Budgeting — an unnecessary evil

Abstract

Almost 30 years ago — in 1970 — the largest commercial bank in Sweden, Handelsbanken, was in a major crisis. Profitability was low and the bank was in conflict with the authorities. As a result of the crisis the executive director left the bank, as did several of the top officials. At this point the board of the bank asked me to become executive director. At that time I was head of a provincial bank in the northern part of Sweden – Sundsvallsbanken. I had been at that bank for ten years. Before that I was a professional economist, head of a major research institute and an associate professor at the University of Stockholm. I did not have any practical business experience and knew nothing about banking, but after 10 years in Sundsvallsbanken, I had learned a lot and developed some firm ideas about how to run a bank with a large network of branch offices.