lafferty bank quality ratings · take comfort from the fact that there is a strong correlation...

1This is not investment advice This is not investment advice

Monitoring the world’s best banks

bankqualityratings.lafferty.com

100 BANKS Ranked by Lafferty Bank Quality Ratings

PORTRAITSAccess Bank to Zenith: Signals, Personnel, Ratings

CULTURE Bringing Lafferty’s scrutiny to bear on the HBOS Annual Report for 2007

STANCHART VERSUS HANDELSBANKEN Comparing the history of the two banks over the past decade and a half

INTERVIEWS With CEOs of ADIB, Barclays Africa, Capitec, Discover, Sterling and TSB

LAFFERTY

BANK QUALITY RATINGSMonitoring the World’s Best Banks

LAFFERTY

LAFFERTYBank Quality Ratings

http://bankqualityratings.lafferty.com

2 3This is not investment advice 3

Lafferty Bank Quality RatingsOne Lyric SquareLondon, W6 0NB United KingdomT: +44 (0) 1264 730 774W: bankqualityratings.lafferty.com

Michael LaffertyEditor-in-chief & PublisherE: [email protected]

Rónán LynchEditorE: [email protected]

Aongus BuckleySenior AnalystE: [email protected]

Claire JoyceGraphic DesignerE: [email protected]

Fin KeeganManaging EditorE: [email protected]

Donal ConatyNews EditorE: [email protected]

For subscriptions, please contact us at: T: +44 (0) 1264 730 774 E: [email protected]

Strictly no photocopying is permitted. It is illegal to reproduce, store in a central retrieval system or transmit, electronically or otherwise, any of the content of this publication without the prior consent of the publisher. While every care is taken to provide accurate information, the publisher cannot accept liability for any errors or omissions. The contents herein are not investment advice. No responsibility will be accepted for any loss incurred by any individual due to acting or not acting as a result of any content in this publication. On any specific matter reference should be made to an appropriate adviser.

Lafferty Ratings Limited is a company registered in England and Wales© Lafferty Ratings Limited, 2016 Company Number: 09393791 ISSN: 2397-9364

LAFFERTYBank Quality Ratings

VOLUME 1, NUMBER 1

Contents

PUBLISHER’S LETTER Michael Lafferty 3Welcome to the inaugural issue

100 BANKS Ranked by Lafferty Bank Quality Ratings 4 Full list of our first group of rankings, indexed by Star Rating and by region

PORTRAITS Access Bank to Zenith: Signals, Personnel, Ratings 10 Each bank as reflected in its own words and people, along with its Star Rating

CULTURE Aongus Buckley 110Bringing Lafferty’s scrutiny to bear on the HBOS Annual Report for 2007

REVIEW Aongus Buckley 114Crash Bank Wallop: The memoirs of HBOS whistleblower Paul Moore

STANCHART VERSUS HANDELSBANKEN Bruce Packard 116Comparing the history of the two banks over the past decade and a half

CONCLUSIONS Aongus Buckley 121What do the Lafferty Bank Quality Ratings tell us?

INTERVIEW Abu Dhabi Islamic Bank 127“Customer behaviour rather than cost-driven behaviour”– Tirad Mahmoud, CEO

INTERVIEW Barclays Africa 131“We look at the best local solutions”– Craig Bond, CEO of Personal & Business Banking

INTERVIEW Capitec 133“Simplicity lies in the front end and complexity lies in the back end”– Gerrie Fourie, CEO

INTERVIEW TSB 136“We don’t use our retail customers’ deposits to play the money markets”– Paul Pester, CEO

INTERVIEW Sterling 141“We want to fit into the lifestyle of the customer”– Adeyemi Razack Adeola, CEO

INTERVIEW Discover 144“We don’t think about management versus shareholders” – David Nelms, CEO

ABOUT LAFFERTY GROUP 148Driving excellence in banking worldwide

SUBSCRIPTION INFORMATION 150Monitor the world’s best banks

http://bankqualityratings.lafferty.com

mailto:bankqualityratings%40lafferty.com?subject=

3This is not investment advice This is not investment advice3 This is not investment advice

VOLUME 1, NUMBER 1

Contents

PUBLISHER’S LETTER Michael Lafferty 3Welcome to the inaugural issue

100 BANKS Ranked by Lafferty Bank Quality Ratings 4 Full list of our first group of rankings, indexed by Star Rating and by region

PORTRAITS Access Bank to Zenith: Signals, Personnel, Ratings 10 Each bank as reflected in its own words and people, along with its Star Rating

CULTURE Aongus Buckley 110Bringing Lafferty’s scrutiny to bear on the HBOS Annual Report for 2007

REVIEW Aongus Buckley 114Crash Bank Wallop: The memoirs of HBOS whistleblower Paul Moore

STANCHART VERSUS HANDELSBANKEN Bruce Packard 116Comparing the history of the two banks over the past decade and a half

CONCLUSIONS Aongus Buckley 121What do the Lafferty Bank Quality Ratings tell us?

INTERVIEW Abu Dhabi Islamic Bank 127“Customer behaviour rather than cost-driven behaviour”– Tirad Mahmoud, CEO

INTERVIEW Barclays Africa 131“We look at the best local solutions”– Craig Bond, CEO of Personal & Business Banking

INTERVIEW Capitec 133“Simplicity lies in the front end and complexity lies in the back end”– Gerrie Fourie, CEO

INTERVIEW TSB 136“We don’t use our retail customers’ deposits to play the money markets”– Paul Pester, CEO

INTERVIEW Sterling 141“We want to fit into the lifestyle of the customer”– Adeyemi Razack Adeola, CEO

INTERVIEW Discover 144“We don’t think about management versus shareholders” – David Nelms, CEO

ABOUT LAFFERTY GROUP 148Driving excellence in banking worldwide

SUBSCRIPTION INFORMATION 150Monitor the world’s best banks

Publisher’s Letter

W ELCOME TO THE INAUGURAL ISSUE of the Lafferty Bank Quality Ratings journal. For the first time, we are going public with our ratings – and the 100 banks we have scored for overall quality are the largest by stock market capitalisation in 28 countries.

The results are striking: • The outstanding characteristic of the best banks among the 100 that are rated is their focus – which is

mainly on retail and corporate banking activities.

• With focus comes a compelling philosophy of serving the customer first and foremost – in the certainty that good results will follow for shareholders and stakeholders in general.

• Humane values – modesty and respect for human beings – are cornerstones of the top-rated banks.

• There is no perfect formula for success. Instead there are many different successful models, which take into account local and regional sensibilities and cultures.

• The majority of banks with the highest 4- and 5-star ratings are based in emerging markets such as South Africa, India, Malaysia, Nigeria and the Middle East – but some excellent banks are also found in Britain, Sweden and the United States.

• So-called universal banks, combining traditional (retail and corporate) commercial banking activities with investment banking, have middle-of-the-road ratings and many are on the wrong side of average.

• If anything, size is a negative factor in bank quality – and this is particularly evident when it comes to the TBTF (too-big-to-fail) universal banks.

• Last but not least, it is clear that quality also means sustainability – and this is perfectly demonstrated in the words of Gerrie Fourie, CEO of Capitec in South Africa, the only 5-star bank in the group: “We are a young bank, and everything we have done we have done from a conservative approach because we want to build a bank to last for one hundred years”.

It should be understood that this rating system is based entirely on banks’ annual reports – both the financial statements and everything else, including the CEOs’ and chairmen’s statements.

We focus on the Annual Report because of its unique status as the primary vehicle for management of a bank to communicate and account to shareholders and other stakeholders. Furthermore, it is available in a broadly standardised format from every bank worldwide – and is the first (and often the only) document that an in-ternational investor will look at in making an investment decision between hundreds and possibly thousands of banks. It is here that one can reasonably expect to find reliable accounts, clear exposition of strategy and how the bank proposes to achieve its aims – and also where an investor should gain valuable insights into the culture of the organisation, how it treats customers and the experience and qualifications of the management team. In carrying out their work our analysts have no contact with the banks they are rating. Indeed the CEO interviews in this journal were only undertaken by editorial staff after the ratings had been completed.

In conclusion, we do not claim that our methodology cannot be improved – for it certainly can. That said, we take comfort from the fact that there is a strong correlation between our ratings and the price/book values of the banks rated. Our aim throughout is the promotion of excellence in banking: your annual subscription to Lafferty Bank Quality Ratings includes three unique and valuable services: this Journal, a bi-weekly Bulletin and Lafferty analyst support: see page 150 for more information.

