Strategy The bank had a successful run from 2002-2012 with strong markets, distracted competitors and a strong balance sheet. In the later years, this growth came at the expense of decreasing returns; competition came back with a vengeance; liquidity drove down margins and regulatory pressures continued to increase. The bank lost some discipline during that time, leading to the recent problems with loan impairments and relatively high expenses. These things, together with a challenging macroeconomic environment, have driven the drop in share price. (Chart 6) Apart from the organisational restructuring, the bank is very focused on the strategic review. The Management Team is finalising a clear and comprehensive strategy ahead of the upcoming …show more content…
The bank has identified some key areas for investment that build on the strengths and leverage these advantages and opportunities and which the bank believes are game changers for the business. The bank sees opportunities to invest in each of the businesses and regions Standard Chartered Bank The bank recently is doing some strategic repositioning weather the near term uncertainties, fix legacy issues and capture significant underlying opportunities by: • Investing more than USD3 Billion over the next three years in improving the controls, becoming more efficient and driving capabilities in key opportunities. This is a 50% increase on recent investment spend and the most has ever invested • Identifying USD100 Billion of assets which will be restructured or exited, including underperforming businesses and assets. The expected cost of this restructuring is USD3Billion. • Delivering USD2.3 Billion of cost rationalisation between now and 2018 in addition to the USD600 Million reduced during 2015 • Introducing tighter risk tolerances, as the significantly improve of risk profile • Establishing new targets for bank’s capital and return on equity – 12-13% Common Equity Tier1 (CET1) ratio and 10% Returns on Equity …show more content…
Secure the foundations a. Reducing risk concentrations in single-name exposures and in China, India and commodities b. Targeting USD100Billion of risk-weighted assets (RWA) to improve returns, restructure or exit, including turning around the Retail and Commercial Banking business in Korea c. Reshaping the Retail and Commercial Business in China with a focus on core cities and targeted clients, branch rationalisation and a reduction in low returning portfolios 2. Get lean and focused a. In Corporate and Institutional Banking (CIB) we will either upgrade or exit clients where returns are poor; favour network businesses such as Transaction Banking and Financial Markets; and build a leading position in banking selected buyers and their suppliers b. The bank is accelerating the Retail transformation focusing on our Priority segment and emerging affluent clients; delivering cost efficiency through technology investment; stepping up investment in branding and marketing; and developing a city-focused strategy on China. c. We will fundamentally overhaul Commercial Banking with new management focus and skills training; taking out low-returning RWA; enhancing risk controls, and integrating Local
... to service our current needs. It is also important that they are committed to the ongoing investment in technology required to deliver the securities, cash and investment management support services we require. The Bank of New York is a well-established financial institution that has outlasted numerous financial hardships, including the Great Depression. It has a long history of providing excellent services to its customers. In the present day, The Bank of New York continues to live up to that reputation by offering its customers a variety of financial services. The future can only get better for the Bank of New York. With the technological era in full swing, the Bank of New York is taking full advantage by specializing in technological securities. In conclusion, The Bank if New York is a historical financial institution that played an important role in the economic growth of the United States. No other bank can say that it has done as much for the United States as has done the Bank of New York.
The desired outcomes from reorientation of the company’s business were to reduce risk of increasing prices, decrease costs and increase sales. These desired outcomes have ap...
Notably, its share price has dropped 43% just in the last year, after the publication of the year losses of €6.8 billion (remarkably €2.8 billion more than the losses of 2008) . The ROE for the bank passed from 7.89% in 2010 to minus -9.02% at the end of 2015. Based on the figures in the latest interim report in July 2016 the ratio decreased further to -11.52% in June . Considering this trend, we need to take into account also that in recent years, the ROE was consistently below the cost of capital, eroding value. A company can increase its ROE in 2 ways: increasing the numerator - raising your net income - or decreasing the denominator – the equity capital. Banks represent generally a capital-intense business, and the introduction of tighter regulations is posing difficulties to the banks that aim to reduce their equity capital. It appears clear that the only way to achieve a better ROE is to attain a high financial leverage . The pre-financial crisis leverage level was impressive (71.73%), and today is 27.11%, above the standard of its direct competitors .The return on assets has also decreased in the last six years and has reached a negative level of -0.46%
Total Asset Turnover – Dropped from .64 in 2001 to .58 in 2002 to .55 in 2003. The reason is big increase in Total Assets.
