DAY 1

1. Overview of the Workshop, and Introduction of Delegates

THEME 1: STRATEGIES & BEST-PRACTICE TARGETS FOR BOOSTING PROFITS

2. Establishing an Overall Profit Improvement Strategy

• How Leading Banks Link Strategy to Profitability:

– The 14 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

• Optimising the Allocation of Scarce Resources

• Upgrading Planning & Control and Management Information

• Fostering Strong Strategic Governance and a Progressive Culture

3. Setting Key Performance Targets (KPT’s) for Driving Up Return on Equity (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 for Attaining ROE Objectives

• Case History: A Leading African Bank Keen to Achieve a Pre-tax ROE of 35%+

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

• Review of KPT’s Used by Bank Boards and Top Teams Around the World

• Discussion: Choosing KPT’s and Best-Practices for Delegates’ Banks

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

• Introduction to the Case History Bank – An Ambitious Arab Bank

• Main Transformation Changes Made by the Bank

• Impact of Changes on the Bank’s Balance Sheet, Income Statement, Costs, Profitability, Share Price and Market Capitalisation

THEME 2: BOOSTING BUSINESS & INCOME FROM CUSTOMERS

6. Case Histories – How Some Bank’s Built 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 Histories: Selected Arab Banks

– 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 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. Profit Improvement Achieved by Banks with Focused Marketing

• Case Histories: Examples of Banks that Increased Profits by 30% with Focused Marketing

• Typical Main Opportunities Grasped:

– Growing and Cheapening the Deposit Base

– Credit Marketing Opportunities

– Cross-Selling Other Products, Services & Product/Service Packages

• 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. Diversifying Products & Services in Personal, 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. Boosting Growth and Market Share of 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. 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

• Discussion: Assessing the Effectiveness of Different Sales Channels

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, But Low Selling Intensity in Branches and Head Office

– Undifferentiated Service Quality for Different Market Segments, and General-Purpose Branches that Serve All Market Segments. A Very High Cost/Income Ratio

• Profit Improvement Strategies to be Evaluated:

– Downsize the Whole Bank, Segment the Network, Focus the Workforce on to Selling

– Segment & Expand the Network, Downsize Head Office, Focus the Workforce on Selling

• Factors to be Considered:

– Different Service Quality Levels for Different Types of Customers

– The Balance Between Front and Back-Office Personnel in Branches

– The Amount of Time Spent Selling in the Branches, and in Head Office

– Income, Costs & Profit 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

• 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 the Branch Networks of Delegates’ Banks

THEME 3: MAKING MORE MONEY FROM ALM AND TREASURY

15. 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 Alternative 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. Running 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 by ALCO’s

• Discussion: Priorities for Advancing ALM and Treasury in Delegates’ Banks

Summary of Day 3

DAY 4

THEME 4: KEEPING CREDIT RISK COSTS AT ACCEPTABLE LEVELS

19. Ensuring that Lending Generates High Profitability 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 – “TRAP”

• Calculating Margins Needed to Meet the Bank’s Target Return on Equity

• Estimating Margins to Cover Funding/Opportunity Costs and Operating Costs

• Calculating Margins Needed to Cover Bad Debts

• Setting Margins to Reflect Competitive Dominance and Weakness

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 Improving Loan Pricing in Delegates’ Banks

22. Establishing a World-Class Credit 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. 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

Summary of Day 4

DAY 5

THEME 6: OPTIMISING THE ALLOCATION OF SCARCE RESOURCES

27. Case History Moving Personnel into Selling Jobs from Cost-Creating Jobs

• The Meaning of “True Selling” as Used by World-Class Banks

• How Selling Intensity Drives Up Cross-Selling and Profitability

• Case History: Steps Taken by One Bank That Intensified Selling Greatly: Use of Time Across the Bank Before and After Reengineering

• Main Changes Made: Former Jobs Removed. New, Mainly Selling Jobs Created

• Impact of Changes on Cross-Selling, Profitability and Size of Branches

28. 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 Jobs. Creating New Types of Selling Jobs

• 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

29. Group Work: Extracting Maximum Value from Information Technology

• The Challenges Arising from Extracting Value form IT

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

• World-Class Governance of IT Strategy

• How to Create Significant & Sustainable Competitive Advantage from IT Investment

30. Case Study: Reallocating Equity to a Bank’s Best and 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

31. Case Answer: Reallocating Equity to a Bank’s Best and Most Promising Businesses

• Delegates’ Answers to the Case Study in Session 30. Presentation of the Model Answers

• Discussion About Capital Reallocation 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 and Proposing Timetables for Moving Ahead

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

• Setting Clear, Challenging Yet Realistic Profit Improvement Targets and Deadlines

• Planning and “Branding” the Work

• Forming and Organising the Profit Improvement Team, Including Project “Champions”

• Announcing the Project to the Whole Workforce, and Outside the Bank

• Taking Immediate Steps to Freeze Costs and Boost Income

• Case History: A Bank that Increased Pre-tax Profits by a Factor of 4 Over 1 Year

34. Summary of the Workshop

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