[Non-English content] hit. A very warm welcome today to this very recently convened press conference as a result of the press release that was published this morning, in which You can see very clearly from the press release that we're pooling our strengths around our branches, we're stepping up the pace of digital development, and we're reducing our costs. I would like to begin by showing you what's on this slide here, outlining very clearly and generally what our next step will be on the path to a less complex bank. We've talked about this over the course of the past 12 months, we're going to invest even further, focusing on decentralization, being close to the customer.
We're pooling our forces, our strength, focusing on branches, and we want to ensure that our branches can face up to the changes we see in demand from our customers. We're going to be doing this in fewer locations than previously. When you implement this type of change, as far as I'm concerned, you can choose two different paths. One where you change the company and you just let your customers run and try and catch up with you as far as possible. You wait around for the customers and you make changes subsequently, and that's what we've chosen to do. This is a customer-driven adaptation that we are implementing now.
We see, not least, due to the fact that this is a long-standing trend, customers to such an extent are choosing to avail themselves of other channels, digital channels, other meeting other than our branches, that we have basically come to some type of tipping point at this stage where we see that our customers are opting for meeting us through different channels. It's an ongoing trend, but we've waited for the customers to catch up with us. When we were still at a level where 20%, 30%, 40% of our customers would pay visits to our branches, it was too early days. Now we see that changes have taken place, not least when you consider what's taken place during the pandemic period. It's impacting all the age categories, not just one particular. It's fairly evenly spread.
This is also entirely in line with what we've said previously. We're doing away with what's no longer in demand from our customers, and we're investing in what they're demanding from us, what they're looking for. That's precisely what we're doing now. This has also had an impact in several locations in Sweden already today, where we see that an ever-growing number of customers have chosen to meet us and make contact with us through digital channels. In several locations in Sweden for the past while, in fact, we've gradually merged branches to try and pool our strength and our resources in the market where we can stand to win, stand to gain. When we've made resolutions, we've done it in a pragmatic way. We've reduced opening hours in some locations, for example, pooling resources.
Now we're at a stage where we see that customers are equally satisfied with meeting us through digital channels, so we meet them in different channels, and that's where we are right now. Needless to say, in wake of all this, we are going to make further investments in the digital journey that we've already embarked upon. We're doing this already today. I said 12 months ago that we're going to step up the pace. That's precisely what we're doing and at a much greater pace than before. We're allocating additional resources to achieve that goal and give our customers continued support on the path they have opted for. We're also going to strengthen our customer service. We have a customer service function already today.
It's going to be further strengthened so that we can assist our customers in an even more qualified way, 24/7, so that we can have everyone join us on this journey of adaptation. There are meetings, at least in our universe, where the personal meeting is important with our customers, and that's why the branch remains a hub, the backbone of our model for how we operate this bank. The corporate segment, for example. Already today, when we talk to our corporate customers, our property customers, they need relations. They want to meet us. We're highly appreciated in many places, and we invest and focus even more on those locations so that we can keep growing, maintaining an excellent market position, and gain market shares. Another such market is the asset management business, and you know this.
We come from a position which is a strong one in many areas. We've seen excellent development on our funds year after year. We've received very high ranking, not least for private banking businesses. That's also based on relationships where the customers say very clearly that they want to meet us, and we're going to ensure that we can do this in a much greater number of locations. It's focused mainly to the larger cities today, and now we're going to meet our customers closer to where they are located in several more places than what is currently the case. We know that it's greatly appreciated by our customers that we are readily available for them when they need to meet us.
In the changes we're making right now, we're doing this to sharpen our offering to be even more focused. We will continue, of course, to do this in all those locations where we have a potential or see that the potential can grow a lot more than it has so far today. We're transferring our mandates much closer to the customer than we have before, as we're strengthening our branches. We're going to reorganize in Sweden on a county-by-county basis, being closer to the branches, and very senior members of staff will be available and be visible much more so than what has been the case previously. This is something we do to grow our number of satisfied customers, also revenue and income profitability.
We see, of course, that there will be a number of employees who will be made redundant, and we will take great care and go to great length to ensure that we deal with this correctly. We're opening up our talks with the trade unions on this topic straight away. We're focusing on the future. The branches remain the backbone in what we do. We are making our digital investments to satisfy all those customers who've opted for that path already. We are in a position where we tag along and follow our customers on this journey, and we look forward to having a bank where we, at the same time, can embrace and cover our expenses.
