Banking in New Europe Before and After the crisis

Transcription

1 VIVALDI FORUMI MENADŽERSKI FORUM POSLOVNI ZAOKRET Mokra Gora, 31.mart-2.april Banking in New Europe Before and After the crisis Filippos Karamanolis President of the Executive Board, Eurobank EFG

2 Eurobank EFG Group points of sale employees 87 bln assets

3 Eurobank EFG in Serbia At a Glance Fastest growing bank Amongst top 5 banks in assets (1,8 bln EUR) Top 3 in many product categories 117 branches nationwide coverage 9 Business Centers 1,600 employees 800,000 clients CSR program We invest in European values (over 3,5m EUR contributed so far) Strong Group presence EFG Leasing EFG Property Services EFG Business Services IMO Property Investments

4 The previous Growth Model DEPENDENCY ON IMPACTS OF CRISIS Fund inflows from foreign banks Foreign Direct Investments (FDIs) Abrupt slowdown in foreign capital flows Speculative attacks on currencies Currency devaluations ( possible difficulties in servicing FX loans) High interest rates in defense of the currencies Sharp Credit Growth (most of it in FX) Real Estate investments Insufficient domestic savings generation to substitute foreign capital Memories of banking system collapses in the 90s panic withdrawals of deposits (Q4 08)

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6 3 Fundamental changes 1. From sales engines to developing client relationships Before Now Market growth phase one size fits all products, good distribution channels and capabilities was all that was needed Need to know our client well, offer customised products 2. New Funding Model Before Now Unlimited resources Self-funded growth, less reliance on fund inflows from abroad

7 3 Fundamental changes 3. Banking is a much more complex business today PLUS Before Now Simple profitability management : (loans*spread) Deposit volumes vs. cost Collections vs. new loans Stricter regulatory environment HR management tougher etc. Liquidity management has become much more important (volatility) More emphasis on remedial management (collections, restructuring)

8 What Has Changed Retail Deposits CLIENT SELECTION CRITERIA 150% FROM Pricing TO Trust / Confidence Bank Image Flexibility to withdraw Pricing PORTFOLIO COMPOSITION 100% 50% TDs Savings Current Savings TDs 0% Sep 08 Dec 10

9 What Has Changed Loans Retail Lending Corporate Lending FROM Retail Lending Smaller Companies Private Lending Longer Term More Unsecured Significant drop in demand Only demand for working capital loans Investment plans put on hold TO Business Lending Larger Companies State or quasi state Shorter Term More Secured

10 Advertising Spend amongst products

11 What Has Changed People Management Some of the challenges in New Europe remain the same (e.g. employees assuming management responsibilities very early in their career) However, other things have changed High staff turnover BEFORE Simple/consistent priorities & targets (e.g. sales volumes) Flexibility in remuneration Management focused on target achievement NOW Very low staff turnover Targets are more complex and difficult to manage (loans, deposits, collections, profitability etc) Fewer & limited remuneration options Reassure & pressure at the same time

12 People Management Lessons Learnt Significance of Internal Communication (people want to know) Very important for senior management to pull together, be involved in all issues and assume collective responsibility for the overall success of the company. Communicate the crisis as an opportunity to become leaner & more efficient - optimise staff quality - take advantage of other competitors difficulties to strengthen our position on the market THE CRISIS WILL END ONE DAY

13 Regulatory changes Volatility Change Consumer needs & perceptions Macroeconomic environment (& sovereign risks) Globalisation everything is connected Chaos is the new normality Philip Kotler

14 Flexibility & adaptability are the most important qualities for any company in today s environment

15 It is not the strong, nor the intelligent who survive, but those who are quickest to adapt Charles Darwin