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.
“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:
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?
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?
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.