Strategic Management in Banking

Euromoney Learning Solutions

How long?

  • 5 days
  • in person

Euromoney Learning Solutions

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Who should attend

This workshop is for the leaders, senior managers who are expected to reach this level soon, and those who support directly the top management teams of their banks:

  • Owners of banks, their main board members and supervisory board directors
  • CEO’s, members of boards of management, and members of top executive committees
  • General managers, executive vice presidents, executive directors responsible for "profit centre" divisions, involved in:
    • Retail Banking, Premium Banking and Private Banking
    • MSME Banking, Corporate & Commercial Banking
    • Treasury and ALM
    • Subsidiary companies involved in these businesses
  • Senior executives responsible for support divisions, including:
    • Strategic Planning and Action Planning
    • Marketing & Sales Support
    • Risk Management, Especially Credit Risk and Market Risk Management
    • Operations
    • Human Resources Management
    • Information Technology Management
    • Internal Audit and Compliance
  • “High-flyers” with potential to rise to the top will find the workshop broadening and beneficial

About the course

Understand how leading banks are led and managed strategically to boost performance

Most top bankers around the world want to know more about strategic management and associated best-practices because they are keen to increase profits and profitability whilst keeping risks acceptable. This motivation arises from a range of challenges and opportunities, for example:

  • Downward Pressures on Profitability
  • Big Opportunities to Boost Income
  • Scope to Advance Risk Management
  • Unrealised Opportunities to Increase Cost-Effectiveness
  • Scope to Allocate More Resources to the Best Businesses

Objectives of the Workshop

This 5-day, top-level workshop is for the leaders of banks that want to increase profitability greatly and rapidly but also safely. It explores how the most profitable banks:

  • Boost business and income from customers
  • Make more money from asset & liability management (“ALM”) and treasury
  • Contain risks at acceptable levels
  • Achieve and maintain maximum cost-effectiveness
  • Optimise the allocation of scarce resources, particularly people, time, capital and IT power

Importantly, the workshop provides a forum for delegates to exchange opinions about how their banks could achieve superior profitability across all major lines of business: Retail Banking, MSME Banking, Corporate Banking, ALM and Treasury.

Benefits of the Workshop

The workshop gives delegates the opportunity to:

  • Understand the strategies, best-practices and associated targets for boosting profitability that are adopted by the most successful banks
  • Assess ways of boosting business & income from customers – marketing and selling
  • Examine how leading banks make more money from ALM and related treasury activities
  • Explore approaches to maintaining risks at acceptable levels – credit and market risks
  • Assess ways of achieving maximum cost-effectiveness – reorganisation & reengineering
  • See how to optimise the allocation of scarce resources – people, time, capital, IT power
  • Set profit improvement priorities at their banks
  • Learn how to guarantee the success of major profit improvement projects at their banks

Learning Level

This is an advanced, leadership level workshop for senior bankers and their management teams who are keen to ensure that they formulate and execute the best strategies, establish best-practices, and thereby increase profitability rapidly yet safely.

Methodology

The workshop is intensive and participative. Various methods are used:

  • Formal presentations with discussions, including many real case histories from across Europe, the Arab world, former Soviet countries, Africa, Asia-Pacific and the Americas
  • “Question & Answer” plenary discussions with the workshop director
  • Case studies that illustrate the application of the approaches examined
  • Group work in which delegates discuss improvement priorities for their own banks
  • 50% of time at the workshop is spent on case studies and group work so that delegates can “learn by doing”.

Because profit improvement is a serious, “hard” subject, the workshop includes specific numerical examples and a range of practical, analytical methods. To assist, the workshop director provides several Excel models that delegates could apply when they return to their banks.

Agenda

Day 1

1. Presentation: Introduction to the Workshop

  • Workshop Themes, Subjects and Timetable
  • Introduction of Delegates and the Workshop Leader

Theme 1: Strategies and best practice targets for boosting profitability

2. Presentation: Establishing an Overall Profit Improvement Strategy

  • How Leading Banks Link Strategy to Profitability:
    • Main Elements of Strategy in Leading Banks
    • Importance of Linking All the Elements of Strategy to Profitability
  • Boosting Business & Income from Customers
  • Making More Money from ALM and Associated Treasury Activities
  • Controlling the Cost of Risks that Go Wrong
  • Ensuring High Cost-Effectiveness
  • Optimizing the Allocation of Scarce Resources
  • Upgrading Planning & Control and Management Information
  • Fostering Strong Corporate Governance and a Progressive Culture