Michael LaffertyChairman, Lafferty Group

4 5This is not investment advice

Lafferty Bank Quality Ratings

Lafferty Bank Quality Ratings: Star Rating

Five Star Rating

Capitec

Four Star Rating

ADIB Hong Leong

Arab National Bank National Bank of Kuwait

Barclays Africa OCBC

BCA Public Bank

Discover Sterling

Handelsbanken Swedbank

HDFC TSB

Three Star Rating

Access ICICI

Agricultural Bank of China ING

American Express Itau-Unibanco

ANZ JPMorgan Chase

Axis Kasikorn (Thai Farmers)

Banco Bradesco Lloyds

Bangkok Bank M & T

Bank of Communications Bank Mandiri

Bank of Montreal Mashreq

Banque Saudi Fransi Maybank

BNY Mellon Nedbank

CaixaBank Nordea

Capital One PNC Financial Services

China Construction Bank RBC

CIT Group Sberbank

Commonwealth Bank of Australia Scotiabank

Crédit Suisse SEB

DBS Société Générale

Diamond Standard Bank

Emirates NBD State Bank of India

Fidelity Toronto Dominion

Fifth Third UBA

First Bank of Nigeria UOB

FirstRand US Bancorp

Guaranty Trust Bank Westpac

Huntington Bancshares Zenith

ICBC


Lafferty Bank Quality Ratings: Spring 2016

Two Star Rating

Bank of China Intesa-Sanpaolo

Bank of Ireland KeyCorp

BBVA Mitsubishi UFG

BNP Paribas Mizuho

Bank of America Morgan Stanley

CIBC National Australia Bank

CIMB National Bank of Canada

Citibank RBS

Comerica Santander

Commerzbank Standard Chartered

Credit Agricole SA Sumitomo Mitsui

Danske Sun Trust

Deutsche Bank UBS

DNB UniCredit

Goldman Sachs Wells Fargo

HSBC

One Star Rating

Barclays



Lafferty Bank Quality Ratings: Star Rating by countryStar Rating

AUSTRALIA

ANZ 3Commonwealth Bank of Australia 3National Australia Bank 2Westpac 3

BRAZIL

Banco Bradesco 3Itau-Unibanco 3

CANADA

Bank of Montreal 3CIBC 2National Bank of Canada 2RBC 3Scotiabank 3Toronto Dominion 3

CHINA

Agricultural Bank of China 3Bank of China 2Bank of Communications 3China Construction Bank 3ICBC 3

DENMARK

Danske 2

FRANCE

BNP Paribas 2Crédit Agricole SA 2Société Générale 3

GERMANY

Commerzbank 2Deutsche Bank 2

INDIA

Axis 3HDFC 4ICICI 3State Bank of India 3INDONESIA

Bank Mandiri 3BCA 4

IRELAND

Bank of Ireland 2

ITALY

Intesa-Sanpaolo 2

UniCredit 2

JAPAN

Mitsubishi UFG 2

Mizuho 2

Sumitomo Mitsui 2



Star Rating

KUWAIT

National Bank of Kuwait 4

MALAYSIA

CIMB 2

Hong Leong 4

Maybank 3

Public Bank 4

NETHERLANDS

ING 3

NIGERIA

Access 3

Diamond 3

Fidelity 3

First Bank of Nigeria 3

Guaranty Trust Bank 3

Sterling 4

UBA 3

Zenith 3

NORWAY

DNB 2

RUSSIA

Sberbank 3

SAUDI ARABIA

Arab National Bank 4

Banque Saudi Fransi 3

SINGAPORE

DBS 3OCBC 4UOB 3

SOUTH AFRICA

Barclays Africa 4Capitec 5FirstRand 3Nedbank 3Standard Bank 3

SPAIN

BBVA 2CaixaBank 3Santander 2

SWEDEN

Handelsbanken 4Nordea 3SEB 3Swedbank 4

SWITZERLAND

Crédit Suisse 3UBS 2


Stars Rating

THAILAND

Bangkok Bank 3Kasikorn (Thai Farmers) 3

UNITED ARAB EMIRATES

ADIB 4Emirates NBD 3Mashreq 3

UNITED KINGDOM

Barclays 1HSBC 2Lloyds 3RBS 2Standard Chartered 2TSB 4

UNITED STATES

American Express 3Bank of America 2BNY Mellon 3Capital One 3CIT Group 3Citibank 2Comerica 2Discover 4Fifth Third 3Goldman Sachs 2Huntington Bancshares 3JPMorgan Chase 3KeyCorp 2Morgan Stanley 2M & T 3PNC Financial Services 3Sun Trust 2US Bancorp 3Wells Fargo 2



THE FOLLOWING “Portraits” reveal the Star Rating of the first 100 banks in our Lafferty Bank Quality Ratings survey, along with details of senior personnel and revealing signals from the Annual Reports.

Some banks give much more information than others in an Annual Report. The signals appearing on each page are extracts from that document that we feel best reflect the bank in its own words.

While qualifications such as a standard MBA and CFA are laudable achievements in themselves, for the purposes of the Lafferty Bank Quality Ratings, these do not count as banking qualifications. If a qualification held by the chief executive is applicable to banking, we note it. Otherwise we register the lack as “N/A”, for “not applicable”.

Also, since firms do not consistently follow the same naming conventions when it comes to job titles, please note that, when job titles vary, this is generally at the particular request of the bank. In the case that the bank does not have a designated person for a particular job, or a role does not exist, this is also noted as “N/A”.

The Signals appearing on each page are indicative (rather than comprehensive) extracts from annual reports.

Some banks, despite repeated attempts at communicating, did not wish to verify their information: thus the symbol (U) for “Unverified by bank”.

Lafferty Bank Ratings Limited is not authorised by the Financial Conduct Authority to give investment advice and does not give investment advice. The information contained herein is not intended for use in making investment decisions by the recipient and, if used for that purpose, Lafferty Bank Ratings Limited accepts no liability for the results of such decisions.

Portraits

Prefatory Note



Access

Signals from Annual Report

Access Bank CEO Herbert Wigwe “holds a Masters degree in Banking and International Finance from the University College of North Wales.”

“We will, in the coming year place more emphasis on our retail business. We will continue to strive for a leadership position in customer service supported by our drive for customer acquisition and retention. Through a continuous improvement in both back-end and front-end technology, we are enriching our capacity to engage with customers more effectively.”

“Our Inclusive Banking team is set up to drive a reduction in the number of Nigerians that have no access to financial services from 46.3% to 20% by the year 2020.”

CEOHerbert Wigwe• Two years in current role• Background: Investment banking• Banking qualification: Masters in

Banking and International Finance from the University College of North Wales

ChairmanMosun Belo-Olusoga• Eight months in current role

CFO/Finance Director Oluseyi Kumapayi• Background: Chartered Accountant

Head of StrategyTitilayo Osuntoki

Head of Investor RelationsCathy Okwara

Head of CommunicationsAbdul Imoyo

Chairman – Audit committee Ernest Ndukwe

Chairman – Remuneration committeeOritsedere Otubu

Auditor KPMG

Legal counsel Fatai Oladipo

Lead Regulator(s)Central Bank of Nigeria

Lafferty Bank Quality Rating

Lafferty Bank Quality Ratings: Portraits


Abu Dhabi Islamic Bank


“The Bank’s overall strategy has three pillars: Build market leadership within the UAE; Create an integrated financial services group; Pursue international growth opportunities.” “With the growing acceptance of Islamic banking worldwide, ADIB is increasingly turning its attention to replicating its business model through systematic geographic expansion.”

CEOTirad Al Mahmoud• Eight years in current role• Background: Corporate banking• Banking qualification: N/A

ChairmanJawaan Awaidha Suhail Al Khaili• Eight years in current role

CFO/Finance Director Ahsan Akhtar Ahmed • Background: MBA

Head of StrategyAndrew Douglas Moir

Head of Investor RelationsAhsan Akhtar

Head of CommunicationsRamy Lawand

Chairman – Audit committee Abdulla Bin Aqueeda

Chairman – Remuneration committeeJuma Khamis Mugheer Al Khaili

Auditor Ernst & Young

Legal counsel Latham & Watkins

Lead Regulator(s)Central Bank of the UAE




Agricultural Bank of China (U)


“[W]e adhered to the fundamentals of making progress through steady development. Focusing on serving Sannong [Agriculture, rural areas and farmers] and the real economy, deepening reforms and strengthening management.” “[W]e will integrate our financial services and business operations into the national strategy of the synchronous development of industrialization, informatization, urbanization and agricultural modernization, so as to realize synchronous development, transformation and prosperity along with China’s economy.”