We've said that we will do this over a fairly rapid pace, a two-year period where we will have reduced our costs and increased our revenue, and we have more satisfied customers. I'm not going to say any further at this stage, but I'll open up for questions. Please go ahead.
Your predecessors have said that Handelsbanken, and we had lots of branches close to the customers so that you can limit risks in that way. Will Handelsbanken become a more risky bank now that you are cutting back with regard to branches? Answer, no, absolutely not. The opposite is true because what we're doing here is we are pooling our resources in the branches where we see that we have a possibility of, in fact, getting even closer to our customers. We're moving mandates.
Those branches, for example, that we're merging with other branches, and this is where the customers have actually chosen not to go to their branches. They've already taken that step. Looking at your slide, it says 150-200 branches. That's a further 50, really. While we're reviewing this and what we're communicating here is that there'll be 200 fewer branches, and we're starting this work now. There'll be even fewer. In the press release it says 200. That is what our estimates are. There'll be further perhaps in the future. Which branches? Have you got a list of the branches to be closed? This is something that we're starting working on now.
With this press release, we're communicating this now because we want to start this work, and we know roughly where certain branches, where we see that customers are happy working with us digitally. We know roughly which branches are affected. This is something that we need to work with due care starting this today. This is a very special day. Handelsbanken closing branches. Will see changes to the bank? Well, we're starting negotiations with our trade union representatives, and so that's where that will be decided. Will the employees' influence also be limited because we have the centralization and reduction of branches, but also the changes as to how the pension scheme is going to be, or the allocation's going to be made to the Oktogonen, the pension sharing scheme.
Is their influence therefore, and their direct ownership in the bank, is that going to be reduced? Now, your first question there. No, we're not centralizing. We are decentralizing in a clearer way. We have greater mandates for certain branches, and we can see that in the organization that we're looking at today. This is a further step in decentralizing the bank even further. Now, the adaptations to the Oktogonen, just as we've just said, is this is adapting to regulations that we need to do to facilitate administration. The influence per se, this is something that our employees will always have in that you are able to have an impact on the bank in the future. What are you going to say to customers who won't have a branch or a bank to go to?
No, but we're looking at branches where our customers have basically more or less left, deserted our branches and are quite happy with working with us digitally. I think a part of this is also to show, yes, they will be present in fewer places, fewer sites, but there'll be sufficient number of branches for people to go to, and we'll still be the bank with most branches. My last question. Is there anything now that differentiates Handelsbanken with other banks? Absolutely. It's our decentralized operations at our branches. We've seen that our customers have changed, and we've also arrived at this tipping point where we need to further expand and develop our digital offering. Thank you.
Hey, Anders Håkansson.
Anders Håkansson from Danske Bank. I'm trying to understand the figures here. I'm looking for the estimate for 2020, SEK 25.5 billion, and that's without the Oktogonen.
I think with Oktogonen will be about up to SEK 850. That's SEK 1.5 billion in savings and losing SEK 1 billion with income. SEK 500 million net. That's 2% EPS. That's making a huge change in the organization, which is going to create conflict.
Before you actually arrive at that point, is it really worth it? Is my question.
When we are making this change for the future, I haven't gone into the detail here at all. When we release our report for quarter three, we'll have more details to communicate. This whole restructuring that we're doing, this is something that we've worked on already since last year, 2019. What do we want to achieve? We want to have a path ahead. We want to decentralize more. We want to become more focused in our offering. At the same time, we need to reduce costs. I think that in these next few weeks, we'll have a better answer to those questions, and more detailed answers to those questions. The figures here, how to achieve that SEK 20 billion, but there won't be a change over time then.
Next question with regard to the Oktogonen. The Oktogonen, there'll be no more inflow. There'll be as an outflow as there were the whole time. Payments next year, disbursements, but are you going to sell Handelsbanken shares and then ownership will be below 10%? Have you thought about that at all?
I can answer that. Now, the Oktogonen, as you know, the net there depends on the disbursements, but also the inflows and allocations. We have to in fact wait and see there. This is not something that the Handelsbanken. No.
Okay. Thank you very much.
