The bank’s decision to leave Finland and Denmark has no impact on its structured products.
Handelsbanken has decided to cease its operations in Finland and Denmark, and the process for divesting these two operations has started.
Together, Finland and Denmark account for 10% of the income, 13% of the costs, and eight percent of the operating profit within the group. The capital allocated to the operations in Finland and Denmark amounts to a total of approximately SEK15 billion (US$1.7 billion).
We want to have a presence in those locations offering the best conditions for profitable growth and a strong market position - Carina Åkerström
The bank’s main markets are in Sweden and Norway, as well as in the UK, where the bank’s ambition has been to be a leading operator in financing and asset management. Together, these markets account for 91% of profits.
Handelsbanken has been an active issuer of structured products in Finland and, to a lesser extent, Denmark.
According to SRP data, the bank has issued 178 products in Finland, dating back to 2010, including 71 structures worth US$236m that are currently still live. Apart from via its own branch network, the products were distributed via Alexandria, Evli Pankki, Garantum and Taaleri.
Live products issued by the bank will continue to be quoted in Finland as before since the team trading and quoting secondary market prices is already based in Stockholm, but no new products will be issued in the Finnish or Danish markets, SRP has learned.
In Denmark, the bank has been less active, issuing 27 structured products (US$256m) since 2001. None of these are live.
The bank’s main market for structured products is Sweden where it has issued 1,528 products since 2001. Some 239 products with combined sales of US$480m are still live, including Kreditcertifikat Norden SHBC STE11, a 5.7-year certificate linked to the creditworthiness of Stena that sold US$28m at inception.
The final market where Handelsbanken has issued structured products is Norway, although all 82 products (US$) launched by the bank since 1998 have since expired, with the most recent products issued in 2016.
Handelsbanken reported its operating profit increased by 26% to SEK18.2 billion (US$2.1 billion) in the first nine months of 2019 (9M2020: SEK14.4 billion). Net fee and commission income increased by 16%; fund volumes increased by SEK199 billion and commission income from fund management grew by 36% during the period.
Income grew by six percent to SEK34.8 billion (9M2020: 32.8 billion). Foreign exchange effects had a negative impact on income of SEK243m. Adjusted for these, income grew by seven percent.
The bank’s business in the Netherlands has demonstrated good profitability in recent years, with a more focused offering within real estate finance and asset management. As of 1 January 2022, the Netherlands will be a part of Capital Markets, together with Luxembourg and New York.
‘From a commercial perspective, we want to have a presence in those locations offering the best conditions for profitable growth and a strong market position. With this decision, we are strengthening the bank’s ambitions in our primary markets: Sweden, Norway and the UK,’ said Carina Åkerström (pictured), president and group chief executive of Handelsbanken.
Click the link to read the full Handelsbanken interim results.