’s a challenge to solely depend on export growth outside of these regions, such as the developing countries. To some extent we have been able to see compensation from the less cyclical export goods. The way to continue growth probably depends on the success in product development, innovation or establishment in new markets. But at the moment, all of the Nordic countries are doing well compared to the Southern European countries. Maybe Denmark is a little bit weaker at this point, but relatively, we’re quite well off.
T2S opens up Europe for competition among CSDs and custodians—how is Handelsbanken preparing to compete?
Target2-Securities (T2S) is an extremely big change in the European landscape, but Handelsbanken has a very long-term committment to the securities business and we are investing heavily in this product area. We are at the moment carrying out our biggest IT investment ever in order to prepare for the future securities landscape. We are building a brand new securities platform that will serve the entire securities flow in the bank throughout the Nordic region, and many existing systems are being shut down and enhancements are being made in many products. We of course follow the progress towards T2S for the Nordic markets, and we are confident that we will be well prepared for the launch. We have a very long-term business plan, and we will continue to deliver a first-class regional Nordic custody solution.
Speaking of T2S, what kind of messages are you getting from clients on whether they will still have a regional custodian in the Nordics?
It totally depends on what client and what kind of client you’re speaking to. The major global custodians have one view and smaller local or regional banks may have another view and investment banks and / or brokers may have yet another view. The different client segments see a different need for a local provider going forward, and the global custodians see much less of a need than the others. However, there will still be services that are of interest, such as tax services and other asset services. The picture for the region may look a little bit different depending on what countries you’re looking at, with Finland and Denmark being a little bit ahead of Sweden and Norway in their plans for T2S.
But projects such as T2S will most likely have an effect on the number of market players, and we are seeing a trend of moving from a single market provider to regional providers. The main message though is that now you rarely hear anyone questioning the project, but more are concentrating on benefits of the project and how to interact.
How is your partnership with Northern Trust going?
It’s a strong partnership that gets stronger every year, and we look forward to continued mutual growth in the region. The Nordic region is a very important market place for us and there are some interesting business opportunities out there. Joining forces with Northern Trust gives us the possibility to offer the client the best of both worlds—the strong local bank and the muscles and top quality products of a global custodian.
What opportunities are there for Handelsbanken in Asia, including Japan?
No other Nordic bank has such a strong presence in Asia. Handelsbanken has branches in Hong Kong, Shanghai and Singapore, as well as representative offices in Beijing, Mumbai, Taipei and Kuala Lumpur. We are active in many areas, such as trade finance, export financing, project financing, FX trading and cash management.