3. Presentation: Setting Key Performance Targets for Driving Up ROE

  • Understanding the Main “Drivers” of Bank ROE Across Different Countries
  • Measuring the Correlation Between the “Drivers” and ROE
  • Choosing Challenging Yet Realistic ROE Objectives for Individual Banks
  • Fixing High-Level KPT’s (Key Performance Targets) for Attaining ROE Objectives
  • Case History: A Leading African Bank Keen to Achieve a Pretax ROE of 35%+

4. Group Work - Choosing High-Level KPT’s for Delegates’ Banks

  • Key Performance Targets for Bank Boards and Top Teams
  • Discussion: Implications for KPT’s and Best-Practices at Delegates’ Banks

5. Presentation: Case History - Lessons from a Bank that Increased Profitability Greatly

  • Introduction to the Case History Bank - A Leading Arab Bank
  • Main Transformation Changes Made by the Bank
  • Impact of Changes on the Bank’s
    • Balance Sheet and Income Statement, Costs and Profitability
    • Share Price
    • Market Capitalisation

Theme 2: Boosting business & income from customers

6. Presentation: Case Histories - Building a Highly Profitable Customer Base

  • The Nature and Contributions of Marketing Strategy Focused on Profitability Improvement
  • World-Class Standards of Marketing Strategy in Leading Banks
  • Examples of “Winning” and “Losing” Marketing Strategies:
    • Case History: A Medium-Sized European Domestic Bank
    • Case History: A Major Corporate Banking Group Based in a Former Soviet Country
    • Case History: A Large Scandinavian Retail Bank
    • Case History: A Medium-Sized International Bank Based in the EU
    • Case Histories: Overview of Some Arab Banks
    • Case History: Overview of an Asian Bank
  • Important Practical Lessons
  • Discussion: Priorities for Upgrading Marketing Strategy Across Delegates’ Banks

Summary of Day 1

Day 2

7. Presentation: Profit Improvement Achieved by Banks with Focused Marketing

  • Case Histories: Examples of Banks that Doubled Profits Via Focused Marketing
  • Typical Main Opportunities Grasped:
    • Growing and Cheapening the Deposit Base
    • Credit Marketing Opportunities
    • Cross-Selling Other Products & Services
  • Deciding How Much to Invest in Implementing Focused Marketing

8. Case Study: Developing & Executing a Marketing Strategy to Drive Up ROE

  • Defining Mutually Exclusive Market Segments
  • Calculating the Profitability of Market Segments and Assessing Their Attractiveness
  • Assessing a Bank’s Competitive Strengths in Different Market Segments
  • Setting Development Priorities Across Market Segments
  • Specifying Action Plans for Moving Ahead
  • Setting Profit Improvement Targets for Individual Market Segments
  • Setting the ROE Target for the Whole Customer Base

9. Case Answer: Developing & Executing a Marketing Strategy to Drive Up ROE

  • Answers of Delegates to the Case Study in Session 8
  • Presentation of the Model Answers
  • Discussion About Focusing Marketing Strategy in Delegates’ Banks

10. Presentation: Diversifying Products & Services in Retail, SME and Corporate Banking

  • Deposit, Savings and Investment Services
  • Loans and Mortgages
  • Insurance Services
  • International Banking Services
  • Business, Support and Educational Services
  • Discussion: Product Development Priorities for Delegates’ Banks

11. Presentation: Boosting Growth of Cheaper Deposits in Personal Banking

  • Factors That Explain the Varying Deposit Growth Rates of Competitor Banks
  • Different Importance of the “Drivers” of Deposit Growth Across Countries
  • Developing and Implementing a Deposit Growth Strategy
  • Case Histories: Banks that Successfully Boosted Deposit Growth

12. Presentation: Modern Sales Channels for Intensifying Selling & Cross-Selling

  • New Sales Channels for Banks:
    • Segmented Branches
    • Point-of-Sales Offices - “POS Offices”
    • Mobile Sales Forces
    • Outbound Call Centres
    • Direct Mailing, E-mails, SMS, Social Media
  • Case History: How One Progressive Bank is Modernising Its Channels
  • The Meaning of “True Selling” as Used by World-Class Banks
  • How Selling Intensity Drives Cross-Selling and Profitability
  • World-Class Standards of Selling & Cross-Selling
  • Case History:
    • Steps Taken by One Bank That Intensified Selling Greatly
    • Impact on Cross-Selling and Profitability

