Back to the future - Swedish efficiency The UK chief executive of Handelsbanken doesn't mind if you've never heard of his bank. Staying under the radar is fine, says Anders Bouvin, so long as customers are happy. And he's come prepared with a list of reasons why he believes they are. Firstly, Handelsbanken has no call centres. Secondly, commissions are not paid to pushy salesmen or to bank executives. Thirdly, decisions are made at branch level by managers who know their customers well and who have a habit of giving out their mobile phone numbers. However, in spite of operating in the UK since the 1980s and regularly topping customer satisfaction polls, the Swedish bank's profile has always been low. Partly, this is because of its size - less than one per cent of UK customers bank with Handelsbanken. But the bank is now expanding. Lending to UK customers rose by close to one third in 2011 to more than £8.5bn and in the past two and a half years the bank has doubled the number of branches operating in the UK to 147. It is also because, rather like fellow "challenger bank" Metro, Handelsbanken concentrates on the local areas that it works in, rather than paying for national advertising campaigns or sponsorship deals. Fans say this means the level of personal service on offer is a welcome throwback to the traditional, in-branch model that has fallen out of favour elsewhere. Banking at Handelsbanken is, according to one new customer, like being a member of a private bank without the pomp. Bouvin thinks this is because the bank takes a long-term view of every decision. "The PPI [payment protection insurance] problem was a result of a product-driven model which steered people towards compromising what is best for the customer," he says. That is why we don't have product targets. To run a profitable bank over time you must have satisfied customers. The 53-year-old Swede first arrived in the UK in August 2007 as the global financial crisis flared. It was, he says, an extraordinary time to start. Within a month there were queues outside Northern Rock. But I would not say that these events changed our plans for the UK. If anything, it gave us opportunities. We tend to gain market share when times are difficult and then in mature markets, when economies are booming, our branch managers will step back. Nearly every decision regarding customers is made by a local Handelsbanken manager, instead of computer algorithms or head office. This model was introduced in the 1970s after the bank suffered reputational problems in Sweden similar to those currently afflicting some UK high street banks. The bank now has no budget or targets and just one simple aim: to maintain a higher return on equity than its peers. However, the emphasis on localism means that it can be difficult to pin down the bank on numbers. There is no standard loan or savings rate, for example. Nor will Bouvin be drawn on minimum funding requirements for customers, although the bank clearly looks to cherry-pick wealthy customers with good credit scores. A further consequence of running each local branch as its own bank is that costs per branch are relatively high, which means that rates available to customers are not market beating. The bank pays 1.5 per cent on its cash Isa, and has a standard variable rate of 4.5 per cent on its mortgages, although Bouvin says that only a tiny fraction of customers are on this rate. "Branch managers identify customers they want to build long-term relationships with," explains Bouvin. We are a relationship bank, not a product one. So I don't think this [lack of rates] is confusing to our customers. One other possible area of concern to UK customers is that the bank is not part of the UK's deposit protection scheme, meaning that if the bank fails customers must reply on the Swedish government's deposit guarantee scheme, which will cover up to €100,000 (about £85,000) per customer. Last year, credit rating agency Moody's downgraded Handelsbanken, saying that Sweden was not immune to problems in the eurozone. Bouvin insists that the bank remains strong, pointing out that it has one of the highest ratings for any world bank and that it did not receive any financial support from either the Swedish government or its shareholders in the financial crisis. "From a capital and liquidity view the bank is stronger than ever," he added.