Head of Bank/PresidentZhao Huan• Appointed head of bank on 21 January 2016,

pending approval by banking regulator• Background: Economics• Banking Qualification: N/A

ChairmanLiu Shiyu• (Resigned his position as of 21/02/2016)

Role remains to be filled

CFO/Finance Director N/A

Head of StrategyFormerly Liu Shiyu

Head of Investor RelationsZhang Keqiu

Head of CommunicationsZhu Gaoming

Chairman – Audit committee Ma Si-hang

Chairman – Remuneration committeeZhang Yun

Auditor PwC

Legal counsel King & Wood Mallesons Lawyers

Lead Regulator(s)China Banking Regulatory Commission




American Express


“We own the world’s largest integrated payments platform — a global network connecting millions of consumers, businesses and merchants. It’s a source of powerful data about the purchasing preferences of our customers, and we are using it to bring greater convenience and choice to people’s lives.”

“This performance has translated into a total five-year shareholder return of 145 percent…As we entered 2015, however, the near-term picture changed due to a number of factors that we face, including economic headwinds, regulatory developments and changes in co-brand partnerships.”

CEOKenneth Chenault• Background: American Express for 35 years• Banking qualification: N/A

ChairmanKenneth Chenault• 15 years in current role

CFO/Finance Director Jeffery Campbell • Background: CPA and MBA,

Harvard University

Head of StrategyN/A

Head of Investor RelationsToby Willard

Head of CommunicationsMichael O’Neill

Chairman – Audit and Compliance Committee Daniel Vasella

Chairman – Compensation and Benefits CommitteeRobert Walter

Auditor PwC

Legal counsel Laureen Seeger

Lead Regulator(s)Federal Reserve System




ANZ


“The strategy has three key elements – strengthening our core franchises in Australia and New Zealand, growing profitably in Asia focused on corporate and institutional clients, and taking an enterprise approach to operations and technology to deliver better control and lower unit costs.”

“ANZ’s view is that the constrained market conditions are unlikely to change in the near term and so the banking sector must remain focused on selective growth opportunities, productivity and capital management. A number of initiatives have been put in place to drive improvements in order to deliver steady improvement in both our cost and capital position over time.”

“On 1 October the Board of ANZ announced that Shayne Elliott will succeed Mike Smith as Chief Executive Officer and join the Board on 1 January 2016.”

“Over the past 8 years, ANZ has been transformed and is today a stronger, more diverse, more profitable bank. Importantly, we have created a better bank for our customers with a stronger brand, growing market share and more retail, commercial and institutional customers choosing to bank with ANZ.”

CEOShane Elliott• Began role January 2016• Background: Corporate banking• Banking Qualification: N/A

ChairmanDavid Gonski• Two years in current role

CFOGraham Hodges• Background: Economist

Head of StrategyNigel Williams

Head of Investor RelationsJill Craig

Head of CommunicationsPaul Edwards

Chairman – Audit committee Paula Dwyer

Chairman – Remuneration committeeRichard Liebelt

Auditor KPMG

Legal counselBob Santamaria

Lead Regulator(s)APRA




Arab National Bank (U)


“These results demonstrate that the core strategy of generating consistent quality earnings, while maintaining a conservative approach to managing credit risk, is being achieved. It is also gratifying to report that other non-financial initiatives identified in the Bank’s Strategic Plan are being satisfactorily progressed. This includes clear evidence of enhanced customer satisfaction, providing employees with a challenging and rewarding workplace and ensuring that the right mix of product, channel and customer segment is being achieved.”

CEORobert Eid• Ten years in current role• Background: Corporate banking• Banking qualification: N/A

ChairmanSalah Al Rashed• Three years in current role

CFO/Finance Director Abdullah Al Khalifa • Background: MBA

Head of StrategyRashid Saad Al Rashid

Head of Investor RelationsN/A

Head of CommunicationsN/A

Chairman – Audit Committee Ahmed Al Akeil

Chairman – Remuneration CommitteeKhaled Saad Albawardi

Auditor KPMG Al Fawzan and Al Sadhan

Legal counsel N/A

Lead Regulator(s)Saudi Arabian Monetary Agency





“Our strategies for acquiring low-cost deposits, diversifying the business mix, upgrading product and process capabilities and putting in place robust risk management frameworks have all worked well.”

“During the year, we launched our premium personal banking service, Burgundy, designed especially for the busy affluent HNI customer.”

“India stands at a defining moment, poised to join the ranks of middle income countries within a generation. We are excited about the prospects that this offers and are confi dent of our ability to capitalize on the opportunities that emerge as we move ahead.”

“As on 31st March 2015, CASA and retail term deposits constituted 77.84% of total deposits. The domestic CASA and retail term deposits constituted 78.87% of total domestic deposits.”

“During the year under review, the Bank added 187 branches, taking the total number of branches and extension counters (ECs) to 2,589, of which 1,324 branches/ECs are in semi-urban and rural areas and 1,265 branches in metropolitan and urban areas. As on 31st March 2015, the Bank has 435 branches in rural unbanked areas.”

CEOShikha Sharma• Seven years in current role• Background: Investment banking • Banking Qualification: N/A

ChairmanSanjiv Misrad• Three years in current role

CFO/Finance DirectorJairam Sridharan • Background: Two decades of experience

in banking and finance

Head of StrategyRashmi Shekar

Head of Investor RelationsYusuf Syed

Head of CommunicationsParminder Panesar

Chairman – Audit committee Samir Barua

Chairman – Remuneration committeeShri Prasad Menon

Auditor S. R. Batliboi & Co.

Legal counselN/A

Lead Regulator(s)Reserve Bank of India

Lafferty Bank Quality RatingAxis (U)




“Banco Bradesco concentrates “mainly on two business fronts: the banking area and insurance, supplementary pension and capitalization, which represent respectively 70.8% and 29.2% of the Organization’s income. It wishes:

“a) to grow organically but [is] open to the possibility of acquisitions, associations and partnerships;

“b) to maintain rigorous controls to identify, assess and mitigate risks intrinsic to the Organization’s activities, as well as to define acceptable levels for each operation;

“and c) to do business ethically, transparently and with appropriate remuneration for investors.”

The bank also wants to focus “more closely on real estate loans, consumer credit and payroll deductable loans, in addition to maintaining a strong presence in supplementary pension plans and expanding services.”

It plans to maintain a “safe diversification” in investment banking, corporate banking and wealth management, and also sets the limits to its ambitions overseas, where it sees its role as providing “support for clients living outside the country and investors interested in Brazil.”

CEOLuiz Carlos Trabuco Cappi• Seven years in current role• Background: Retail and Corporate banking• Banking qualification: N/A

ChairmanLázaro de Mello Brandão• 17 years in current role

CFO/Finance Director Luiz Carlos Angelotti • Background: MBA

Integrated Risk Management & Capital Allocation Committee CoordinatorAlexandre da Silva Gluher

Head of Investor RelationsLuiz Carlos Angelotti

Head of CommunicationsMaurício Machado de Minas

Chairman – Audit Committee Milton Matsumoto

Chairman – Compensation CommitteeLázaro de Mello Brandão

Auditor KPMG

Fiscal Council Coordinator José Maria Soares Nunes

Lead Regulator(s)Banco Central do Brasil

Lafferty Bank Quality RatingBanco Bradesco




“Enduring Values: Building for the long-term; A partner and a friend; Adding value at every level.”

“[W]e are now Thailand’s biggest bank and a major regional bank, helping our customers to flourish and prepare for an era of regional integration, as the countries of ASEAN join together to form a single community, the AEC.”

“We provide support for direct investments, acquisitions and trade services, especially for customers with international business interests in Southeast Asia.”

“Bangkok Bank sees three major trends shaping Thailand – regionalization, urbanization and digitalization. We are expanding our international networks with a strong focus on the AEC, upgrading our services to provide our customers with efficient financial supply chains, and expanding our provincial branch network. We are also introducing new digital banking options and ensuring that our IT networks meet world-class standards.”

