BYE-BYE BANK: SpareBank1 will close Svalbard’s only physical branch Dec. 18, leaving behind a cold, cashless community along with numerous other chilling financial challenges

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“It’s an emergency” the woman told the assistant bank manager with a resigned smile, explaining the last-minute to-do list was about “all those ‘D number’ things” only possible with in-person banking that will vanish a day from now.

Others coming in steadily during the last days before Longyearbyen’s only bank closes its doors for the final time on Friday (open from 10 a.m. to 1 p.m.) have been doing everything from trying to unload the change in their pockets while it’s still “usable” to seeking loans they likely won’t be able to get next week via online-only options.

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Trond Hellstad, manager of the SpareBank1 Nord-Norge branch in Longyearbyen, discusses Friday’s closure of the branch in his office Thursday. The bottle of wine in the background is a farewell gift from a customer, but H said any toasts by the bank’s four employees will be a wake, not a celebration. Photo by Mark Sabbatini / Icepeople.

“It’s been consistently busy – not a queue, but there’s almost always been customers here,” said Trond Hellstad, manager of the SpareBank1 Nord-Norge branch in Longyearbyen, at midday Thursday. In addition to those rushing to complete last-minute needs “people are coming by almost to say the last goodbye.”

Almost two years to the day after the first armed robbery of a bank in Svalbard reaped a wealth of global headlines, the robbery of the bank itself from its customers is resulting in an abundance of neediness.

For the many in Svalbard who’ve gone months with no cash in their wallet – literally and figuratively – due to the COVID-19 pandemic, the bank closure and a flurry of financial problems such as obtaining loans is about to become a lot more bleak despite months of efforts by local leaders and activists to persuade the bank to change its decision or establish an alternative with another bank.

Other anticipated hardships range from the simplistic dilemma of having scant cash (as in bills and coins) in circulation to numerous complications for the sizeable percentage of Svalbard foreigners such as getting a photo ID  and getting paid by foreign companies trying to do so in Norwegian currency.

The closure announced earlier this year by SpareBank1 Nord-Norge, which is closing 16 of its 31 locations by Dec. 31, is proceeding despite a lengthy list of complaints from local authorities and residents concerning unique financial aspects of Svalbard that makes a physical bank branch essential. However, the issues raised have fallen on deaf ears among top bank executives from the beginning, who are dismissing the protests as expected “noise” (for a longer explanation, see translation of official statement at end of article).

Some piecemeal solutions are being announced during the Longyearbyen branches final days, but among those in Svalbard ranging from officials at the bank to business owners to leaders presiding over Russian settlements the criticisms remain near-unanimous.

The local SpareBank1 branch was established in 1959 and was one of the rare “institutions” besides Store Norske in the company town Longyearbyen has been during most of its history, wrote Richard Mook, a retired state meteorologist and longtime Longyearbyen resident, in a letter published earlier this month by Svalbardposten. He noted the branch severed as a notorious financial link to the mainland during its initial years since Longyearbyen relied primarily on its proprietary “Svalbard” currency until 1980 – but by closing the branch it is again leaving the community in the financial cold.

“Digital solutions cannot replace the bank’s locally socialized employees,” he wrote. “What they have done and their role for the benefit of all parties will be revealed with this decision. It is destructive for the bank’s reputation to close its doors when the city is in an economic and structural crisis.”

The issues begin literally with currency itself, as SpareBank1 has not transported cash between the mainland and Svalbard since spring, Stein Vidar Loftås, a bank executive, wrote in an email to the newspaper. The town’s only ATM remains out of operation and cash is only “valid” at a handful of locations such as Svalbardbutikken and the Mix kiosk (although COVID-19 precautions obviously are largely a factor).

“This is not related to whether we have an office in Longyearbyen or not,” Loftås wrote. “We have not found partners who can take on the job of transporting money to and from Svalbard, or of operating and maintaining the machines. Until early 2020, we have partially solved this with our own personnel, but safety requirements mean that it is no longer possible.”

Hellstad said Svalbardbutikken is working on providing a means of cash exchange since many local businesses cannot practically expect to function indefinitely on card-only payments, especially those dealing with visitors and other customers making purchases.