Ratios for return on assets and return on equity offer support for the loss in stockholders’ equity. Return on assets went from 13.1 in 2000 to 5.1 in 2001 and return on equity dropped from 25.4 in 2000 to 8.7 in 2001. Return on equity represents return on assets divided by the difference of 1 and debts/assets.
To accomplish the company’s long-term objectives the follow strategies have been put into place: forward/backward/horizontal integration,
The banking industry is under pressure in today’s business climate. Banks have been through big changes. There is opportunity, but there is also increasing competition. To be the preferred bank means changing “good enough” into a unique value proposition. And that means changing the way people have always done things, change on this level requires cutting edge technology. Change cannot be achieved with a simple directive or surface adjustment especially within the banking industry. It requires an innovative rethink of the entire system, in a strong partnership between bank leaders and their change agents. New systems and policies must support the strategy to be successful. The real test of a good strategy implementation plan is whether the people understand the strategy, are motivated and enabled to implement it, and actually start achieving its goals.
Organizational changes that reduce cost. The M&S reduced its management levels to reduce the cost.
The early decades of the nineteenth century saw the establishment of banks in the Caribbean largely as a convenience for the local governments. Throughout much of the nineteenth century, most Caribbean banks operated as an oligopoly with limited government influence – this directly translated into higher profits. However, over time, the banking environment could best be described as complex and dynamic. Competition increased, resulting into greater need for improved customer service, product innovation and cost reduction strategies. In order to achieve this, the banking sector was undergoing major structural reforms characterized by mergers and acquisitions. On July 23, 2001 Barclays and CIBC announced that they were in advanced discussions which were intended to lead to the combination of their retail, corporate and offshore banking operations in the Caribbean.
This plan alleviates many of the firm’s current uncertainties. With the price reduction and more public relations, there may be an improvement in the public perception of the company. The implemented plan supports continual profits and reduces the possible increase in regulatory constraints.
The new president believes that the key to the new strategy is to be able to understand the true nature (i.e. costs of customers and orders. He feels that if the company is able to tie costs to customers in an accurate manner, it will enable the company to better focus on higher profitability. Major Issues: What is the ' Understand the cost structure of the company. Allocate costs on a per customer and per order basis. Implement a new cost system that will support the new cost allocation methodology.
Another pivotal issue was that of the multichannel integration—call center, branch, ATM, and Internet—which is immensely important for large financial institution like ICBC to attract and retain customers with the promise of “anytime, anywhere” account access. Customers are eager to have the kind of flexibility to use whichever channel is most appropriate at a particular time. Continuing with the same point the, ICBC was also concerned about the relative penetration of the existing as well as new customer base to gain access to the banks new technological proposition.
All these improvements will boost profitability by identifying at least or more that EUR 30 mio required by U.S.A headquarters. However, we believe it is not realistic to manage all this turnaround in 1 year’s time. It might take from 2 – 3 years.
In the 1980’s new services were introduced as technology advanced such as telephone banking and the Switch debit card which extended the use of the electronic transfer of money to the point of sale. The Organisation also moved into more markets with inception of National Westminster Home Loans and the Small Business Unit in 1980 and 1982 respectively. However the recession and changing financial services environment of the 1990’s forced the bank to withdraw from many markets and refocus its activities, adopting the name NatWest. The apparent limitations with which the bank found i... ... middle of paper ... ...
“Successful Strategic Management must not end with the last annual meeting or with the final compilation of the strategic planning document.”