The Longyearbyen branch of Norway's Sparebank1 bank is set to close. This will leave the few thousand residents of Svalbard without a bank.
One of the claims to fame for residents of Svalbard is that they have the northernmost, well, pretty much everything. The world's northernmost department store, full-service hotel, university campus, brewpub, public library, hospital and food truck are all located here.
But soon, Svalbard will lose its claim to have the world's northernmost bank. The closure of Longyearbyen‘s only bank branch will mean anyone needing to visit a bank in person will have to take a 1.5-hour flight to Tromsø.
In total, Sparebank1 will close 15 branches across northern Norway. “Very few customers go to the bank anymore. They complete the tasks themselves in the mobile bank, online bank, or in phone conversations with our advisers,” said CEO Liv Ulriksen in the stock exchange announcement.
Physical banks disappearing from northern Norway
The banking group expects the closures to result in an annual saving of around NOK 40 million ($4.4 million). In addition to Longyearbyen, the bank will also close the following branches across northern Norway:
Meløy, Rognan, Leinesfjord, Stokmarknes, Myre, Andenes, Storsteinnes, Målselv, Lyngseidet, Skjervøy, Karasjok, Tana, Vardø, Båtsfjord and Honningsvåg.
Sparebank 1 communications director Stein Vidar Loftås spoke to Svalbardposten about the closure:
“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. The world has become incredibly digital,” he said.
A difficult year in Longyearbyen
It's been a tough year for residents of the Arctic archipelago, Svalbard. The worldwide health crisis and resultant travel restrictions have caused chaos for the local economy, which these days is heavily reliant on tourism.
Then came the tragic death of a Dutch national and a polar bear at Longyearbyen Camping next to the town's airport. Residents of the city were said to be in mourning following the incident.
A difficult future?
The population of Svalbard has dropped by more than 10% since the coronavirus began. Of the 273 people to leave Svalbard, 63.8% were Norwegians. However, the number does not yet take into account autumn's new arrivals to the Svalbard Folkehøgskole.
Government spokesperson Monica Mæland said that the risk of a loss of competence in Svalbard must be taken seriously: “The Government is following developments and is continuously considering further measures to support Svalbard in this demanding situation.”
Longyearbyen's Stein Tore Pedersen has been a lifelong customer of Sparebank1. He told NRK that he fears it will be difficult for established companies, startup businesses and foreign employees.
“I do not think the board's decision to close the branch in Longyearbyen has taken into account the social role the bank actually has,” he added.
As a citizen of Longyearbyen, I can tell you that SpareBank’s cruel attempt to shut down our vital community institution – which is highly profitable just as the bank as a whole is highly profitable – is going to fail. The community is organizing from the grassroots to the political to the local business levels. I do not use this word lightly, but Mr. Loftås is a liar. The bank executives who are attempting to shut our community’s lifeline down have not as he claimed acquired any meaningful local customer knowledge. The entire community was kept in the dark, not asked to explain our needs before decisions were madd, and the local bank manager and employees only learned about this decision when it was announced.
SpareBank 1 Nord-Norge just had its best year in at least a decade by a huge margin in 2019, making kr 2,7 billion in profit. And their executive-bonus-feeding gravy train hasn’t slowed down this year with their 2Q earnings in the middle of the pandemic up 31% versus solid 1Q profitability. Their 2Q earnings call was practically a giant party celebrating how much money they are making and forecasting to continue making.
Meanwhile in Longyearbyen we keep telling them how the world’s northernmost community has entirely different needs than even any normal small town and we constantly need the local physical branch to get things done. They are a 60 year old integral part of making our community function. All SpareBank executives dish back are generic PR points that sound like they could have been written by an analyst sitting half a world away at JP Morgan. Who are along with State Street one of the biggest shareholders in SpareBank 1 Nord Norge which is majority owned by international banks, funds, and millionaires, with at least 29% foreign ownership.
Basically this is a case of raw corporate greed, seeking to somehow “save” a small portion of a kr 40 million target (1.5% of last year’s profits) by shutting down a profitable branch. The entire Longyearbyen community is rallying around our local bank branch to save it from these out of touch executives seeking to line their own pockets even as they keep spouting their lies about caring for the communities they claim to serve. We are united to stop them.
Unfortunately banks nowadays see individual customers and sme’s as more of a nuisance, and the minimal cost of keeping a branch running will generate more income in share transactions.
Government needs to provide legislation to ensure banks do not close local branches where there is no close alternative.
This is happening throughout Europe!
Customers simply don’t matter any more!
It is not a surprise that they will have to fly 1.5 hour to visit bank because though I live in mainland I have to take flight or train ca. 4 hours if I have to visit my bank in person. I use Nordea and they don’t have branches everywhere.
I don’t know if you have an equivalent institution under Norwegian law to the Credit Union, but we have many of these in the United States. They are essentially a member owned local bank-type institution with restricted membership based on an employee group, town of residence, or so on.
https://en.wikipedia.org/wiki/Credit_union
Perhaps starting something like that would solve the problem (and keep profits in the community).
It’s too bad the Norwegian Postal System does not provide banking services, as they are often located in remote areas. We have the same issues in the Canadian arctic.