Summary of Day 2

Day 3

13. Case Study: Redesigning Branch Networks for Growth, Superior Service and High ROE

  • Introduction to the Case Study Bank and Its Strengths & Weaknesses:
    • A Clear Marketing Strategy
    • Low Selling Intensity in Branches and Head Office
    • Undifferentiated Service Quality for Different Market Segments
    • General Purpose Branches that Serve All Market Segments
    • A Very High Cost/Income Ratio
  • Profit Improvement Strategies to be Evaluated:
    • 1. Downsize the Bank, Segment the Network, Focus the Workforce on to Selling
    • 2. Expand the Bank, Segment the Network, Focus the Workforce on to Selling
  • Factors to be Considered:
    • Different Service Quality Levels for Different Types of Customer
    • The Balance Between Front and Back-Office Personnel in Branches
    • The Amount of Time Spent Selling in the Branches
    • Income Per Customer from Customers in Different Market Segments
    • The Balance Between General-Purpose and Segmented Branches
    • The Size of the Head Office in Relation to the Branch Network
    • The Amount of Time Spent Selling in Head Office
  • Choosing the Best Strategy

14. Case Answer: Redesigning Branch Networks for Growth, Superior Service and High ROE

  • Delegates’ Answers to the Case Study in Session 13
  • Presentation of the Model Answers
  • Discussion About Redesigning Branch Networks in Delegates’ Banks

Theme 3: Making more money from ALM and Treasury

15. Presentation: ALM - A Business with Risks, Not Just Risk Management

  • The Fundamental Nature and Purpose of ALM in Leading Banks
  • Modern Methods for Measuring ALM Profits and Risks

16. Case Study: Measuring Correctly the Profitability from ALM Decisions

  • Understanding the Case Study Bank’s Balance Sheet and Profit & Loss Account
  • Assessing Transfer Rates for Defining Profitability and Selecting the Best:
    • “Psychological” Transfer Rates, Cost-of-Funds Method
    • Single Pool Rate, Dual Pool Rate and Mark-to-Market Methods
  • Calculating and Attributing ALM Profits: “Gapping” Profits, “Structural” ALM Profits
  • Calculating and Attributing Customer Profits: Deposit Profits and Lending Profits
  • Restructuring the Case Study Bank’s Balance Sheet to Balance Profits and Risks

17. Case Answer: Measuring Correctly the Profitability from ALM Decisions

  • Delegates’ Answers to the Case Study in Session 16
  • Presentation of the Model Answers
  • Discussion About Progressing ALM in Delegates’ Banks

18. Presentation: ALM as a Business - Role of ALCO in Banks with Active ALM

  • How Leading Banks Use ALM to Increase Profits at Acceptable Risk
  • World-Class Standards of ALM and Treasury Management
  • Case Histories: Using ALM to Increase and Smooth Bank Profitability
  • The Role of ALCO in Progressive Banks and the Essential Support Needed
  • Discussion: Priorities for Advancing ALM and Treasury in Delegates’ Banks

Summary of Day 3

Day 4

Theme 4: Keeping risk costs at acceptable levels

19. Presentation: Ensuring that Lending Generates High Profits After Bad Debts

  • The Elements and World-Class Standards of Credit Risk Management
  • The Credit Risk Assessment Methodology – “CRAM”
  • Case Histories: How Illustrative Banks Became World-Class at Credit Management
  • Discussion: Advancing Credit Policy and Processes in Delegates’ Banks

20. Case Study: Pricing Loans to Meet a Bank's ROE Objectives

  • Explanation of Target-ROE Risk-Adjusted Pricing of Loans
  • Calculating Margins Needed to Meet the Bank’s Target Return on Equity
  • Estimating Margins to Cover Funding/Opportunity and Operating Costs
  • Calculating Margins Needed to Cover Bad Debts and Exploit Competitive Dominance

21. Case Answer: Pricing Loans to Meet a Bank's ROE Objectives

  • Delegates’ Answers to the Case Study in Session 20
  • Presentation of the Model Answers
  • Discussion About Loan Pricing in Delegates’ Banks

22. Presentation: Establishing a World-Class Risk Management Division

  • Main Responsibilities of a Modern Risk Management Division, Including Credit, Market, Operating and Other Risk Management Functions
  • Organisation Structure of a World-Class Risk Management Division

