Ukrsibbank (a member of BNP Paribas Group)

               a gradual transformation

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Client Profile:

UkrSibbank was founded in 1990 in Kharkiv. Since that time the Bank has paved its way from a regional bank to a national leader and then evolved further to its membership in one of the world’s largest banking groups.

Since 2006 the international bank BNP Paribas has been a principal shareholder of UkrSibbank. In 2006 BNP Paribas bought 51% of UkrSibbank shares. In 2009 the stake of the French group increased to 81.42% and in 2010 to 99.99%. In August 2011, European Bank for Reconstruction and Development (EBRD) completed a deal to buy 15% UkrSibbank’s shares. Thus, the share of BNP Paribas totaled 84.99%. Today it is a universal bank that follows a balanced development strategy in retail and corporate banking.

UkrSibbank has been recognized as the best banking institution in Ukraine by Global Finance (2007–2010) and EuroMoney (2007, 2008) as well as the best foreign-owned bank by EMEA Finance (2010, 2011).

As of May 1, 2012, UkrSibbank’s total assets and liabilities accounted to 29.3 billion (HRV –national currency) and 28.08 billion (HRV), respectively, while its capital amounted to 1.23 billion (HRV). UkrSibbank services about 2 million retail customers throughout its nationwide network of almost 600 retail branches   as well as 255 thousand small and medium businesses, and 4 thousand large corporate clients. UkrSibbank employs nearly 7,000 people.

Case Introduction:

Prior to the economic crisis that hit Easter Europe in 2008-2009, a significant portion of the bank’s income derived from mortgage loans (UkrSibbank had the largest mortgage loan portfolio in Ukraine right before the crisis), while the physical branch network was approaching 1000, much of them in less than ideal locations and unprofitable. The effects of the economic crisis, compounded by the customers struggling to repay their loans, delivered a strong blow to UkrSibbank’s balance sheet.

The bank’s French shareholder undertook a massive effort to introduce drastic measures to cut losses and even out the financial situation. The new management team, with a keen focus on reducing operational costs and generating new sources of sustainable revenue, referred to Senteo for guidance and support. One of Senteo’s present partners, Miroslav Boublik, took charge as the 1st Deputy Chairman of the Management Board and Chief Operating Officer of UkrSibbank, while the other Partner, Michael Ruckman, was engaged as a strategic adviser tasked to personally advise the internal team in a program to boost retail revenues and service, while creating added sustainability to the bank’s business model. Another of Senteo’s Partners, Ian Newman, led a separate project to launch a pilot program to introduce a new branch design model that would later be spread across the entire network.

During the following year the bank’s operational performance and sales soared, helping the bank to turn itself around and establish a course for a healthy growth. City after city, UkrSibbank began to implement a new distribution model approach designed by Senteo, coupled with a powerful sales and service-oriented culture, improved product line, and a new look of the branches.

Project Scope & Goal:
The primary goal was simple: reverse the bank’s performance and bring it into black. The effort dedicated to this goal required everyone’s participation and hard work, not to mention teamwork. Areas of Senteo’s primary involvement included:

  • Upgrading the retail product line with the introduction of commission-based and loyalty-inducing products
  • Introducing the internal motivation program aimed to encourage greater sales and service quality
  • Launching a new training program for the customer-facing staff
  • Implement a new distribution model that would take into account specificities of each geographical locale and test it on a pilot territory
  • Enhance the branch design and apply the new branch model to a pilot territory
  • Re-engineer a branch operation model which would both cut costs and raise sales levels
  • Introduce key performance measurement and management tools to effectively monitor progress and quickly respond to any arising issues
  • Provide training for the key management members in Senteo’s transformational methodology and hold regular workshops to guide the team on a path to positive change

Results (after 18 months): 

  • 50% increase in sales
  • 25% increase in IRR
  • 30% reduction in branch locations
  • 25% reduction in staff headcount
  • 75% increase in transactions per branch staff
  • 10% in crease in transactions through alternative hannels
  • 18 month period for total return on investment (ROI)

To ensure success of the initial pilot transformation project it was necessary to drastically alter most of the existing operational processes, centralize key functions, re-define staff roles and motivate employees towards higher performance standards (which were also developed), change the reporting guidelines, reduce paperwork, retrain the workforce, and launch a wholly new look in the branches to appeal to customers.

Most importantly, besides the purely financial results, the positive changes were also felt by the bank’s new and existing customers. Traditionally long wait time was reduced and lines virtually disappeared, branches were relocated to more convenient locations, staff culture enhancements received hugely positive customer feedback, brand recognition level increased, and UkrSibbank’s level of customer experience scored higher than all its competitors, according to a specially conducted market study.

The proven approach was adopted as a centerpiece for the next phase of strategic development and the transformation program on a national scale.

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