CEOChartsiri Sophonpanich• 22 years in current role• Background: Corporate banking • Banking Qualification: N/A

ChairmanKosit Panpiemras• Eight years in current role

CFO/Finance DirectorBenjaporn Prisuwanna • Background: MBA

Head of StrategySurayud Kanchanabhogin

Head of Investor RelationsChaiyarit Anuchitworawong

Head of CommunicationsThantika Bodhisompon

Chairman – Audit committee Prachet Siridej

Chairman – Remuneration committeeKovit Poshyananda

Auditor Independent Certified Public Accountant (Thailand)

Legal counselSongkram Sakulphramana

Lead Regulator(s)Bank of Thailand

Lafferty Bank Quality RatingBangkok Bank




“Bank Mandiri is determined to become the ASEAN market leader by 2020.”

“Mandiri has identified three aspirations as part of its determination to be the Best Bank in ASEAN by 2020, namely...Asean Market Cap Leader, with a minimum market capitalisation of $55 billion; Leading ROE, in a range of 23 to 27 percent; and Broader Socio-economic Impact.”

Strategies:

• “Become the customer choice bank in the retail segment, with business acceleration in main segments which drive business growth in Bank Mandiri (including the micro, SME and individual segments);

• “Integrating business in all segments of the bank, including with subsidiary companies.”

“Bank Mandiri’s recognition by external independent parties, such as Roy Morgan Consumer Bank of the Year in 2014 (2 times in a row).”

CEOKartika Wirjoatmodjo• Appointed March 2016• Background: Consulting and finance• Banking qualification: N/A

Chairman/ President Commissioner Wimboh Santoso• First year in current role• Background: MBA from University

of Indiana, PhD in Economics from Loughborough University.

Director of Finance & Strategy/CFO Pahala N. Mansury • Background: BSc Accounting, MBA

(Finance)

Head of Strategy and Performance ManagementAnton Herdianto


Head of Corporate SecretaryRohan Hafas

Chairman – Audit Committee Aviliani

Chairman – Remuneration & Nomination CommitteeBangun Sarwito Kusmuljono


Director of Risk Management & Compliancer Ahmad Sid

Lead Regulator(s)Bank Indonesia

Lafferty Bank Quality RatingBank Mandiri




“On August 20, 2014, we reached a comprehensive settlement with the DoJ and certain federal and state agencies (DoJ Settlement). The DoJ Settlement included releases for securitization, origination, sale and other specified conduct…As part of the DoJ Settlement, we paid civil monetary penalties and compensatory remediation payments totaling $9.65 billion in 2014 and agreed to provide $7.0 billion worth of creditable consumer relief activities.”

“[W]e serve people (individuals), companies (large and small) and institutional investors. In the U.S. we serve all three customer groups, and outside the U.S., we have simplified and reduced our risk profile by focusing primarily on larger companies and institutional investors.”

“Our consumer business is the best in the industry…. The key to our success is serving each customer well, while making all of our capabilities available to them. We will keep simplifying our operations and reducing costs so we can provide the most effective, fair and rewarding products for these customers.”

“We continue to invest in our mobile banking capabilities. As of February 2015, we have nearly 17 million active mobile banking consumer and small business customers.”

CEOBrian Moynihan• Six years in current role• Background: Corporate banking • Banking Qualification: N/A

ChairmanBrian Moynihan• Six years in current role

CFO/Finance DirectorPaul Donofrio • Background: Chartered Accountant

Head of StrategyAnne Finucane

Head of Investor RelationsThomas Montag

Head of CommunicationsAnne Finucane

Chairman – Audit committee Sharon Allen

Chairman – Remuneration committeeMonica Lozano

Auditor PwC

Legal CounselDavid Leitch


Lafferty Bank Quality RatingBank of America




“Dedicated to the strategic goal of “Serving Society, Delivering Excellence”, the Bank persisted in the four wheels of business development, risk management, reform and innovation and team building to drive its development, thus achieving admirable operating results.”

“The Bank continued to serve the real economy and expanded business through the coordinated development of its domestic and overseas operations.”

“In 2014, the Group’s new RMB and foreign currency loans amounted to RMB875.5 billion. Loans were mainly granted to major strategic industries, vital fields that benefit the people’s livelihood and key projects related to Chinese enterprises’ “Going Global” efforts. The Bank actively supported “Going Global” companies by committing total loans of USD121.9 billion to such projects as at the end of the year.”

“The Bank made earnest efforts to carry out risk control measures targeting local government financing vehicles, overcapacity industries and real estate, kept increment under strict control and pushed forward rectifications for credit enhancement. The Bank set up a specialised department for interbank businesses in line with new regulatory requirements.”

“[S]riving to become the financial artery of the “Belt and Road” development strategy.”

President/CEOChen Siqing• Two years in current role• Background: Corporate banking• Banking qualification: N/A

ChairmanTian Guoli• Three years in current role

CFO/Finance Director N/A

Chairman of Strategic Development Committee Tian Guoli

Head of Investor RelationsLuo Nan


Chairman – Audit Committee Lu Zhengfei

Chairman – Personnel & Remuneration CommitteePaul Chow Man Yiu


Legal Counsel Tian Guoli


Lafferty Bank Quality RatingBank of China (U)




The Bank’s development strategy is to become “a first class listed comprehensive banking group focusing on international expansion and specialising in wealth management.”

“As a pioneer of China’s financial reform and developer of financial innovation, BoCom has constantly and actively adapted to the economy “New Normal”. By placing our customer at the first priority, we optimise the internal system, network, operation and service procedures to tailor for our customers’ needs.”

“We understood that the traditional growth model of China’s banking sector – “issuing loans, attracting deposits, and raising profits”, has ended. The transformation is irresistible. We will be backed up by China’s economic growth, to align with the “go global” strategy of Chinese enterprises and internationalization of Renminbi, and constantly build up the best wealth management bank of China based on vast service network and solid customer base to support sustainable performance growth.”

“The “BoCom Strategy” is to become a first class listed global banking group, focusing on international expansion and specialising in wealth management.”

CEOPeng Chun• Two years in current role• Background: Investment banking • Banking Qualification: N/A

ChairmanNiu Ximing• Three years in current role

CFOYu Yali • Background: MBA

Head of Strategy CommitteeNiu Ximing


Head of CommunicationsDu Jianglong

Chairman – Audit committee Fan Jun (General Manager of the Audit Committee)

Chairman – Remuneration committeeHua Qingshan

Auditor PwC

Legal CounselNiu Ximing


Lafferty Bank Quality RatingBank of Communications (U)




“[O]ur performance is closely linked to the prosperity of the Irish economy. We are continuing to play a pro-active role in supporting the ongoing economic recovery in Ireland and we are significantly increasing our lending to all sectors of the economy including consumers, businesses and corporates.”

“The Group’s balance sheet, credit risk profile and funding profile have been substantially restructured since 2008, with a focus on the Group’s core Republic of Ireland (RoI) market and selected international diversification.”

CEORichie Boucher• Seven years in current role• Background: Corporate and retail banking• Banking qualification: N/A

ChairmanArchie Kane• Four years in current role

CFO Andrew Keating• Background: Chartered Accountant

Head of StrategyDonal Collins

Head of Investor RelationsMark Spain

Head of CommunicationsPat Farrell

Chairman – Audit Committee Kent Atkinson

Chairman – Remuneration CommitteePat Butler

Auditor PwC

Legal Counsel Páraic O’Kennedy

Lead Regulator(s)ECB

Lafferty Bank Quality RatingBank of Ireland




“BMO’s strategic priorities: 1. Achieve industry-leading customer loyalty by delivering on our brand promise; 2. Enhance productivity to drive performance and shareholder value; 3. Accelerate deployment of digital technology to transform our business; 4. Leverage our consolidated North American platform and expand strategically in select global markets to deliver growth; 5. Ensure our strength in risk management underpins everything we do for our customers.”

“Strategy and Key Priorities: We aim to grow our business and be a leader in our markets by creating a differentiated, intuitive customer experience and advising our customers on a wide range of financial topics, leveraging our brand reputation, local presence and high-performance teams.”

“Our NPS for the retail and business banking segments improved year over year, as we continued to focus on customer feedback.”

CEOWilliam Downe• Nine years in current role• Background: Corporate banking • Banking Qualification: N/A

ChairmanRobert Prichard• Four years in current role

CFO/Finance DirectorThomas Flynn • Background: Chartered Accountant

Head of Strategy Hugh McKee

Head of Investor RelationsSharon Haward-Laird

Head of CommunicationsSharon Haward-Laird

Chairman – Audit committee Philip Orsino

Chairman – Remuneration committeeRonald Farmer

Auditor KPMG

Legal CounselSimon Fish

Lead Regulator(s)OSFI

Lafferty Bank Quality RatingBank of Montreal




“BSF is deploying a balanced strategy between its different business lines leveraging on its historical and strong position in the corporate sector to develop its offer across all banking segments and business lines.”

