Bank to basics

By The Economist online

TWO years ago Swedbank, Sweden’s biggest retail bank, moved from its offices in the centre of Stockholm to a drab business park outside the city. Employees fretted about leaving their prime location, a few doors from the Riksbank, the central bank, and a stone’s throw from Parliament. The move, which has saved $25m-odd a year, was symbolic not only of the bank’s thrift, but also of its desire to retreat from the exciting but risky end of banking. Instead, much like the Scandinavian furniture in its office, it is returning to something simpler and more straightforward. That strategy has made Swedbank not only one of the safest banks in Europe, as judged by the thickness of its cushion of capital, but also one of the most profitable.

European banks are struggling. Economic growth is low; regulators demand ever more capital, and negative interest rates, which most banks do not dare to pass on to depositors, squeeze margins. All this, bankers tell aggrieved shareholders, has inevitably pushed returns far below their pre-crisis levels. Yet Swedbank has defied the inevitable. It is nearly twice as profitable as the average European bank, despite holding…

Read more here:: The Economist – Economics