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1 Changing strategy Lars Mørch CEO, Danske Bank Sweden 24 April 2012.
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Transcript of 1 Changing strategy Lars Mørch CEO, Danske Bank Sweden 24 April 2012.
1
Changing strategy
Lars MørchCEO, Danske Bank Sweden
24 April 2012
2
Content
Change Management
• Our bank and position – at a glance
• The environment – macro and competitors
• Our strategy 2010 –
• Status – hard and soft
• Lessons learned
3
HistoryFounded by a bishop in 1837 – accelerated by Danske Bank in 1997 Selected milestones
1837 Östgöta Enskilda Bank founded by bishop Johan Jacob Hedrén
1920 Office in Stockholm
1994 Acquisition of Bohusbanken in Gothenburg and opening of the first provincial banks in Halmstad, Örebro and Karlstad
1997 Östgöta Enskilda is acquired by Danske Bank
Utilising the idea of provincial banks with high level of decision power and local “boards” as a differentiator
2004 HQ moved to Stockholm
2011 Full-service bank with a solid platform
Single brand - All provincial banks rebranded to Danske Bank
Our bank and position – at a glance
4
Why do we change?
• The world is changing• Weak and uncertain economc recovery• New regulations• Customer behavior is changing
• Big potential• Improve profitability• Improve the way we work• Growing with improved business mix
Our bank and position – at a glance
5
History and positioningStronger and weaker = different and new possibilities
Situation
Pre crisis - GROWTH• Strong growth• Vision: “Double the bank”• Branch mangers: “The power hub”• Top customer satisfaction and most satisfied employees• Low profitability and business mix not in balance
During crisis - ADJUSTMENT• Bottom-up model ineffective• Declining employee and customer satisfaction (08 and 09)• Reduced lending (SEK 255 bn to SEK 228 bn)• Profitability in line with competitors
Lending volumes (SEKbn)
C/I ratio: 2007-2011
0
50
100
150
200
250
300
2008 2009 20112010Danske Bank Sweden incl CIB
Danske Bank Sweden incl CIB
2007
Q3-20
0720
08
Q3-20
0820
09
Q3-20
0920
10
Q3-20
1020
11
Q3-20
1140
45
50
55
60
65
70
Our bank and position – at a glance
6
History and positioningStronger and weaker = different and new possibilities
SituationPre crisis - GROWTH• Strong growth• Vision: “Double the bank”• Branch mangers: “The power hub”• Top customer satisfaction and most satisfied employees• Low profitability and business mix not in balance
During crisis - ADJUSTMENT• Bottom-up model ineffective• Declining employee and customer satisfaction (08 and 09)• Reduced lending (SEK 255 bn to SEK 228 bn)• Profitability in line with competitors
Post crisis - DEVELOPMENT• Better financial results than ever – also on a comparative basis• More customers, higher volumes than prior to crisis (2007)• High customer satisfaction in priority segments• Stronger platform than ever (branding, product and integration)• Funding limits possibilities• Less attractive “contract” for some employees and customers
than before crisis: Less local “freedom” on some matters, e.g. price and processes. However, no loss of key people and EOS again significantly above industry
Lending volumes (SEKbn)
C/I ratio: 2007-2011
0
50
100
150
200
250
300
2008 2009 20112010Danske Bank Sweden incl CIB
Danske Bank Sweden incl CIB
2007
Q3-20
0720
08
Q3-20
0820
09
Q3-20
0920
10
Q3-20
1020
11
Q3-20
1140
45
50
55
60
65
70
Our bank and position – at a glance
7
MediaLending to the public, 1998-2011 (SEK bn)
Lending – 4 banks with 76% market share
