A Blueprint for Better Banking

This book takes a new look at the financial crisis. It sets out to answer specifically what the mistakes were that banks made and how this could have been avoided. This book gives a detailed description of a large bank that operates very differently from its peers and that has, as a result, steered clear of the areas that have brought many other banks into trouble. This provides a number of insights into how a more resilient, post-credit crunch banking system should look. The first section begins with an overview of existing explanations of the crisis and why they remain partly unsatisfactory. The second and main part of the book is a new and extensive description of the management practices at Svenska Handelsbanken.The bank has traditionally been run by management practices that are diametrically opposed to so-called ‘best practice’ in the industry. The book investigates how Handelsbanken operates without bonuses and examines their organisation, strategy discussion, risk management and capital markets communication. In effect, the book describes how Handelsbanken ensures that it does not fall for any of the Seven Deadly Sins. The author has conducted over fifty interviews with Handelsbanken executives and competitors, and also draws on his knowledge of many other institutions to bring out the important differences between the ‘Handelsbanken way’ and common practices at other banks. The final part summarises what other banks and financial institutions can learn from Handelsbanken and how its model may offer a solution that other potential regulatory changes may not.