Magnus Andersson from ABG. Just to stay on cost, SEK 20 billion at the end of 2022. I assume then that if we look at, well, by 2023, you'll see the full impact only by then. Should we expect SEK 20 billion+ Oktogonen, or do we add any type of inflation component on top of that? Is this where we're going to end up by 2022 and then we come into 2023?
We're expecting SEK 20 million for 2022 for the absolute level. The Oktogonen is a matter for the board of directors. It's not included. When it comes to Oktogonen and allocations, now you're talking about allocations to the foundation. No criteria will be changed. We can still calculate with 850 max. There's nothing else. Yes, as Karin, 850. Any additional targets.
What about IT, SEK 1 billion evenly distributed. What's the capitalization rate going to be? I expect that it's now going to all be in the income statement.
We're going to try and be as OpEX heavy as possible, but historically, we're at about 65% straight away activating 35%. 65% for the start of that SEK 1 billion.
What about headcount reduction, 1,000 employees? What's the net? I presume you'll be recruiting. I assume this is a gross number. Is it a net figure?
It's a net figure, is the answer.
Okay. You have more regions or more home markets than just Sweden. We see that branches have reduced in numbers in Finland a little bit. We're quite flat. There are a couple of 100 branches in the U.K. Can we expect similar decisions for the rest of the company?
Well, the markets are in slightly different phases. What we've done in Finland is to a great extent focusing on locations where we can create much better growth and where we see that our customers have a presence. We've done the same in Denmark over the past few days, where we've merged some of the branches precisely because we see that the digital direction is taking us along the path where the customers want to see us. Nevertheless, branches remain the backbone of what we do. Doing it more focused, more decentralized, and more focused to particular locations is definitely the path we've chosen. Tagging along with our customers, as I mentioned earlier.
It's still quite minor for the other countries, no major structural costs. U.K., for example, taking that as an example, when you have higher capital requirements, all else being equal, you won't have an IRB model in a while, a new one before you have it available. Can we expect any more in-depth structural measures?
Well, you know the phase where I came into the company in 2019. We're involved in this entire process. We've done very thorough work reviewing what the possibilities are in the bank to move forward and to embrace the problems that we are slowly but surely dealing with in terms of the cost situation. Everyone in their home markets will make adjustments and certain movement. There's nothing strange about that. This is a presentation of what we're proposing to do in Sweden because time is right.
The review is ongoing, you could say.
Yes. Well, it's a continuous process. Minor changes continuously is much better than big bangs generally, is my opinion. Now we're taking one big, clear, decisive step where we see that our customers want us to be.
You talked about SEK 1 billion, you said -SEK 500 for Q3 2019. When I see those measures, I think on the phone conference, we discussed this in Q2, that a lot of this had already been realized. I expect another SEK 500 rather than SEK 1 billion compared to where you are right now. Would that be correct?
Well, it's SEK 1 billion from where we are currently.
1 billion from where we are today. Total SEK 1.5 billion. Oh, I see.
From Dagens Industri. A couple of years ago, your predecessor wanted to close 50 branches, but there was a complete uproar in the bank. You want to close 200, around. Is the organization with you on this?
Let me say that a lot of the changes that we're making now, we have done gradually. We've already closed about 100 branches in the last few years, and that is because we've seen the trend heading in this direction. I think that when we are showing what we're doing, that we're pooling our resources, I think the people will see this as something positive. Still, 1,000 reduction in staff, of course, that we have to handle. The organization knows that we need to tackle the digital challenge. We're reinforcing that, but at the same time that we also need to reinforce our local branches.
Does that make sense?
That they are with you.
Yes, they are. Yes. Yeah.
In this presentation, you termed this like an investment, as it were, in the bank. You're saving a couple of billion and closing 200 branches. 1,000 people are going to be affected by this. It's going to have an impact on revenues and income. How can you see this as an investment?
No, I wouldn't put it like that at all. I think it is an investment, because today we do see how important our branches are today. Because we see that most of our branches. We have branches because this is where we get our revenue. At the same time, we also see that there are certain branches where they are not as relevant anymore. As I said, the customers, they've already chosen.