“BSF has made considerable progress over the past few years deploying a business model adjusted to the economic and regulatory environment, modernizing its processes and reinforcing its reserves and financial position. I am accordingly very confident that BSF will be well positioned to capture opportunities and continue playing a key role supporting the economic development of the Kingdom.”

“Corporate Banking continued to be instrumental in the overall growth of the Bank’s assets and profitability. Leveraging the bank’s strong corporate client base, extensive focus was directed towards cross selling of the bank’s retail, treasury, corporate finance, and investment banking franchises.”

“On the Retail Banking front, the introduction of new incentive programs coupled with an optimized sales force have produced good outcome.”

CEOPatrice Couvegnes• Five years in current role• Background: Corporate banking • Banking Qualification: N/A

ChairmanSulaiman Abdulrahman Al Gwaiz• Three years in current role

CFOJulien Maze • Background: MBA

Head of Investor RelationsKamal Khodr (also head of Corporate Banking)

Head of CommunicationsSameh Abdulhadi

Chairman – Audit committee Abdulrahman Rashed Al-Rashed

Chairman – Remuneration committeeMosa Omran Al-Omran

Auditor • KPMG Al Fozan & Al Sadhan• PwC

Legal CounselNicholas Diacos

Lead Regulator(s)Saudi Arabian Monetary Agency

Lafferty Bank Quality RatingBanque Saudi Fransi




“Our goal is to become the ‘Go-To’ bank for our clients, customers, colleagues and our stakeholders.”

“A small number of senior employees receive a class of fixed pay called RBP to recognise the seniority, breadth and depth of their role. RBP was introduced in 2014 to enable Barclays to remain competitive for global talent, given the CRD IV 2:1 maximum ratio of variable to fixed pay which came into effect in 2014.”

“We have agreed eight key measures … against which our stakeholders can hold us to account. We are committed to monitoring and reporting on our progress annually…..[including] PCB, Barclaycard and Africa Banking weighted average ranking of Relationship Net Promoter Score® (NPS) vs. peer sets [and]….Conduct Reputation (YouGov survey).”

CEOJes Staley• Background: Investment banking • Banking Qualification: N/A

ChairmanJohn McFarlane

CFO/Finance DirectorTushar Morzaria

Head of Strategy (Group Chief Operating Officer) Paul Compton (joining in May 2016)

Head of Investor RelationsKathryn McLeland

Head of Communications Stephen Doherty

Chairman – Audit committeeMike Ashley

Chairman – Remuneration committeeCrawford Gillies

Auditor PwC until 31 December 2016. KPMG will then take over.

Legal CounselBob Hoyt

Lead Regulator(s)• FCA• PRA

Lafferty Bank Quality RatingBarclays




“We are uniquely positioned as a fully global, fully regional and fully local bank and aspire to build the leading financial services group in our chosen countries in Africa, as well as selected customer and client segments and to remain locally relevant and competitive in all presence countries.”

“Our strategy is focused on the opportunity for growth and takes into account the matters we believe are material to our long-term sustainability and our ability to leverage the assets and expertise of the wider Barclays group. We remain responsive to the needs of our key stakeholders in achieving our goals and retain flexibility in executing our strategy, taking into consideration prevailing trading conditions and future opportunities.”

“Turnaround Retail and Business Banking; Investing in Corporate Banking growth; Grow Wealth, Investment Management and Insurance; Develop and invest in talent and our people.”

“Focusing on sustainable revenue growth within the framework of an appropriate risk appetite and disciplined cost management.”

“[S]implify our products and services to match our customers’ and clients’ needs with the right service model; implement new systems and technologies…; improve digital functionality on our cellphone, online and ATM channels; simplify customer and client interactions such as customer on-boarding, vehicle financing and loan applications; and drive service excellence and deal with customer complaints efficiently.”

CEOMaria Ramos• Seven years in current role• Background: Retail banking• Banking qualification: Institute of

Bankers’ Diploma (CAIB)

CEO of Personal & Business BankingCraig Bond• Background: Retail banking• Banking qualification: N/A

ChairmanWendy Lucas-Bull• Three years in current role

CFO/Finance DirectorDavid Hodnett• Background: Chartered Accountant

Head of StrategyBobby Malabie

Head of Investor RelationsAlan Hartdegen

Head of CommunicationsNadine Drutman

Chairman – Audit Committee Colin Beggs

Chairman – Remuneration CommitteeMohamed Husain

Auditor PwC

Legal Counsel Charles Wheeler

Lead Regulator(s)South African Reserve Bank

Lafferty Bank Quality RatingBarclays Africa




“For BBVA it was a productive year because we achieved good earnings, took important decisions that improve the Group’s growth potential and made notable progress in our digital transformation strategy to become the best Bank in the world.”

“[T]he increase in our stake in Garanti to 39.9% makes us the largest shareholder in what is the best bank in Turkey and possibly the most technologically advanced bank in the world.”

“After completing the initial construction stage of the new, highly innovative and world-class technological platform which we initiated eight years ago, we are now working hard on the next stage, creating new distribution models, processes and products and a new organization, while we explore new digital businesses. To accelerate the process, in 2014 we created the Digital Banking area, made up of more than 3,000 people from the Group’s different geographical areas and to which we are adding external talent from top-level digital companies.”

“Acquisition of Simple in February, 2014. This deal is part of BBVA’s strategy to lead the technological transformation of the financial industry. It is a U.S. company headquartered in Portland, Oregon.”

CEOCarlos Torres Vila• One year in current role• Background: Corporate banking• Banking Qualification: N/A

ChairmanFrancisco Gonzalez Rodriguez • 16 years in current role

CFO/Finance DirectorJaime Saenz De Tejada Pulido • Background: MBA

Head of Strategy Jaime Saenz De Tejada Pulido

Head of Investor RelationsLuisa Gomez Bravo

Head of Communications Ignacio Moliner Robredo

Chairman – Audit committeeJosé Miguel Andrés Torrecillas

Chairman – Remuneration committeeCarlos Loring Martinez De Irujo

Auditor Deloitte

Legal CounselEduardo Arbizu Lostao


Lafferty Bank Quality RatingBBVA




“BCA believes that excellence in payment settlement services will strengthen the long term competitive advantage and will support the growth of the Bank’s third party funds particularly in the stable CASA [Current Accounts and Savings Accounts] accounts.”

“CASA [Current Accounts and Savings Accounts] comprised the main contributor to the Bank’s funding base, accounting for 75.1% of total deposits. We are pleased to report that our transaction banking franchise remained strong.”

President DirectorJahja Setiaatmadja• Five years in current role• Background: Corporate banking• Banking qualification: N/A

President Commissioner Djohan Emir Setijoso• Five years in current role

CFO/Finance DirectorEugene Keith Galbraith

Head of StrategyArmand Hartono

Head of Investor RelationsRamyon Yonarto

Head of CommunicationsInge Setiawati

Chairman – Audit Committee Sigit Pramono

Chairman – Remuneration CommitteeRaden Pardede

Auditor KPMG

Legal Counsel Subur Tan

Lead Regulator(s)Bank Indonesia

Lafferty Bank Quality RatingBCA




“The Strategic Plan contemplates a number of initiatives, including simplifying the Bank’s organisation and operations, continuing to improve operating efficiency, adapting certain businesses to their economic and regulatory environment and implementing various business development initiatives.”

“It is expected to devote in 2015-2016 about 20% of net earnings to financing organic growth. The Group expects the growth of risk-weighted assets to be of the order of 2.5% (1) a year during this period compared to the 3% originally planned.”

CEOJean-Laurent Bonnafe• Four years in current role• Background: Retail banking• Banking Qualification: N/A

ChairmanJean Lemierre • One year in current role

CFO/Finance DirectorLars Machenil • Background: PhD in nuclear science

Head of Strategy N/A

Head of Investor RelationsStéphane de Marnhac

Head of Communications Bertrand Cizeau

Chairman – Audit committeeDenis Kessler

Chairman – Remuneration committeePierre Andre de Chalendar

Auditor • Deloitte • PwC• Mazars

Legal CounselGeorges Dirani


Lafferty Bank Quality RatingBNP Paribas




“BNY Mellon is an investments company. We manage and service financial assets. That’s what we do.”