23. Group Work: Minimising the Operating Costs of Credit Risk Management

  • Estimating the (Usually High) Operating Cost of Credit Management Processes
  • Best-Practice Standards for Credit Operating Costs
  • Setting Priorities for Reducing Credit Operating Costs

Theme 5: Achieving maximum cost-effectiveness

24. Presentation: Reorganising Banks to Serve the Market Cost-Effectively

  • Design Principles for Effective Bank Organisational Structures - Leadership, Business and Management Principles
  • Pros & Cons of Organisational Options for Modern Banks: Territorial, Product, Segment and Functional Structures, and Matrix Organisational Arrangements
  • The Economic Impact of Good & Bad Organisation Structures
  • Organising Business & Support Divisions - How Banks Reorganise Successfully
  • Discussion: Priorities for Reorganising Delegates’ Banks

25. Case Study: Widening Spans-of-Control & Reducing Layers of Management

  • Spans-of-Control and Layers of Management Found in the Most Profitable Banks
  • Understanding the Huge Economic Impact of Spans-of-Control & Layers of Management
  • Calculating the Major Impact of Broadening Spans-of-Control: Reduction in the Number of Staff and Managers, Salaries and Layers of Managers

26. Case Answer: Widening Spans-of-Control & Reducing Layers of Management

  • Delegates’ Answers to the Case Study in Session 25
  • Presentation of the Model Answers
  • Discussion About Spans-of-Control and Layers of Management in Delegates’ Banks

27. Presentation: Cutting Overhead Costs and Strategic Wastage in Banking

  • Common Examples of How Banks Waste Money
  • Methods for Cutting Excessive Costs

Summary of Day 4

Day 5

28. Presentation: Reengineering Processes & Operations to Free People for Selling

  • The Large Operating Costs of Banks’ Management Processes and Operations
  • Ways to Increase Cost-Effectiveness, for example:
    • Process Reengineering
    • Increased Delegation
    • Automation
    • Centralisation, Regionalisation, Outsourcing

Theme 6: Optimising the allocation of scarce resources

29. Group Work: Moving People into Income-Producing Jobs at Delegates' Banks

  • Estimating the Current Selling Intensity of Delegates’ Banks
  • Increasing the Number of Existing Types of Selling Job
  • Creating New Types of Selling Job
  • Moving People Into Income-Generating Jobs from Cost-Creating Work
  • Increasing Selling Time in All Selling Jobs
  • Reengineering Delegates’ Banks to Reach World-Class Standards of Selling Intensity

30. Presentation: Extracting Maximum Value from Information Technology

  • Deciding How Much, Overall, to Invest in IT
  • Distributing IT Investment Across Applications That Underpin Generation of Extra Income, Improvements to Risk management and Lower Operating Costs

31. Presentation: Reallocating Equity to a Bank's Best or Most Promising Businesses

  • Measuring the Profitability of Major Strategic Business Units – “SBU’s”
  • Impact on Profitability of Reallocating Equity Across SBU’s
  • Key Factors for Success in Reallocating Equity in Practice
  • Discussion: Reallocating Equity in Delegates’ Banks

Theme 7: Guaranteeing the success of profit improvement

32. Group Work: Setting Profit Improvement Priorities for Delegates' Banks

  • Setting Priorities for Boosting Profitability: More Income, Better Risks, and Lower Costs
  • Defining the Actions to be Taken
  • Proposing Timetables for Moving Ahead

33. Presentation: Key Factors for Success of Major Profit Improvement Projects

  • Setting Clear, Challenging Yet Realistic Profit Improvement Targets and Deadlines
  • Gaining Board and Top Team Support for Profit Improvement, Removing “Blockers”
  • Planning and “Branding” the Work
  • Forming and Organising the Profit Improvement Team, Including Project “Champions”
  • Organising Top Management Governance of the Profit Improvement Work
  • Announcing the Project to the Whole Workforce
  • Taking Immediate Steps to Freeze Costs and Boost Income
  • Communicating Progress Regularly to the Workforce and Rewarding Success
  • Case History: A Bank that Increased Pretax Profits by a Factor of 4 Over 1 Year

34. Summary of the Workshop

Closure of the Workshop

Experts

Chris Batt

Chris Batt has extensive experience of helping banks to boost profitability. He is an internationally-recognised authority in advising the owners, boards and top management teams of leading banks and other financial institutions, worldwide. He has worked with over 160 banks and other financial in...

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Strategic Management in Banking at Euromoney Learning Solutions

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