They've already made that decision. We don't need to be present there. We need to pool our resources to the branches that we need to have, because we'll see here that branches will be even closer to the customers because they'll have greater mandates. We'll have the expertise that we require at the branch, so we can actually help our customers to a much greater extent now we're looking at the business where we have potential, where we might be able to grow, for example, wealth management, et cetera. We can see that. However, at the same time, when we're doing this, we can also tackle the problems that we have with costs. We can't pretend otherwise. I would say that we are focusing, I would say.
In that way, we can handle our costs in a completely different way, as opposed to us having done nothing.
Now, the other major banks in the last few years have gradually reduced their network of Swedish branches because they refer to changes in the behavior of their customers, digitalization, et cetera. Why has it taken Handelsbanken so much longer to arrive at this point to draw the same conclusion?
Well, just as I said earlier, I think that when you have to change the operations, you can do it in slightly different ways. We have decided to wait for our customers to make their choices. We've seen this heading in this direction for a long time, and we see that also our branches are great sources of revenue. Now we have come to this tipping point.
Our customers, not least due to what's happened in the last seven months, they have chosen many times to do their banking online. Therefore, we see that we are heading even clearer in this direction. You've just suddenly realized that there are 200 branches that people don't visit. It is as I said, we're waiting for our customers. This is driven by our customers. That's the path we've chosen. That so many customers, they're taking that step, and we've chosen to take that step.
Handelsbanken has a problem with profitability. If you look at the key figures, when it comes to cost efficiency, et cetera, figures, Sweden is really the best, really, of all the home markets. Are we going to see even more draconian measures in the other markets?
Why are you doing this in Sweden, where the situation is so much better than the other home markets?
Well, I suppose you can see it in that perspective, but I think this is a change which is going to benefit our customers and actually our employees, because what we're doing is we're reinforcing many of our branches in many places. Not the ones that you're closing. No, that's exactly what I just said, in fact. We see today that so many customers, they don't go to the bank anymore. We're available, yes, but most of our customers have chosen a completely different path in many of these towns and villages. We see that in certain places where we have a strong position, where we can reinforce with expertise, accessibility, availability, et cetera, there of course, we'll continue investing.
That's where the branches do still make a difference for our customers. The question was, though, why you're doing this in Sweden first, bearing in mind that when it comes to cost efficiency, profitability, et cetera, compared to the other markets, it's different. Well, this is because our customers here are prepared to make this change. We're making these changes in some of the other domestic markets, too, for example, Denmark and Finland. However, we feel or believe that we will gain more from doing this here, being able to invest more for the future because our customers are already present in both, as it were, places.
In this way, returning to this slide, the first step that we had made last year when we started talking about this was, in fact, to review the whole bank to try to find internal efficiencies as well in the structures that we have in place and with the main head office, et cetera.
Final question. The position of the Oktogonen as a major owner of Handelsbanken, this obviously is going to be undermined now. The idea there was this was for the employees and owners to be in the same boat, as it were, that you was going to row the boat in the same direction together. How is that going to impact the Oktogonen? Will there be different boats now?
Well, myself, I am a product of this, and I can really see the benefits that culturally as well. I think that the adaptations that we are making now, I think, well, we have a lot of people in our operations who would also like to be part of the Oktogonen already today. I think that there are advantages with this new system. I think that perhaps this might, in fact, create a sort of momentum for the future. Thank you.
[audio distortion]
[audio distortion] You say that this is customer-driven. This is not something that the customers are asking for anymore. Isn't that due to the fact that the branches have no longer been offering the service you used to provide earlier?
I would say, on the contrary, that we've offered a very high level of service in the branches, combined with an excellent digital offering and a good customer service. We have been able to offer all our customers a very high level of service. You see this when you look at customer satisfaction surveys, not least during the pandemic, the bank is ranking very highly indeed. Suffice it to say that in some locations already today, we have branches where other branches in the surrounding areas, sort of taking care of them, keeping them open a few days a week, availability is fairly low. The customers have already chosen to be more digital or to have a presence elsewhere, and we're taking this step fully.
There are customers who are entirely using analog channels. It's a problem for them that digitalization is expanding. Isn't there a price to pay for some customers? For example, will there be an enhanced focus on corporate customers as opposed to private individuals?