“Our business model is fee-based, with fees representing more than 80 percent of our revenues. The vast majority of those fees are recurring. We can therefore grow our business without the need to extend credit support”.

“[W]e put in place a three-year plan, which we publicly shared in October, to deliver increased value to our shareholders. Our goal is to deliver revenue and earnings-per-share (EPS) growth that is not dependent on an improved interest-rate and economic environment.”

“Our effort to improve business processes includes: Refocusing on our core businesses through a number of actions, including:

• Restructuring our Markets Group to reduce costs and exit some businesses that were too capital

• intensive or lacked effective size and scale

• Shutting down our futures commission merchant derivatives clearing businesses in the U .S. and Germany and selling our Corporate Trust business in Japan and Mexico.

• Selling our investment in Wing Hang Bank.”

CEOGerald Hassell• Four years in current role• Background: Investment management• Banking qualification: N/A

Chairman Gerald Hassell• Five years in current role

CFO/Finance DirectorThomas Gibbons• Background: MBA

Head of StrategyN/A

Head of Investor RelationsValerie Haertel

Head of CommunicationsKevin Heine

Chairman – Audit Committee Joseph Echevarria

Chairman – Remuneration CommitteeJeffrey Goldstein

Auditor KPMG

Legal Counsel Kevin McCarthy


Lafferty Bank Quality RatingBNY Mellon




“CaixaBank’s competitive strategy:..Plain and simple retail banking, with solid financial backing; Global leader in digital banking, with a complete product offer; Customer-focused, long-term relationships, a franchise of quality.”

“CaixaBank conducts regular customer satisfaction surveys and has devised an internal service quality indicator for the branch network, called the Customer Satisfaction Index (CSI). This index is fuelled by over 350,000 surveys filled out by retail and corporate customers.”

“Challenges set for 2014: Obtain a score of 8.5 on the Customer Satisfaction Index (CSI) through a raft of measures such as a programme of visits to branches with the greatest room for improvement to put specific solutions in place....Progress during 2014: Although the CSI score rose to 8.4 (on a scale from 1 to 10), the target of 8.5 was not met. The office visit programme is under way.”

CEOGonzalo Gortazar Rotaeche• Two years in current role• Background: Corporate and investment

banking • Banking Qualification: N/A

ChairmanIsidro Faine Casas • Background: Doctorate in Economics;

International Senior Managers Program certificate in Business Administration from Harvard University

CFO/Finance DirectorJavier Pano Riera

Chief Economist and Chief Strategy Officer Jordi Gual

Head of Investor RelationsEdward O’Loghlen

Corporate Director of Communication, Institutional Relations, Brand and CSR Maria Luisa Martinez Gistau

Chairman – Audit committeeXavier Vives Torrents

Chairman – Remuneration committeeMaría Amparo Moraleda

Auditor Deloitte

Legal CounselIgnacio Redondoi


Lafferty Bank Quality RatingCaixaBank




“Since our founding days, we’ve focused on these enduring success factors: Go where the market is going. Choose businesses with structurally attractive returns.”

“[W]e’ve transformed ourselves from a credit card company into a diversified bank….We’ve achieved relevant scale in our card and auto businesses, as well as in our digital and brand capabilities, but avoided the size and complexity of the country’s largest banks.”

“[W]e have established a reserve related to U.K. cross sell products, including PPI, which totaled $116 million and $169 million as of December 31, 2014 and 2013, respectively.”

CEORichard Fairbank• 28 years in current role• Background: Credit cards• Banking qualification: N/A

Chairman Richard Fairbank• 28 years in current role

CFO/Finance Director Stephen Crawford• Background: N/A

CIO/Head of StrategyRobert Alexander

Head of Investor RelationsJeff Norris

Head of CommunicationsRichard Woods

Chairman – Audit Committee Bradford Warner

Chairman – Remuneration CommitteeMayo Shattuck


Legal Counsel John Finneran


Lafferty Bank Quality RatingCapital One




“Capitec was established to provide essential banking services to all South Africans. It conducts its operations through Capitec Bank, a retail bank that has changed the landscape of South African banking and is empowering South Africans financially.”

“The singular focus on retail banking by Capitec Bank and the innovative application of the building blocks across everything the bank has developed, make it unique as a service provider in this industry.”

“Our client philosophy is to strive for simplicity and transparency, giving clients greater control over their banking. Our fees are transparent and easy to understand. We don’t have different fee packages which confuse clients or which give some clients a better deal than others.”

“With the strong growth of retail deposits and a moderate demand for funding, we decided not to retain all wholesale deposits as they matured, but only competitively priced money. We maintain a healthy reserve of longer dated wholesale deposits to match our assets and liabilities.”

“We developed and implemented a new front-end banking system during the year. This was a massive and expensive effort, entailing the training of 6 823 employees. As part of this development we introduced ‘side-by-side’ consulting, a Capitec Bank first, where the client and consultant both face the computer screen. The client is treated as a participant in the process.”

CEOGerhardus Metselaar Fourie • Two years in current role• Background: Retail banking • Banking Qualification: N/A

ChairmanMichiel Scholtz du Pré le Roux • Nine years in current role

CFO/Finance DirectorAndre Pierre du Plessis • Background: Chartered Accountant

Head of strategy N/A

Head of Investor RelationsAnton Friend

Head of Communications Charl Nel

Chairman – Audit committeeJean Pierre Versters

Chairman – Remuneration committeeChris Adriaan Auto

Auditor PwC

Legal CounselMarthinus Janse van Rensburg


Lafferty Bank Quality RatingCapitec Bank




“The Group formulated Transformation and Development Plan of China Construction Bank in 2014, which proposed to accelerate transformation towards a comprehensive banking group, multi-functional service, intensive development, an innovative bank and a smart bank.”

“In recent years, we rapidly developed emerging businesses of strategic importance such as investment banking, private banking, electronic banking, small and micro enterprises and consumer finance, and strove to build a comprehensive platform for services in insurance, fund, trust, leasing, investment banking and futures, so as to continuously enhance the level of integration, multifunction, and intensiveness of operation and management.”

CEOWang Zuji• One year in current role• Background: PhD Economics• Banking qualification: N/A

Chairman Wang Hongzhang• Four years in current role

CFO/Finance Director Xu Yiming• Background: PhD Economics

Head of Strategy Development CommitteeWang Hongzhang



Chairman – Audit Committee Chung Shui Ming Timpson

Chairman – Remuneration CommitteeWim Kok

Auditor PwC

Legal Counsel N/A


Lafferty Bank Quality RatingChina Construction Bank (U)




“Our Strategy…[involves]: Focusing on our clients; Innovating for the future; Simplifying our bank.”

“We’ve made encouraging headway in shifting our culture to become more open and transparent and we’ve seen both qualitative and quantitative improvements in this area.”

“[W]e have set a plan in motion to transform CIBC into a strong, innovative, and relationship-oriented bank that continues to deliver consistent sustainable earnings with more emphasis on growth.”

“[W]e were the first of the Big 5 banks to launch an app for the Apple Watch. This was made possible by our partnership with the MaRS Discovery District urban innovation hub and the new FinTech cluster focusing on developing the next wave of banking innovations.”

CEOVictor Dodig • Two years in current role• Background: Corporate banking • Banking Qualification: N/A

ChairmanThe Honourable John Manley • One year in current role

CFOKevin Glass • Background: Chartered Accountant

EVP Strategy & Corporate Development Jaqueline Moss

Head of Investor RelationsGeoff Wiss

Head of Communications N/A

Chairman – Audit committeeJane Peverett

Chairman – Remuneration committeeLinda Hasenfratz


Legal CounselMichael Capatides


Lafferty Bank Quality RatingCIBC




“2014 was one of our least successful years in financial terms due to the significant decline in earnings at CIMB Niaga.”

“Our T18 strategy is centred around a number of key strategic imperatives…Digital consumer banking will be a key growth driver for CIMB...Small to Medium-sized Enterprises (SME) is another focus area for us moving forward…A significant part of the T18 strategy will be focused on managing our costs to preserve margins.”

“2014 has been a defining year in CIMB’s technology roadmap. The pinnacle was the successful launch of 1Platform which replaced five legacy applications and embedded powerful product bundling and pricing capabilities. 1Platform is now in a majority of our main markets, enhancing our position as a seamless ASEAN bank.”

“As a firm, we have set the bar high with an ROE target of more than 15% by 2018, along with a cost-to-income ratio target of less than 50%, CET1 target of more than 11% and income contribution from consumer bank of 60%.”