However, the unavailability of cash is just the starting point of the complaints detailed by Sergey Gushchin, the Russian Consul General in Svalbard, in a letter to the CEO of SpareBank1 Nord-Norge that was also sent to other entities including Norway’s Ministry of Foreign Affairs. He asserts the branch’s closure – which among other things will make it difficult to open accounts for new employees, and make cash/salary withdrawals from them – violates the Vienna Convention because Norway under the Svalbard Treaty must ensure foreign authorities can fulfil their duties.

“One can imagine that there may be a cut of politics in this,” he wrote.

Gushchin told NRK he has not received a reply, and as a result Russian officials will be forced to fly between Longyearbyen and Tromsø to conduct banking business.

A SpareBank1 spokesperson told NRK that Gushchin’s letter contained unforeseen complaints, although it wouldn’t affect the closure decision. Jakub Godzimirski, a researcher at the Norwegian Institute of Foreign Policy, told the news network he does not believe the closure of a bank is a violation of the Vienna Convention.

“It will probably make the job of consul general more difficult,” he said. “But I do not think it says anything in the Vienna Convention that one must maintain banking in the areas where consulates are located.”

Those in Longyearbyen, meanwhile, are largely focusing on how the closure is contrary to the Norwegian government’s official policy goals, which include diversifying the community both economically and socially.

Among those most likely to be affected are the roughly 35 percent of residents in Longyearbyen who are foreigners, who say they will be unable to open bank accounts, obtain loans and conduct other crucial transactions due to certain residency/financial regulations that differ between Svalbard and the mainland. Local residents must have a valid passport and resident “D-number” to open a bank account, for example, but obtaining the latter won’t be possible once the branch closes. It also means they won’t be able to obtain a BankID, which is used for a wide variety of official purposes such as online government forms as well as banking, although some officials have stated an existing alternative known as MinID may be an acceptable substitute.

Loftås, in a short statement reported by Svalbardposten, said an alternative allowing foreigners to open an account using passports at the post office – located in the same building as the bank branch – is in the process of being worked out. While the process would take longer due to the transfer of processing and other information between the mainland and Svalbard, local officials told the newspaper it appears to be a workable – if not entirely satisfactory – solution.

But that won’t solve yet another major concern: that mainland bank officials will deny or complicate requests for loans and other services that local employees would be more likely to approve because of their understanding of Svalbard’s unique financial, business and other community aspects.

“Norwegian citizens will also experience that other banks, without local knowledge, will refuse to finance a home purchase on Svalbard,” Hellstad said during the initial days following the announced closure. “This includes a lack of knowledge about the value of real estate here, which we have just established a collaboration with a broker about.”

Hellstad said he will remain employed by SpareBank1 until March, working at a home office as well as “tidying up here” since the bank’s building space has not yet been sold.

“My focus as a human being is just focusing on myself and my colleagues,” he said.

There may be some kind of “farewell” – but obviously not a celebration – at the bank during its final day, Hellstad said. After the doors close he may take the other three employees out for a beer in the spirit of a commemorative “wake.”

“It seems like we should be able to do at least that much,” he said.

•••••

Digital banking – also for Svalbard

(The following is an English translation of a Sept. 25 statement by Liv Ulriksen, for SpareBank1 Nord-Norge, regarding concerns about the closure of the Longyearbyen branch. Is it provided via Google Translate with minimal editing aside from factual and blatant grammar/style errors.)

Last week, we told SpareBank 1 Nord-Norge that we will close our 16 smallest bank branches.

The bank branch in Svalbard is one of the branches that will be closed by 31 December 2020. The board’s decision has triggered many emotions at 78 degrees north. I have a great understanding of that. Some have reacted with disappointment. Others have become upset, dissatisfied and even provoked. Still others have simply been pissed off, as only we from the north can be. It’s probably not more than we had to expect.

In a way, it’s nice to see that many people care about their bank, and say they’ll miss the bank branch. We have received a lot of feedback in recent days, both emails, phones and comments on social media. I myself was in Longyearbyen two days this week, and there were several who contacted me to say their opinion. I would like to thank you for your commitment.

The feedback we have received is mainly about the fact that there are special conditions in Svalbard that mean that not everyone can use the bank digitally. Many tell us that society in Svalbard is being severely set back without a physical bank branch. Some therefore hope that the decision will be reversed.