Once again, implementing this change means that we will take good care of our customers. There's absolutely no other ambition than that. We see, I think it was Telia who had some statistics to look at the increase of e-commerce over this period, and that goes for all age brackets. I think that the digital development is no accident. It's no surprise that the tipping point comes now for us and that the development is escalating. We know that there will be customers in all processes of change. There are always those who we will perhaps not be able to help and assist in the way we would have liked to. In our investment in the digital channel, making sure we have service and availability 24/7, and that we offer close enough proximity to a branch that can assist.
I believe that we will cover the very large majority of all those concerned.
You've had the ambition to open up new locations. Should you have been able to gaze into a crystal ball, was this a misinvestment over the past few years?
Well, I don't know what crystal ball we should look into. It can look different from different perspectives. Our branches are our sources of income, no question about that. They have been so for a long period of time, and they remain the backbone of our operations. In order for the situation to remain that way, we need to pool our resources to the branches where we still assess that we can meet the type of demand that our customers place on us, being close to them, to meet them where they want to meet us.
Now, the customers who have chosen Handelsbanken because you have branches, what are you saying to them?
Well, as I said, naturally, we will look after our customers in those branches. We have already looked at this over time. My experience is, I think we do manage to look after our customers in a good way. When we, for example, merge branches with branches that are close by. In certain parts of the country, you might have to travel a bit further to get to a branch. That's true. We do hope and believe that we will be able to do this in the same way that we've managed to do it up until now.
What about the risks, the risk of losing customers? Why on earth should we choose Handelsbanken, which is going to be the same as all the other banks?
We're not the same as all the other banks because we still have our network of branches which we're investing in to ensure that we have full service for most things. I think there's every reason to become a customer in the bank. At the same time, we need to ensure that we have other offerings as well that our customers want, that we need to be available 24/7, just as everybody else.
What are you going to do then to be sort of fantastically digital that you're talking about? What exactly are you going to do to develop in that area that you haven't done up until now? I mean, that those customer-driven, et cetera, say. How are you going to improve on that?
Well, we have a digital offering today that our customers in all surveys, they give the thumbs up. They think that we do have a good digital offering. However, we also see that the pace is increasing, the availability and the accessibility. They want broader requirements, and we can see this is what our customers want, and this is what we're going to do, the advancements that we're going to be making.
Now, is there a risk that you are sort of lagging behind the other banks because you're doing this? I mean, others have done this a long time ago. Are you going to be any good at this at all?
That's of course our ambition. We're sort of departing from a position of strength, and we have already, as I said, a good digital offering. In order to achieve this change and to be sort of more prominent, we do have to invest in the digital side of things. We already have something in place which we can make even better. When we're focusing and trying to make the bank slightly less complex, we'll be able to make that step.
My final question, the pandemic. You're saying that you're doing this now because you've seen during the pandemic in the last seven months has really reinforced your beliefs, et cetera. Isn't it that we're sort of living in these times that, I mean, your customers are going to be getting very cross at you, and that once we've suddenly they'll really want to go to the bank to resolve or for all their banking?
No, we've seen this over time, in fact, and that's how we've also developed our digital offering. During the pandemic, what's happened there that we've seen that our digital competence, not just for the customers. We see that everything looks so different today. We see this internally, in-house, in the bank with colleagues, et cetera. We've all taken this journey, as it were. More and more people are buying online, ordering of food
Going to the chemist online, et cetera. We see this in all age groups. I think this is here to stay. We're not going to go back to the old situation. Still, I do believe that we need to have meetings, and we'll still have more branches around the country than any of the other banks. Thank you.
Hey, Mats Juhl, Starbreeze.
Mats Juhl from Starbreeze. If we look at the revenue side, your income. You think you'll drop by SEK 1 billion compared to 2019. You made it SEK 32 billion, if I'm not mistaken then. You're getting down with your cost, reducing them to the tune of, say, SEK 1.5 billion or SEK 2 billion. You don't have a cost income of 100%. Where do you see your income reducing? How confident are you that SEK 1 billion? Speaking out of experience, when banks cut costs, they usually see even more of an impact on top line, quite a hard impact. How confident are you in this?
You should understand this not as if we're talking explicitly only about cost. We're talking about the impact of what we're doing on the revenue line. We have revenues of SEK 44 billion.
Of course, what we're talking about here, the SEK 1 billion mentioned here, can be referred to the efficiency improvements we're making.