CEOTengku Dato’ Sri Zafrul Aziz• One year in current role• Background: Investment banking• Banking qualification: N/A

Chairman Dato’ Sri Nazir Razak• Two years in current role

Group CFO Shahnaz Jammal• Background: MBA, University of

Cambridge

Chief Strategy OfficerGurdip Singh Sidhu

Head of Investor RelationsSteven Tan Chek Chye

Head of CommunicationsJosandi Thor

Chairman – Audit Committee Dato’ Zainal Abidin Putih

Chairman – Nomination and Remuneration committeeDato’ Zainal Abidin Putih

Auditor PwC

Legal Counsel Lee Chin Tok

Lead Regulator(s)Bank Negara Malaysia

Lafferty Bank Quality RatingCIMB




“Our collateralized lending model continues to differentiate CIT from its competitors.”

“One of the opportunities we identified was in commercial real estate. We reentered the space after many commercial banks retreated from it in the wake of the credit crisis. But we did so selectively, focusing solely on first-lien collateralized loans.”

“[T]he OneWest Bank transaction…will fundamentally change the foundation of our lending businesses by making the majority of our assets funded with bank deposits instead of a combination of secured and unsecured debt. The new funding mix will significantly lower the overall cost of our funding, improve profitability and diversify our deposit base through the addition of branch and commercial deposits.”

“We exited businesses that we concluded no longer supported our strategic goals, including our student lending portfolio, a corporate finance portfolio in the United Kingdom (UK).”

CEOEllen Alemany • One month in current role• Background: Retail banking • Banking Qualification: N/A

ChairmanJohn Thain • Seven years in current role

CFO/Finance DirectorCarol Hayles• Background: Chartered Accountant

Head of Strategy Kelly Morrell

Head of Investor RelationsBarbara Callahan

Head of Communications Margaret Tutwiler

Chairman – Audit committeeMarianne Miller Parrs

Chairman – Remuneration committeeSeymour Sternberg

Auditor PwC

Legal CounselJames Shanahan


Lafferty Bank Quality RatingCIT Group




“I set four specific goals for Citi: first, to utilize our deferred tax assets; second, to drive Citi Holdings to break-even; third, to generate quality and consistent earnings; and fourth, to be known as an indisputably strong and stable institution.”

“Going forward, our core Consumer network will comprise those 24 countries where we enjoy some mixture of scale, competitive advantage, history and expertise. We closed sales on our retail franchises in Greece and Spain and signed agreements to sell those in Peru and Japan.”

“[W]e were pleased to see an increase in customer satisfaction, as measured by Net Promoter Scores.” (No score given).

CEOMichael Corbat• Four years in current role• Background: Corporate banking• Banking qualification: N/A

Chairman Michael O’Neill• Four years in current role

CFO John Gerspach• Background: CPA

Chief Risk Officer Bradford Hu

Head of Investor RelationsSusan Kendall

Head of CommunicationsJennifer Lowney

Chairman – Audit Committee James Turley

Chairman – Personnel and Compensation CommitteeWilliam Thompson

Auditor KPMG

General Counsel and Corporate Secretary Rohan Weerasinghe


Lafferty Bank Quality RatingCitibank




“Comerica…has the resources of a large bank and the customer-centric culture of a community bank. We have a strong presence in Texas, California and Michigan, as well as operations in Arizona and Florida. Our strategy is to have balance between our markets, which should help us achieve consistent and sustainable growth over time.”

“Texas is home to our Energy business....California is home to our Technology and Life Sciences business, Entertainment group, and Financial Services Division.”

“We provide comprehensive banking services through our Business Bank, Retail Bank, and Wealth Management segments. Our focus on relationships in all three segments makes a positive difference for us in this highly competitive, low-rate environment.”

“We find customers are attracted to Comerica because we get to know and understand them. Our relationship banking model does make a positive difference for us and remains a competitive advantage.”

CEORalph W. Babb Jr. • 14 years in current role• Background: Accounting • Banking Qualification: N/A

ChairmanRalph W. Babb Jr. • 13 years in current role

CFO/Finance DirectorKaren L. Parkhill• Background: MBA

Head of Risk Management Michael Michalak

Head of Investor RelationsDarlene Persons

Head of Communications Wendy Bridges

Chairman – Audit committeeT. Kevin DeNicola

Chairman – Governance, Compensation and Nominating CommitteeRichard G. Lindner


Legal CounselJohn D. Buchanan


Lafferty Bank Quality RatingComerica




“Satisfaction levels among Commerzbank customers rose significantly again in 2014. Every month, the net promoter score, which measures customers’ willingness to recommend the Bank, was well above the target of 30%. Indeed, the fourth quarter saw the highest value – 49% – among private, corporate and wealth management customers since measurements began.”

“[T]he 2014 customer satisfaction scores: in every month the Net Promoter Score, which indicates customers’ willingness to recommend the Bank, was well above the target 30% level in both Retail and Business Customers and Wealth Management, with the third quarter of 2014 even seeing the highest scores since they were first measured.”

CEOMartin Blessing• Eight years in current role• Background: Corporate and retail banking• Banking qualification: N/A

Chairman Klaus-Peter Müller• Eight years in current role

CFO/Finance Director Stephan Engels• Background: automotive industry

Head of Strategy Bettina Orlopp

Head of Investor RelationsTanja Birkholz

Head of CommunicationsRichard Lips

Chairman – Audit Committee Helmut Perlet

Chairman – Remuneration CommitteeKlaus-Peter Müller

Auditor PwC

Legal Counsel Günter Hugger


Lafferty Bank Quality RatingCommerzbank




“[F]our strategic priorities: people, technology, productivity and strength.”

“Part of our commitment to customer focus is also reflected in our determination to put things right where we have let our customers down. An example of this commitment is our Open Advice Review program.”

“Over the last 12 months, the Group undertook an extensive review of our culture, assisted by external advisers, The Ethics Centre, KPMG and Gilbert & Tobin. While integrity, collaboration, transparency and trust are all clear ingredients of “ethics”, the task of ensuring that behaviour mirrors excellence in all of these characteristics will be an ongoing task. It has management’s full attention and is central to the conduct of the Group’s business.”

CEOIan Narev• Four years in current role• Background: Corporate banking,

management consulting• Banking Qualification: N/A

ChairmanDavid Turner• Six years in current role

CFODavid Craig• Background: Chartered Accountant

Head of StrategyVittoria Shortt

Head of Investor RelationsMelanie Kirk

Head of CommunicationsKate Abrahams

Chairman – Audit committee Brian Long

Chairman – Remuneration committeeJane Hemstritch

Auditor PwC

Legal CounselDavid Cohen


Lafferty Bank Quality RatingCommonwealth Bank of Australia




“Backed by its universal customer-focused bank model, characterised by close ties between its retail banks and related business lines, Crédit Agricole Group helps its customers pursue their projects in France and around the world in insurance, property, payment instruments, asset management, leasing and factoring, consumer finance, and corporate and investment banking.”

“2014 also saw the publication of our Medium Term Plan:…..innovate and transform our Retail banking to better serve our customers and strengthen our leadership in France, accelerate revenue synergies across the Group, achieve focused growth in Europe and improve our operational efficiency.”

“Achieve focused growth in Europe, Step up organic growth in Italy, the Group’s second domestic market, accelerate growth in Savings management and Insurance as well as asset management and pursue a focused strategy for other businesses.”

“[T]he customer recommendation index (Indice de recommandation client, IRC) represents an indicator of the quality of service. By means of an annual barometer taking readings across all markets, this global synthetic indicator measures customers’ attachment to their bank based on whether or not they would recommend it to a close relative or friend. The third reading of the IRC, at national level, was carried out in 2014 in all markets. Regional IRCs were also launched for the third year in the individual customer market including 32 Regional Banks. The second reading of the IRC in more specialised markets, such as high net worth customers or small businesses was also completed this year.”

CEOPhilippe Brassac• Four years in current role• Background: Retail and Corporate banking• Banking Qualification: N/A

Deputy CEO - Second Effective ManagerXaxier Musca

Chairman Dominique Lefebvre• One year in current role

CFO/Finance DirectorJérôme Grivet

Head of StrategyClotilde L’Angevin

Head of Investor RelationsDenis Kleiber

Head of Communications Denis Marquet

Chairman – Audit committeeFrancois Veverka

Chairman – Remuneration committeeLaurence DORS (Independent)

Auditor • PwC • Ernst & Young

Head of Group Legal Affairs Pierre Minor


Lafferty Bank Quality RatingCrédit Agricole




Note that Crédit Suisse has adopted a new strategy since the 2014 annual report was published.

