Decreasing margins in interest margin business as well as in the other businesses, increasing costs, changing customer needs as well as the fast technological development and increasing regulation confront banks with major challenges. The core duty of the board of directors is to react to these demands strategically and in an operationally appropriate manner in order to ensure sustainable value creation. IFBC accompanies banks in the process of strategy definition and subsequent strategy implementation. Specifically, we offer support in the following areas:
The strategic positioning and the business model of the bank have to be tested regularly with regard to their medium and long-term prospects for success. The starting point is a detailed analysis of current market conditions and expected medium-term developments. It is then necessary to devise strategic action options and to assess these from various perspectives. We carry out the various analyses necessary and support banks both in their strategy development as well as in the realisation of defined strategic initiatives.
National regulatory authorities are imposing higher equity ratios on banks, in line with international groups of experts. Alongside increased capital requirements for individual banking transactions, the leverage ratio (i.e. equity as a proportion of the balance sheet total) has also been increased. These developments entail a critical examination of business models. Dividend policy also has to be re-assessed and in some cases external additional capital funding has to be considered. The equity strategy must not only comply with regulatory requirements and risk policy principles, but must also adequately consider the costs of equity in the sense of risk-adjusted return.
Many banks also discuss and examine potential corporate transactions as part of the strategic realignment of business models. Whilst some banks focus in many cases on the specific activities of the value chain and thus wish to divest business that no longer complies with the strategy, other banks wish to access new markets with acquisitions, increase market share and create synergies. We support and accompany our clients throughout the whole transaction process and contribute to their success with our experience.