Philippe Citerne, 63, the former boss of the Societe Generale who in December 1998 signed the privatization contract of Romania’s second largest bank BRD, is now a key official in the restructuring of BCR from US consultancy Bain&Co.
Bain&Co was hired to identify the weaknesses of the largest local bank and devise a plan to turn it around.
Pressured by the burden of a portfolio of bad loans and many internal organization and resource allocation problems, the new management of BCR held a tender last fall to find a consultant and invited all global consultancy firms to bid.
The tender, where price was an important factor, ended with Bain&Company as the winner, a US firm whose former bosses include the Republican candidate for the White House Mitt Romney. Romney also founded and ran private equity firm Bain Capital for many years.
Bain&Co specializes in several other areas besides banking, but this is its first known project in Romania.
Banking sources say the BCR restructuring project is being supervised from the office in Paris, even though Bain opened an office in Warsaw last year to expand in Central and Eastern Europe.
Bain’s achievements in the region include its work on Russia’s Sberbank and preparing it for the position of regional player with the takeover of the international network of Austria’s Volksbank in 2011 (except for the Romanian subsidiary). The deal was not a very smooth one, with Russians now accusing the Austrians that they misrepresented the quality of the assets transferred.
Hiring a consultant like Bain&Co may suggest once again the complexity of the problems BCR is having. Its owner Austrian-held Erste is making such an expense in the hopes of speeding up the turnaround of the bank it spent EUR3.75 billion on.
Not many local banks went through such an extensive analysis and reorganization process conducted by a major international firm. One other example is Raiffeisen, which was assisted by McKinsey several years ago, and was among the few that managed to preserve profitability during the crisis.
The big surprise in BCR’s case is the personal involvement of the French Philippe Citerne, former member of the two-man management team of Societe Generale and then of the three-man team also comprising Didier Alix, during the golden decade of 1997-2007.
That decade was when the French group significantly expanded abroad, also arriving in Romania. Citerne and Bouton’s terms in office ended after the huge Kenviel affair of 2008 caused by the EUR5 billion fraud.
The entire SocGen management team was gradually replaced as the new chief executive officer Frederic Oudea put together a new one.
Citerne, who also served as director of UniCredit S.p.A., supervised the takeover of BRD in 1998 and then closely watched the bank. He attended the inauguration of its office tower in Piata Victoriei in downtown Bucharest in 2003. SocGen also looked at CEC (state-owned bank) during his term.
He has been trying to see what is not working properly inside BCR over the last few months and has been advising the members of the team of Tomas Spurny, hired precisely because of his restructuring expertise last year. It seems Spurny’s expertise needed reinforcement from outside professional consultants.
Banking sources say the plan to transform BCR with the help of Bain&Co has been finally devised and significant steps towards its implementation can start next month. It was also submitted to the central bank, the sources added, and the main target is to restore profitability after posting losses in 2012 partly because of restructuring costs.
Separate teams of Bain&Co looked at various segments of BCR and found a huge list of problems. From the actual time an employee in a branch spends with a customer, to the number and types of products an employee sells in one month, from decision-making flows and hundreds of pages of working procedures to reorganizing the business structure and operating and financial efficiency, their work turned out a project that should transform both the bank and the employee mentality.
(English version by Loredana Fratila-Cristescu)