Competitive landscape Many banks, four dominate and only one full scale challenger
Deposits – 4 banks with 74% market share
• Swedbank and SEB in serious trouble during 2008-2009. However, criticism has almost totally disappeared during 2010
• Nordea now being heavily criticised for ROE target (15%)
• Late 2011 banks again heavily criticised: “greedy”
Source: SCB
24%
16%
22%
14%
6%
20%Other
20%
18%
20%
16%
5%
21%Other
1998 2002 2006 2011
The environment – macro and competitors
0
500
1000
1500
2000
2500
Bank Mortgage Deposit
8
Other competitors – market share of 20% (lending) and 21 % (deposits)
Competitive landscapeSuccessful “new” entrants – agile and popular, but with limitations
5510
2513
252
Selected “international” competitors
314
10048
511
1007
2632
244
129
Selected local competitors
Lending SEK bnDeposits SEK bn
The environment – macro and competitors
9
Some key challenges Addressed in 2010 strategyLending/deposit ratio – challenge for Swedish banks
Customer satisfaction advantage continuously eaten up
Allocated capital and economic profit per segment BASE
Portfolio can tilt towards real estate – easily
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
0
2
4
6
8Pesonal Customers
Corporate Customers
Relative to peers – 3-year moving average (SKI)
76 80 73
020406080
100
Private Real estate Business -otherUtilised volumes, excluding LCC, as of 31 December 2010
0
200
400
600
800
1 000
1 200
1 400
1 600
0 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500 5 000 5 500 6 000
Allocated capital
Ec
on
om
ic P
rofi
t
Business VIP: 744
CIB: 362
Business - Kärn: 183
Business - Service 87
Private Banking: 23
Personal - Favör -26
Personal - Bas: -63
Personal - Premium: -76
1,234
5,9
59
[SEK MM]
[SEK MM]
SEKbn
SH
B
DB
SE
Sw
ed
b
Nord
ea
UniC
red
i tS
EB
Santa
nd
er
Com
merz
b
RB
S
Barc
lays
BN
P
Deuts
che
HS
BC
UB
S
Cre
dit
S
Funding, cost and availability
Our strategy 2010 -
10
Three imperatives in 2010-2014 strategy
Implementation in progress
• Getting the result up
• Change in key focus: From quantity to quality
• On credits
• On customer service
• Rewire the platform to enable new growth and improved results
• New attractive and efficient customer service concepts tailored for most attractive (bigger and stronger) customers – build on group platform
• New vision – “number one for our customers” (=cross selling and customer satisfaction)
• Rebrand for efficiency in multichannel setup and attractiveness for “right customers”
• Clear premium brand positioning
• Organisational model: customer perspective and channel integration
• Improved funding position
Valu
e p
rop
osi
tion
Customer sizeLow segments
High segments
Premium
Potential to position ourselves as a premium bank and to focus our marketing efforts etc on the higher
value segment
Basic
Customer and value dimensions
Our strategy 2010 -
11
Vision: Number 1 for our customers
Goal:Balanced growth
Strategy:Targeted customer concepts
Position: Premium Bank
Motto: Ambition welcome
Our strategy 2010 -
12
A shared vision for all employees
”Nr 1” means:• The Bank where our customers do
most of their business • The Bank that our customers like
most
for our customersNr 1”for our customers” means• Existing customers • Customers that we want
How? Our employees' expertise and commitment to our
customers The ability to do the right skills available Commitment to deliver the small but very valuable,
additional Focus on customers who want premium quality - regardless
of channel
