Reorganizing a European Bank’s Corporate Center
See how BCG assisted a client in reorganizing its corporate center activities to create a value-adding headquarters.
Our client is a top European player in the financial services industry, employing more than 100,000 people and operating approximately 10,000 branches worldwide.
The company was having difficulties with the effectiveness and performance of its corporate center. At the same time, it lacked clear plans and methods to meet the needs and expectations of employees at the business unit level. Owing to the pressures of the global financial crisis, it was forced to introduce cost-savings procedures in order to restructure and improve the performance of its headquarters’ operations. These procedures focused on three key activity groups: service functions, cooperation and integration, and leadership and control.
BCG was asked to conduct a top-level reorganization project, the key challenges of which were to increase the value that the corporate functions added to the businesses, to make the corporate functions more cost efficient, to minimize the operational and social risks, and to prepare the organization for life beyond the economic crisis.
Our first step was to analyze the client’s corporate activities and to take a look at its decision-making framework. BCG's internal corporate center database (CCDB) then provided the client with benchmarks for full-time equivalent (FTE) capacities at the corporate level.
BCG developed a three-step program to help the client's managers assess the performance of specific corporate functions and to identify key levers for improvement to guide the decision-making process:
We performed an activity evaluation to help identify performance gaps based on staff expectations.
We identified key levers for increasing performance for each activity based on three strategic options:
To perform the activity better—optimize it, simplify it, or accelerate it
To perform the activity in a different way—develop it, reconsider it, or renew it
To stop performing the activity
We then validated the impact of each option against three different cost-cutting scenarios, ranging from 5 percent to 20 percent of required savings.
We distributed a survey among staff members in each of the three activity groups to assess satisfaction levels across 350 functions performed at the center. Results showed that the majority of activities did not fully meet staff expectations.
Our case team then assessed the cost savings potential across the three activity groups and evaluated opportunities to increase value-per-activity by upgrading, changing, or stopping each activity. We identified a total cost-savings potential—varying for different activities—of 12 percent to 17 percent.
We then proposed a target organizational model for a new corporate center.
This new corporate center provided three key benefits:
Visibility—a corporate center with a defined role that is communicated to and understood by the business units
Simplicity—an easy-to-understand organizational structure with transparent activities and processes
Accountability—key, well-defined, and measurable missions and activities
BCG’s approach helped the client in several key ways:
It created a powerful decision-making framework built on clear cost-cutting objectives
It provided a social strategy to help adapt to a highly regulated environment; this, in turn, provided the client with a foundation to define and coordinate projects that will drive future change processes
Our analytical process empowered the management to make improvement initiatives part of their everyday responsibility; this "role transformation” created a culture of continual improvement throughout the organization