BCR, the local unit of Austrian financial group Erste, has closed down over 100 units and rethought its network management model, has reevaluated its ATM and POS network and has implemented a strategy aimed at encouraging clients to conduct transactions through the bank. Also as part of its restructuring, BCR has cut requests processing time in order to increase client satisfaction, has tested a new personnel motivation scheme, and the evaluation of loan applications has become more automated.
“We want to give loans. There is still a problem as far as demand is concerned, but we have enough liquidity and are fully prepared to support the economy both through non-secured and through secured loans. But we only sell loans in lei,” says Martin Skopek, vicepresident of BCR’s retail.
The 45 year-old Czech banker was sent by Erste Group to Romania in the spring of last year for a second term in office as executive vicepresident of retail of BCR as part of the effort to restructure and restore profitability of the largest Romanian bank.
In parallel with turning around the bank’s retail division, Skopek’s ambition is to restart production of loans based on the bank’s new offer of mortgage loans in lei. BCR has lost market share since last autumn, when it suspended sales of mortgage loans in euros, but in the last few months sales of loans denominated in lei have started to show.
“Statistically a deterioration of the portfolio is still apparent as long as we are not able to give enough new loans. But I am waiting for the new offer of mortgage loans to be reflected in sales volumes. I have big expectations for the next three months.”
Skopek says it has been psychologically difficult for him to return to the same job he had left in 2010, when he took over a job in Vienna, coordinating retail at regional level.
“It was hard for me to say yes, but I and the Erste board together decided that I would come back, especially given that I knew the situation and fast action was needed in order to solve as many of the existing problems as possible.”
The Czech banker found at BCR a completely different picture from his first mandate as retail vicepresident, starting from the market context, which has changed completely.
“In 2006-2007 the crisis seemed far off, we all thought expansion would go on forever. In 2009-2010 there were times when I thought we would get out [of the crisis], but then we ended up realizing that the situation would not change substantially, that we would have stagnation or very weak growth. Many of the initially implemented projects were based on completely different market conditions, and now the whole business model needs to be adjusted.
After his return to Bucharest in February 2012, he spent the first two months evaluating the situation of the retail division in order to make a full diagnosis and to come up with a list of priorities. The general context: a market which isn’t growing and which is not expected to rebound very soon.
“We have to forget about the boom years. I don’t think we’ll see strong rises over the course of our careers,” says Skopek, who is a young banker. But he insists: “The situation in the banking sector is so bad that only a 25 year-old can expect a bright future in the sector.”
The “Next” program includes a large number of initiatives meant to contribute to activating the client base, making it loyal, streamlining the branch network, boosting the efficiency of using digital channels and motivating employees.
The lending process has been automated to the maximum: the branch is no longer involved in any way in decision-making, it only introduces the data into the centralized system.
Skopek says for low-value consumer loans, clients get an answer in one day, with the money being immediately available.
In the case of mortgage loans – the most complex retail product – the analysis of the application is said to take up to 5 days.
The need to cut the cost to revenue ratio has put pressure on evaluating the entire network of branches and agencies. “We opened units during the boom period based on business scenarios that were not confirmed during the crisis period. But we evaluated the whole 667-unit network.” By the end of 2012 the bank had closed down 45 units and another 63 units in 1Q of 2013.
“Some units got the chance to prove their viability, and are still under scrutiny: if they get back on their feet, they stay, if not, we will analyze whether to keep them.”
The head of BCR’s retail says he has a budget for opening up to 20 units in Bucharest and other major cities, with the locations already identified. The bank has opened one new unit so far.
Skopek says more important than closing down units is to change the network’s management model based on the concept of ‘hubs’ which include 4-5 units that share personnel according to needs.
The bank has also started a project aimed to boost the number of part-time employees, who are set to reach 10-12% of the total.
Sales are set to be boosted through a new personnel motivation scheme, which has already been tested in the Romanian city of Iasi last year and which should become operational at bank level as of the third quarter.
“Poorly performing employees either improve performance or leave,” is the principle stated by Skopek.
(English version by Daniela Stoican)