Do you have a split on where we can expect this to come?
No, we'll be much more transparent on that in Q3.
Okay. Hello. When it comes to Oktogonen, there's already been reported dissatisfaction amongst the employees because there were no allocations for 2018 and 2019. What's the feeling amongst the bank's employees now that there will be no more allocations, as you announced?
Well, from our previous position, the non-payment of the allocations previously, that was something which was decided upon based on, well, for clearly announced reasons. I think when we get further in this, you'll realize why this is being done.
Payments made to the individual, where the individual themselves can decide how they want to avail of that allocation is hopefully something which will be well-received. I can't say very much more than that. This has only just been announced. We're doing this because we're convinced that this is going to be beneficial for our employees.
Okay. I'm still thinking about Oktogonen. This has been one way for Handelsbanken to attract competent employees, competent people. Is there a danger that you'll lose this competitive edge?
Oktogonen has been a very important component, both culturally and how we operate this bank, and we've all been involved in the profit sharing, and that's something that's going to continue, but it's going to be made on an individual offering basis. The incentive should still be there to be involved in driving the bank. We're making these changes.
It's the same amounts and the same corporate targets that we have. Then it's up to the board of directors to make their assessment, of course. In that sense, we still have it all there.
[audio distortion]
Yes, Nordström from TV4. Talking about the 180 branches disappearing, is it basically the influx of customers. Is that going to determine which branches are going to be closed?
Well, it's a bit too early to say exactly which branches. We know more or less. We can see already today that in certain areas, there are branches where customers have very definitely chosen different paths. When we're talking about decentralizing and pooling our resources, et cetera, we are therefore transferring our expertise, et cetera, to many more sites, as it were, branches where we are able to expand more. I'm talking about rural areas. Are they going to be affected most by this?
Well, actually, in this, there's also an efficiency of doing this actually in major cities as well, where we can perhaps reinforce things and pool our resources in one particular site. This is something that we've done already to a certain extent in the last few years. This is throughout the country. You're talking about the digitalization process and the pace. I've spoken to many people who live in rural areas. They're quite worried now because many say that they chose Handelsbanken because they didn't want to be on board this digitalization train, as it were. Well, once again, I've worked with customers throughout my life, and looking after our customers, that's the most important thing, and we'll do that as much as possible. In this type of restructuring, yes, in certain places, we will not have possible to maintain our high level of service.
What kind of service are you talking about?
Reduced availability, accessibility. Once again, as I said earlier, the digital offering is something we see that more and more people are using that, and we need customer help as well. We see this in all age groups as well. Our branches are far and few between already, if that makes sense. We don't have branches all over.
The movement and all the branches, the branch operations, why have you had those?
Well, we have them because they're our backbone. That's how we make our money, and we'll continue with that in the future. Once again, we see changes in our customers means that we also have to do something different. Still, the branches are still our backbone.
Isn't this the holy cow that you're slaughtering as it were?
Well, no. I think that we're going to improve our business. Finally, there are theories out there that Erik Thedéen is trying to sort of weaken the Oktogonen so much. I have no comment whatsoever to that question.
It is an interesting question, isn't it? Well, perhaps for you it is. I think it is for you, too, as a CEO, isn't it?
No, I focus on the bank and moving this bank into the future, and have the owners act, that's not my place to have a view on that. The importance of Octo is now going to be undermined quite substantially with this. Well, this is again, we're looking at this as allocations for everybody who works there and the employees who are working with the bank and working for the future of the bank.
I think this is one way of dealing with this situation. We want to attract talent, and we want to maintain talent as well. That's how I see it.
Well, is this really sort of the last nail in the coffin for your white-collar employees?
Well, I don't know. Well, that's your view. I have fantastic colleagues around me and many of us agree that this is the right path to take. We'll continue doing this this way. Thank you.
Jens Hallén from Carnegie.
Jens Hallén , Carnegie.
A quick question on the dividend. Today's or yesterday's announcements on capital changes, is that the reason why there's no extraordinary shareholders meeting this autumn?
