CLOSING SVALBARD’S ONLY BANK IS A REALLY BIG DEAL: Here’s why impacts are far different than for ‘remote’ mainland communities – and how locals are trying to prevent it


The closure of Svalbard’s only bank office will cause considerable difficulties and issues for customers that people won’t suffer on the mainland. But despite overwhelming objections from local leaders, businesses and residents, along with actions such a boycott petition and politicians vowing to seek national help, one cold bottom-line fact remains: it’s a bank and as such is looking without emotion at its bottom line.


SpareBank 1’s history since it opened in 1959 in Longyearbyen is full of unique moments, including global news coverage after Svalbard’s first-ever bank robbery last December. Photo by Mark Sabbatini / Icepeople.

Put another way: On one end of the scale stack the barrage of emotional pleas, arguments about practical issues such as different financial laws than the mainland and the small local branch having a minuscule overall impact on the bank’s overall finances. It’s all outweighed by a single brief and blunt sentence from a bank spokesperson who said the Svalbard objections are known and the decision to close the branch remains firm.

“We were prepared for noise,” Stein Vidar Loftås, communications director for SpareBank 1 Nord-Norge, told Finans Watch in a recent interview.

The closure announced a month is scheduled Dec. 31, one of 16 of SpareBank Nord-Norge’s 31 total branches slated for shutdown. The main issues for locals, which were raised immediately and remain largely unchanged, are:

• Who will be affected by the closure and how?

• Are the bank’s claimed reasons/need for the closures legitimate – and does it matter if those claims are disputable?

• What are local residents and officials doing to try to ensure a physical bank branch in Svalbard – and do any have any realistic change of success?

To summarize the situation as of now in a few paragraphs (followed by a full FAQ), without wading into pages and pages of spreadsheets regarding profits and other numbers:


An online petition calling for a boycott of SpareBank 1 if it closes its Longyearbyen branch has nearly 300 signatures as of Saturday afternoon.

As of this week, the most notable local actions have been a meeting Thursday of local politicians and residents hoping to reverse the bank’s decision and an online petition started the same day that received more than 200 signatures within 24 hours.

So far their arguments and “awareness” campaign essentially come down to: the bank is profitable (both locally and overall) and keeping the Svalbard branch open serves a common good (including “Norway’s Arctic strategic interests”).

“To continue providing services with a local branch in Longyearbyen is both a profitable and moral decision by a bank that has served our nationally and internationally unique community since 1959,” the petition states.

However, the bank isn’t denying it’s still profitable – merely the closures are necessary to restore what it considers proper financial health since profits have dropped sharply during the past year and tough times are expected for at least another year due to the COVID-19 pandemic.

The following are the questions most frequently being asked and the answers – some incomplete or likely unsatisfying – known so far:

Q: Given that people in Svalbard can’t “drive to the next town” or a competing branch like customers on the mainland, why is Longyearbyen’s branch among those being closed?

Among the personal touches at SpareBank 1 Nord-Norge’s Longyearbyen branch are bank cards with a famous “lights out” photo of the city. Photo courtesy of SpareBank 1 Nord-Norge.

A: Rest assured, this question isn’t just “noise” from unhappy customers. Trond Hellstad, manager of the local branch, told NRK and other media the branch’s four employees were caught totally by surprise about a decision they had no input on, and “I cannot say it clearly enough: We do not fully understand the basis for the decision.” But when Loftås, the corporate spokesperson was asked specifically about the local branch by Svalbardposten, the response about customer impacts was essentially identical to a statement in a press release about all the closures: “There is no longer a need for the traditional bank branch. We have made a thorough acquisition of knowledge from customers, who tell us that they have very little need for a physical bank.”

Q: Local customers and officials say that reasoning is preposterous, and shows a clear ignorance about the unique clientele and financial needs/regulations in Svalbard. Are those claims accurate and not resolvable by means other than a physical bank branch?