The board has decided that our office in Svalbard will close no later than 31 December. That decision stands. At the same time, we have no plans to escape Svalbard, board the first flight to the mainland and let the Svalbard community manage on its own. We will close the office, but we will also ensure that there are solutions to Svalbard’s special challenges related to banking services.

There are three areas in particular where Svalbard differs from our other market areas. The first is related to foreign workers. Through the Svalbard Treaty, foreigners can work on Svalbard without having a work and residence permit in Norway. This means that they do not have a Norwegian birth number, and that they thus do not qualify for banking services such as BankID or bank cards with identification. Foreign workers are instead given a so-called D-number from the state. Until now, people with a D-number have had to show up physically at a bank branch to identify themselves, so that they can open a bank account at a Norwegian bank.

Does this mean that foreign employees will not be able to open an account in SpareBank 1 Nord-Norge when we close the office? No, by no means! We are specifically looking at two solutions for how people with a D-number should be able to identify themselves to us. One possibility is to collaborate with other players in Svalbard, who can perform the identification check for us. Another possibility is that the regulations actually allow us to confirm the identity of these customers without physical attendance. In such cases, the bank is required to implement further measures. What these measures should be will depend on how we assess the risk that the customer is not who he or she pretends to be. So far, we have not opened up for such a solution, but this is something we are considering on an ongoing basis.

The next area where banking services on Svalbard differ from banking services on the mainland is about being sent a bank card. Norwegian banks send bank cards to the customers’ registered address. It is not always as easy in Svalbard, especially for foreign workers who are not registered in the population register. Here we have provided an extra service to customers in Svalbard, in that they have been able to pick up their bank card at our bank branch. Here, too, we believe that a collaboration with other players in Svalbard can provide a good solution to the challenge. Another possibility could be that the bank card can be sent to the customer’s employer.

The last point many have pointed out in recent days is that loan processing for customers in Svalbard is not as “straight forward” as for customers on the mainland. For example, tax figures for Svalbard do not automatically find their way via Altinn. In addition, all land is state-owned. This means more manual work on loan applications in Svalbard. This is made easier when you actually have detailed knowledge of Svalbard. Many are therefore afraid that it will be more difficult to get a mortgage when we close our office premises.

To this I would like to say that we have run a banking business in Svalbard for over 60 years. Throughout all these years, we have built up solid expertise in the special conditions at 78 degrees north. Here, of course, the accumulated local knowledge from our skilled employees in Longyearbyen has been important. We will seek to take care of it when we close the office. But the Svalbard knowledge is also located elsewhere in our organization. We will continue to be the expert on Svalbard. Even if the application is processed from the mainland, it should not be more difficult to get a loan.

Beyond these three areas, the vast majority of bank customers in Svalbard are the most bank customers. They are digital, and they can use our digital services. Our corporate customers are not directly affected by the office closures. We know that a few retail customers, for various reasons, can not use our digital solutions. We know our customers well, and we know which of them will now need a little extra help. We will contact them directly, to find good solutions for the individual.

I understand that we are not met with cheers when we say that we will close 16 bank branches. But the decision was made on a good basis and is the right one for the group. In isolation, it can be argued that the annual savings of NOK 40 million are small, compared with the results we have delivered in recent years. So why do we really need to save this money? The answer is twofold.

First, we are 100 percent dependent on capital from investors at home and abroad. The same capital is needed by other banks. In other words, we have to compete, and investors can choose who they want to trust. We must therefore deliver a competitive return on a par with the best international banks. If we do not do that, we will have to pay more for capital – we will lose our competitiveness. This in turn means that we lose customers, and in the worst case, SpareBank 1 Nord-Norge can disappear as an independent bank.

Secondly, we are constantly being challenged by internet banks that have lower costs than us, and thus can offer customers better terms. Price is becoming more important to people, and thus we must cut costs where we can to continue to create the results we depend on to deliver.

The main reason why we are now closing our offices, however, is changed customer behavior. Our customers have been clear in their feedback; they want a bank with good digital services and competitive prices. We are not elected just because we have many bank branches. Nor because we are a northern Norwegian bank. It is only through being the best bank for Northern Norway that we are elected, and if we are to succeed, we must constantly evolve. This means that we sometimes have to make some demanding and painful decisions. We are confident that even after this change we will be able to take care of both customers and employees in a good way, and that the offer we provide will continue to be both good and adapted to people and business in northern Norway – and on Svalbard