No, I wouldn't put it that way. No, this is definitely the decision for the board of directors. There are many factors involved, but we can comment on the message from yesterday where newspapers have made analyses based entirely on just one part of the two in the equation on the increase in our risk exposure amounts. The likelihood of this is that it's going to have an impact on the capital requirements. Our guidance to the market is that we feel that we are definitely above our target ratio range nevertheless. When it comes to the decision on dividend, it brings us even higher when it comes to that range.
From Q3 onwards, you're going to put this back and before 2020, you talked about 40% provision for the year would have been a good level. You said that earlier. Is this something you intend to revise?
No, we didn't say that it was a good level. We said that we were not of the opinion that the regulatory provisions we were forced to make were a good level. That was 75%. 40% was something we anticipated. We believe that it creates a greater room for maneuver. Then it's up to the shareholders meeting to resolve next year on the actions.
Axel Jonsson.
Axel Jonsson from, I'm just referring to. But the unanswered question wasn't able to answer how this was going to have an impact on the capital requirements of it it's going to have an impact on that? It's difficult to communicate that, as you say. And it may etc.
Well, I think the future will holds. It wouldn't tell us what exactly happened, that's what it says in the article, that it may have an impact. Carina, now, how does this impact the system for the Regional Bank heads? I mean, does it and How if it does?
Well, as I said earlier, we are today, we are restructuring county-by-county, so they will phase out the Regional Banks, the five Regional Banks, so we have the new structure in the place.
These county Regional Bank Heads, what is going to happen with them?
Well, we're going to reorganize and restructure, so we'll have a rough county structure, if it is going to be 2021, we'll have county heads there which are there to run the operations in those counties, at the branches there. The Regional Bank system that will disappear.
Considering that the other banks have a smaller network of branches, is the ambition over time that you want to get down to the same order of magnitude as they're at? Or do you dare to say anything about the future in that respect?
No, I wouldn't say that's it. This is very much based on a behavior and the pattern that we need to adapt to right now. As I said to you earlier, the branches very much remain there for a reason. We have them to earn money and to meet our customers. Currently, this is the structure we're going to put together. As I mentioned, the branches remain our backbone. We're going to make sure that we're going to meet the demand of our customers out in the branches, not least for the type of business that I believe will be very important for the longer term. I'm not as certain that you and me paying our bills will be a service which is very much in demand in the future on-site.
If we look at the digitalization trend in the longer term, can we not expect a very small number of branches?
Well, I'd like to take this as a starting point. We're making major changes now because we believe that this can make the bank progress, both in terms of earnings and profitability, growing our income. We have huge potential having proximity to our customers in the market on-site, we're making these investments. We also need to add additional services, 24/7 availability, meeting the customer where they want to meet us, you'll have to be very attentive in the future as well.
It's kind of like the course in the sense that can you regret that you didn't do this earlier?
No, I'm only focused on the future, I have to say. When you're sitting with all facts at hand, you can sometimes have regrets, I don't see it that way at all here.
Operating a bank is a complex business, many customers, many employees, major values to manage and to make an in-depth analysis the way we have done now, very structured. We came with our first initiatives 2019, and then further steps up to where we are right now. This is not something you do haphazardly. You do it in a very focused way, and I'm very confident standing here today that this is the right path forward.
What's the end?
I'm talking more about this personal relationship that people have with their bank, and they have it with you because you have branches. They have their savings or their company with you, and they have a personal relationship with you, what's it going to be like for them? What's the risk? They're going to leave you. You're not in their town or village and they then have to suddenly have to drive 50 km to the closest branch, are they going to leave Handelsbanken because you're doing this last of everybody?
No, we're doing this because we have made different assessments, obviously, and our customers are at the center of things.
We're going to do our utmost to ensure that we are able to look after our customers where, for example, we merge two branches, that we bring those customers on board in that merger.
At the same time, you're going to have staff as well. 1,000 people have to leave. They're going to be very upset. Are you going to handle them? You have dissatisfied customers and dissatisfied employees.
Obviously, we have to handle those who are going to be affected by this, and you have to do it very carefully and with empathy. Naturally, we have to look after our staff.
We've done something along these lines before, but we have to sit them down and tell them why we're doing this, and then they perhaps understand that even if they don't think it's a great thing for themselves, they understand why we're making these type of changes. I want to ensure that we do this as best as possible, which is why we're starting these negotiations and discussions now.
Okay.
Very well. I'd like to thank you all very much for your participation.