Corporate & Investment Banking
The worst financial crisis since the Great Depression has profoundly changed the world of corporate and investment banking. Major regulatory changes and a shift in customer demand driven by decreasing risk appetite are forcing companies to rethink their business models, innovate and prepare themselves for potential new shocks. Players who make the right decisions today will enjoy a significant competitive edge in the future.
Roland Berger's Corporate & Investment Banking Segment has a strong track record in providing sustainable solutions right around the globe. We serve a wide range of institutions, including private banks, public banks, universal and investment banks.
Our areas of expertise reflect the complexity that our clients face in today's demanding environment, their strategic, organizational and operational needs. By leveraging our global network of functional experts we are able to cover the entire spectrum of relevant issues.
We help our clients identify and prioritize their strategic options in the face of market transformations and regulatory reform. We assist them in adapting their segmentation approaches, customer coverage models and product portfolio to the new reality of a sector in transition. Together with our clients we strive to optimize operational performance by improving their cost basis as well as their structures and processes. We also work with our clients on issues of risk management, wallet analysis & sizing, and marketing.
The following sample projects illustrate some of our international experience in the Corporate and Investment Banking Segment.
Defining a growth strategy for a leading German bank
A large German wholesale bank – the leader in its regional market – had an excellent track record in the small- and mid-cap business. For a long time, however, the bank had been a minor player in the German large-cap segment. The bank asked us to develop a growth strategy for the large corporations market.
We first quantified the relevant market by performing a wallet-sizing exercise for the relevant target corporations. We drew up a large database of potential clients, including key figures from the potential clients' financial statements and their specific revenue potential with respect to the bank's various products.
Next we determined a target product mix for the different corporations, and identified the strengths and weaknesses of the client's future key competitors in the large-cap segment. We also analyzed the impact of the planned expansion on the bank's capital requirements. This enabled us to draw up a business plan detailing the bottom-line implications of the new strategy.
Our work permitted the client to enter what used to be largely unchartered waters. Our database of over 1,000 potential customers and our detailed competitor fact-book enabled the bank to become a serious competitor in the German large-cap segment. Furthermore, thanks to our special wallet-sizing methodology and scenario analysis for capital requirements, the client can at any time determine the financial implications of further expansion in this segment.
Supporting the strategic and organizational redesign of a European real-estate bank
A European real-estate bank had experienced negative results over several years, and a recent merger with another mortgage bank had failed to yield significant cost or revenue synergies. The bank asked us to devise a strategy for a fast turnaround.
The challenge facing the bank was twofold: to change the strategic focus and business mix so as to generate a sustainable revenue stream, and at the same time to significantly reduce costs so as to create lasting positive results. After carrying out an in-depth market analysis and benchmarking the client's strategic positioning against its main competitors, we created a smaller but more efficient bank focused on the commercial real-estate business.
This reorientation required separating out non-strategic business units, reinforcing existing skills in the commercial real-estate segment and streamlining the bank's organizational structure. In line with the new positioning, we reorganized the bank's sales organization and staff functions, redefined its target customer group and reshaped the credit processes and risk strategy.
To implement the turnaround quickly, we opted for a tool-driven approach with a rigorous timeframe. A functional analysis of the support and overhead functions identified redundant functions. At the same time, the central database facilitated the staffing process for the target organization, while the documentation tool ensured efficient and transparent working processes.
In the year following the project, the redesign yielded a cost reduction of 30%. In the long run, the sustainable cost reduction will be around 45%. A detailed cost and budget plan for the next four years allows for strict cost management. The bank's new lean organizational structure, coupled with efficient and fast processes, allowed it to react swiftly to the market turmoil of recent years. The strategic repositioning also enabled the bank to make the most of new opportunities during the US mortgage crisis.
Defining the Asia-Pacific organization of a large universal bank
Our client was a top European universal bank with a significant presence in all regions of the world. Its Asia-Pacific corporate and investment banking functions had been through a major evolution in recent years. With increased scrutiny from local regulators and a marked trend toward regionalization within the organization, the bank felt that its regional organizational structure was insufficiently reactive and improperly aligned to the overall organization.
The bank asked us to define a new target structure for COOs within the Asia-Pacific region and key target organizational principles. We first analyzed the existing organization and identified potential constraints. We did this by conducting over 40 interviews at the global, regional and local level and compiling existing organizational documents (organization charts, job descriptions, etc.) from the different locations.
Our analysis showed that the diversity of Asian countries had translated into a variety of organizational models. This resulted in an overloaded span of control with too many upward and downward reporting lines. The high variability of mission statements and job descriptions created potential for hierarchical overlaps, functional gaps and local interpretation of roles and responsibilities.
In light of the above, we decided to outline clear responsibilities for each COO, define the expectations for countries and lines of business, and detail interactions for key positions, including upward and downward reporting lines. This led to the establishment of new structures at the regional and local level. As support for the implementation process, we defined an interim structure to deal with individual movements toward the target organization.
The project resulted in the establishment of a common Asia-Pacific mission statement on governance that streamlined regional processes. The aligned organizational structure not only ensured regulatory compliance but also introduced cost transparency and allowed the client to identify new efficiency gains in operating costs.