Our strategy 2010 -
13
Strategy implementation according to planVision and position set to be fully achieved by 2014
New strategy
Launch Organisational change Implementation
• Internal launch of new Vision and Strategy
• Performance management optimised
• New customer concepts
• Incentive programme
• Slimming of branches
• Positioning
• Name change
• Governance
• Changes in management
• New management forums from four to two
• Organisational Change
• Shift to segment structure
• All positions appointed
• Deliveries of concepts
• All customer concepts implemented
• Vision accomplished
2009 2010 2011- 2012 2014
• Visiting branches and Finance centres to gather information
• Establish working groups – management team at the wheel
• Decision on New Strategy
Our strategy 2010 -
Communication - Mgt Conference
Communication – Road shows
Communication – Management info
Communication - Headlines
ANALYSIS STRATEGY STRUCTURE AND IMPLEMENTATION
ACCOUNTABILITY
14
New Strategy - owned by Management - open for organisation
• Strategy assessment in Brand Ex Co
• Intensive meeting schedule (branches, shared entities etc)
• Road show
Our strategy 2010 -
Nr 1 for our
customers__________
Premiumposition
15
Launch
• Approved by Advisory Board (May 2010)
• Communicated at Management Conference (Sep 2010)
• Strategy Book
• Road Show
• First implications
Our strategy 2010 -
16
Private Banking
Jonas Predikaka
Head of Global Sales, SEB PB
CIB
Joacim Nässén
Head of Large Corporates, SHB
Organisational change - People, structure and implementation
Danske Capital
André Vatsgar
Executive VP, Fokus Bank
SkandiaMäklarna
Liza Nyberg
Managing Director, Emric AB
Danske Markets
Berit Behring
Head of Regional Sales , DM SE
Communications
Heléne Wernstedt
Partner, Kreab Gavin Anderson
Russell Reynolds: “The recent hires have significantly strengthened the management team, bringing a fresh perspective, new competences and a high level of professionalism.”
Our strategy 2010 -
17
OperationsJohan Löfgren *
Two Management Teams:
** Country Management: All Heads of Danske Bank Business entitles and Heads of Resource and control areas* Executive Management: Executive management team of the retail bank
CEOLars Mørch**
Business BankingAnn Krumlinde**Stf Anders Rex**
Private BankingJonas Predikaka**
Gro
up Fu
nctio
ns
Business DevelopmentLars Sjögren **
Personal Banking Branches
Personal BankingLiza Nyberg **
Contact Centers Customer Service
Business Banking Branches
Finance CenterMid Market
Danske Direct Business
Danske Markets*CIB*
Danica*Danske Capital*SkandiaMäklarna
Internal Audit(vacant)
Wealth Management
Private Banking onFinance Center
Danske Direct Personal
Danske Bocenter
FinanceCarina Jahn**
CreditsJan Enmark**
LegalArne Peterson*
CommunicationHeléne Wernstedt*
HRIng-Marie Frithiof*
Other units
Organisation, 1 January 2012
Our strategy 2010 -
18
Raising awareness and profile
Our strategy 2010 -
19
Implementation - project in place
• Customer concept
• Results etc
• Vision accomplished
Our strategy 2010 -
20
197544
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
EBT FTE
Branches and Finance centres
Profit and employeesVolumes
30
0
45
4
0
10
20
30
40
50
60
Branches Finance centres
11 12
248
117
0
50
100
150
200
250
300
Lending Deposits
3,267
1,332
SEKbn SEKm/#
1 2
1. Including parent company Östgöta Enskilda Bank and subsidiaries Consensus Fondkommission AB and Östgöta Enskilda Fastighetsbolag AB2. Danske Bank A/S, Danmark, Sweden branch (Retail, CIB and Danske Markets).