A: Setting aside whether it matters to the bank’s “powers that be” if the reasoning is absurd, yes there are clearly multiple and significant hardships Svalbard residents will face beyond a long plane ride to the nearest bank branch (the latter of which prompted an an unsympathetic customer in a remote mainland town to note “I have to take flight or train for about four hours if I have to visit my bank in person”). Among those most affected will be Svalbard’s large foreign community (about 35 percent of the population) who, according to Hellstad, will find obtaining many financial services – especially home loans – difficult or nearly impossible. “But Norwegian citizens will also experience that other banks, without local knowledge, will refuse to finance a home purchase on Svalbard,” he told Svalbardposten. “This includes a lack of knowledge about the value of real estate here, which we have just established a collaboration with a broker about.” Put in the simplest of human terms, real people at the bank meeting face-to-face with locals are more likely to OK something the pure number crunchers at the other end of a phone line or internet hookup won’t.

Q: The banks says the closures are occurring to improve its bottom line. How legitimate is that concern?


SpareBank’s earnings have dropped by about half since a peak in 2019 and are expected to remain level through the coming year due to the COVID-19 pandemic, Graph by OB:NONG.

A: It’s not like SpareBank 1 is facing immediate bankruptcy or existential problems on the horizon, but there has been a sharp drop in its profitability during the past year and the COVID-pandemic is obviously having an impact expected to last into next year (see chart and analysis summary at right). The issue from the bank’s perspective may be one of investor confidence – which is anything but stable across the spectrum – although the financial website Simply Wall Street analysis cited in the chart offers glowing reviews of the bank’s performance the past five years and long-term outlook. “SpareBank 1 Nord-Norge share price has climbed 81 percent in five years, easily topping the market return of 16 percent (ignoring dividends),” the analysis states. “On the other hand, the more recent gains haven’t been so impressive, with shareholders gaining just 5.1 percent, including dividends.” Nonetheless, the article projects strong performance again when the COVID-19 downturn ends. Of course, any company is usually seeking a better bottom line and cost-cutting is frequently seen as a solution. In short, the cutbacks as a whole may allow SpareBank’s financial performance to remain “competitive” with other Norwegian financial institutions – important from a corporate/investor perspective and seen as “greed” by locals objecting to the closure.

Q: What actions are being taken by local residents/officials to preserve a local bank branch and what reasons/incentives are they offering the bank’s decision-makers that might consider more than “noise?”

A: The petition launched Thursday calls for a boycott of SpareBank 1 (by “customers on the mainland and the Norwegian government,” as well as locals) if it indeed closes the Svalbard branch. Jamal Qureshi, a local business owner and U.S. resident who has been among the most vocal critics of the closure, said one of the main target groups in terms of raising issues about the the bank’s judgement is “creditors and shareholders” since they are the outsides most likely to have influence with the bank’s decision-makers. By raising issues about Svalbard’s strategic/sovereignty role the critics also hope to make inroads with Norway’s government officials who have long stated those are among the country’s top national security and future planning issues.

Q: What about another alternative solution such as another bank opening a Svalbard branch or changing financial regulations specific to the archipelago that are likely to cause local residents difficulties?

A: SpareBank 1 Nord-Norge, even after the closures, claims it will still have “far more offices in the region than our biggest competitors combined.” Regardless of the validity of that claim, the reality is other banks in Norway and elsewhere are scaling back their physical presence for the same reasons as SpareBank, making investing in a new venture here highly improbable (and would take some time to happen even if immediate interest was expressed). As for altering those “different” regulations, a lot of them are “baked in” in keeping with the principles of the Svalbard Treaty and rather drastic changes would have to be OK’d by Parliament – and possible internationally – which would clearly be more complex and require considerably more time than the unlikely prospect of a new bank opening a branch.

Q: So are you saying it’s hopeless and Svalbard residents are just going to have to deal with it?

A: Not necessarily. There’s plenty of “firm” decisions in Svalbard (and everywhere else) that have changed over the years, often right before they’re supposed to happen, due to varying levels of citizen, business and political pressure. Among the many local examples, Store Norske during the past decade or so vowed to shut down specific or all operations unless profits improved and/or, the government speedily approved certain projects (obviously things kept going until the crisis of 2015/16 resulted in a government-ordered shutdown). Plus, if nothing else, the surreality of this entire year has shown there’s pretty no predicting how anything is going turn out.