1996 2011
History and developmentRapid growth, now earning more than the acquisition price once a year
(#)
#
Status– hard and soft
21
Dansk
e Ban
kSE
B
Hande
lsba
nken
Swed
bank
Norde
a0%
5%
10%
15%
20%
25%
Dansk
e Ban
kSE
B
Hande
lsba
nken
Swed
bank
Norde
a25%
30%
35%
40%
45%
50%
Better, relative to peers than ever (Banking Activities
Sweden)
RoE* Deposits/Lending 2011 (average)
Profit before credit losses index 2011/ 2008C/I - 2011
* Profit after credit losses/risk-weighted, Basel I *8%
RoE* - Q1-Q2 2011
Dansk
e Ban
kSE
B
Norde
a
Swed
bank
Hande
lsba
nken
30%
60%
90%
120%
150%
Status– hard and soft
Source: Company data, BASE+CIB
Dansk
e Ban
kSE
B
Hande
lsba
nken
Swed
bank
Norde
a20%30%40%50%60%70%80%
22
Cross sales – Business advisory
Increased cross sales on corporate and personal customersCash Management penetration key to cross sales
Cross sales – Personal advisory
2,00
2,10
2,20
2,30
2,40
2,50
2,502,602,702,802,903,003,10
VIP/Premium
VIP/Premium/Favör
Status– hard and soft
23
Customer development – Business advisory1
Customer development – positive trendLost corporate customers mainly in commercial property business
Customer development – Personal advisory2
+3,000 business customers since Q4 20083
+8,000 personal customers since Q4 20084
1. VIP(49) and Kärn (39). 2. VIP (03) and Premium (09). 3. All business customers. 4. All personal customers.
30 000
32 000
34 000
36 000
38 000
2009 20112010190 000
195 000
200 000
205 000
210 000
2009 20112010
Status– hard and soft
-750
-500
-250
0
250
500
750
1000
1250
1500
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
-750
-500
-250
0
250
500
750
1000
1250
1500
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
24
Business advisory1
Customer satisfactionOnly bank to improve on both corporate and personal (Swedish Quality Index)
Personal – all customers
1. VIP(49) and Kärn (39). Internal surveys.
Greenwich Midcorp 1. SEB2. Danske3. Nordea4. Handelsbanken5. Swedbank
Swedish Quality Index• 2nd place in 2011
(-with margin)
Private BankingMystery shopping • 2010: 9/9• 2011: 4/9
(Nordea only large bank ahead)
Swedish Quality Index• 2nd place in 2011
(-just)
Status– hard and soft
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
7.57.67.77.87.9
88.18.28.3
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
7.57.67.77.87.9
88.18.28.3
Relative to peers: Improved customer service and image. Satisfaction with prices develops negatively.
25
Our people: highly educated, loyal and happy by local standards...
DBSE 2011 Industry
Satisfaction and motivation 73 +5
Loyalty 79 +4Image 77 +1
Immediate superior 78 +7
Senior management 73 +6
Cooperation 82 +4
Daily work 77 +4
Remuneration 69 0
Development 70 +6
Churn rate 5.4%
Main
Sco
reExpla
nato
ry
fact
ors
54% with academic degree – 38% women in management
Status– hard and soft
26
Lessons learned
Communication is key for successEnough timeFind ambassadors
• Background analysis is crucial
• Communication is key for success
• Recurring information to staff
• Think ahead and plan stages
- not all can be done at the same time
• Find ambassadors in the organisation
27
28
Deliveries and must wins
Deliveries Essential releases
• Regularly meetings are held to discuss different solutions
• Suggestions on solutions must always be approved by the Sponsors
• Deliveries are made monthly to gather all information from the projects to facilitate for the receivers (account managers)
• Communication is responsible for all information regarding deliveries in the projects
• Role descriptions, staffing and education are the corner stones for adapting the new way of working
• It is central to build a platform for solutions required from all or several sub projects.
• Cooperation agreement between concept and special & business supporting units.
• Accomplish the transfer of customers – start with customers to the Direct concepts.
Focus
• Role descriptions and staffing
• Platform for business process – first up is Premium Banking
• Cooperation agreements – first up is Mid Market
• Packaging of products – first up is Premium Banking
29
Many benefits has already been seen, with expectation on more to come
We see
• A strengthened management team
• A flatter organisation
• A clearer focus on implementation of
customer concepts
• A clearer structure - one bank
• Less bureaucracy – from 4 to 2 management forums
• All staff functions to be shared
Resulting in
Quicker time to market Improved customer
satisfaction
Enhanced platform to attract new customers
Increasing profit in all segments