“We operate as an integrated bank, combining our strengths and expertise in our two global divisions, Private Banking & Wealth Management and Investment Banking….Our global structure comprises four regions: Switzerland; Europe, Middle East and Africa (EMEA); Americas; and Asia Pacific.”

“We [are] shifting resources to focus on growth in high-returning businesses while moving towards a more balanced capital allocation between our Investment Banking and Private Banking & Wealth Management divisions.”

“On March 10, 2015, we announced that the Board of Directors has appointed Tidjane Thiam as the new CEO of Credit Suisse Group, effective at the end of June 2015.”

“[R]ecent analyst and media reports have questioned the sustainability of the universal banking model, which combines wealth management and investment banking services. Credit Suisse has had an integrated bank model in place since 2006, and our “One Bank” approach represents an integral part of our business model and strategy.”

“In the past year, we were able to resolve certain significant legacy issues. Looking back, the settlement with the US authorities regarding all outstanding cross-border matters in May marked an important turning point.”

CEOTidjane Thiam• Six months in current role• Background: Insurance and consulting• Banking qualification: N/A

Chairman Urs Rohner• Five years in current role

CFO/Finance Director David Mathers• Background: N/A

Head of Investor RelationsChristian Stark

Head of CommunicationsPeter Goerke

Chairman – Audit Committee John Tiner

Chairman – Remuneration CommitteeJean Lanier

Auditor KPMG

Legal Counsel Romeo Cerutti

Lead Regulator(s)• Swiss Financial Market Supervisory

Authority (FINMA)• Swiss National Bank

Lafferty Bank Quality RatingCrédit Suisse




“We reaffirmed our commitment to remaining a Nordic universal bank. We took steps to reinforce and expand our Personal Banking market positions in Sweden and Norway, where we are confident that our challenger position offers considerable opportunities.”

“Our business banking operations are already gaining momentum and volume in both markets. We also decided to refocus our business in the Baltics towards our corporate customers and we will invest in strengthening our platform and product offering in these markets.”

“We will continue to review our business and take new initiatives to ensure a return on shareholders’ equity of above 12.5% in 2018 at the latest.”

“At our business units, we will continue to focus on expanding our customer offering and improving the customer experience through innovation and optimisation of our product portfolio.”

CEOThomas F. Borgen• Two-and-a-half years in current role• Background: Corporate banking• Banking Qualification: N/A

Chairman Ole Andersen• Four years in current role

CFO/Finance Director Henrik Ramlau-Hansen• Background: D.Sc. in Actuarial

MathematicsJacob Aarup-Andersen (from April 1 2016)• Background: M.Sc. in Economics

Head of StrategyLars Andreasen (Head of Group Executive Office)

Head of Investor RelationsClaus I. Jensen

Head of Communications Jeanette Fangel Løgstrup

Chairman – Audit committeeJørn P. Jensen

Chairman – Remuneration committeeOle Andersen

Auditor Deloitte

Legal Counsel Flemming Stig Pristed (General Counsel)

Lead Regulator(s)Danish Financial Supervisory Authority

Lafferty Bank Quality RatingDanske




“Entrench leadership in Singapore; Continue to expand Hong Kong franchise; Rebalance geographic mix of our business.”

“Build a leading small and medium enterprise (SME) banking business; Strengthen wealth proposition; Build out transaction banking and treasury customer business.”

“Customer Satisfaction Index of Singapore, 1st for Banks.”

CEOPiyush Gupta• Seven years in current role• Background: Commercial banking• Banking qualification: N/A

Chairman Peter Seah• Six years in current role

CFO/Finance Director Chng Sok Hui• Background: Chartered Financial

Analyst, Chartered Accountant

Head of StrategyKaren Ngui

Head of Investor RelationsMichael Sia

Head of Group Strategic Marketing & Communications Karen Ngui

Chairman – Audit CommitteeDanny Teoh

Chairman – Remuneration CommitteePeter Seah

Auditor PwC

Legal Counsel Chee Kim Lam

Lead Regulator(s)Monetary Authority of Singapore

Lafferty Bank Quality RatingDBS




Note that Deutsche Bank has adopted a new strategy since the 2014 report was published.

“While management is undertaking a full strategic review of the Group, Deutsche Bank will continue to work towards the existing targets of Strategy 2015.”

“Five elements are key to delivering Strategy 2015+ Clients; Competencies; Capital; Costs; Culture.”

“Building on existing processes, the bank determined a Net Promoter Score (NPS) in 2014 for most client segments to create a consistent and systematic measurement of client satisfaction across the bank, which will also contribute to strengthening client centricity.” (No score given.)

“In CB&S [Corporate Banking & Securities], we established our Conduct and Control Group and put some 6,000 people, around 90 % of our CB&S staff, through dedicated compliance and risk culture workshops.”

CEOJohn Cryan• Six months in current role• Background: Corporate banking• Banking Qualification: N/A

Chairman Paul Achleitner

CFO/Finance Director Marcus Schenck• Background: N/A

Head of StrategyStefan Krause

Head of Investor RelationsJohn Andrews

Head of Communications Karl von Rohr

Chairman – Audit committeeHenriette Mark

Chairman – Remuneration committeePaul Achleitner

Auditor KPMG

Legal Counsel Christian Sewing


Lafferty Bank Quality RatingDeutsche Bank




“We developed a medium term strategy for retail banking in 2008 and as of today, we have largely achieved our stated objectives. Our retail deposits alone have more than tripled – with an increase of 262% over the last four years. The growth has been driven by innovative propositions and they are the best of breed.”

“The bank is strategically focused to grow the retail segment of the market by providing a wide range of unmatched convenience in its retail products and services. The bank equally has strong focus on Corporate banking.”

“We will continue to develop innovative products to deepen our retail market share and optimize the rapidly expanding opportunities in that space. We will expand and consolidate our relationships within the corporate banking space and more importantly, we will ensure that the Bank has the right people.”

CEOUzoma Dozie• One year in current role• Background: Retail banking• Banking qualification: N/A

Chairman Chris Ogbechie• One year in current role

Ag. CFO Chiugo Ndubisi• Background: Chartered Accountant

Head of Corporate PlanningLanre Showunmi• Background: MBA, PMP

Head of Investor RelationsIfeatu Onwuasoanya

Head of Communications Ayona Trimnell

Chairman – Audit CommitteeNnamdi C. Oyeka

Chairman – Governance and Personnel CommitteeOlubola Hassan

Auditor KPMG

Legal Counsel Nkechi Nwosu


Lafferty Bank Quality RatingDiamond Bank




“Five years ago, we set our sights on becoming the leading U.S. direct bank and a flexible global payments partner.”

“Discover received the highest customer satisfaction ranking among U.S. credit card companies, tying for the top ranking in the 2014 J.D. Power U.S. Credit Card Satisfaction StudySM.”

CEODavid Nelms• 12 years in current role• Background: Retail banking and credit cards• Banking Qualification: N/A

Chairman David Nelms• Seven years in current role

CFO/Finance Director Mark Graf• Background: N/A

Head of StrategyN/A

Head of Investor RelationsWilliam Franklin

Head of Communications Robert Weiss

Chairman – Audit committeeCynthia Glassman

Chairman – Remuneration committeeGregory Case

Auditor Deloitte

Legal Counsel Kelly McNamara Corley


Lafferty Bank Quality RatingDiscover




“DNB aims to be the leading bank throughout Norway and a leading international player within selected customer segments, products and geographic areas.”

“DNB gives priority to long-term value creation for its shareholders and aims to achieve a return on equity, a rate of growth and a market capitalisation which are competitive in relation to its Nordic peers.”

“Customer satisfaction index, CSI (score) 71.1 [2014] 72.5 [2013].”

CEORune Bjerke• Nine years in current role• Background: Industry• Banking qualification: N/A

Chairman Anne Carine Tanum

CFO/Finance Director Bjørn Erik Næss

Head of StrategyBenjamin K. Golding

Head of Investor RelationsRune Helland

Head of Communications Thomas Midteide

Chairman – Audit CommitteeTore Olaf Rimmereid

Chairman – Remuneration CommitteeAnne Carine Tanum

Auditor Tor Steenfeldt-Foss

Legal Counsel Audun Moen

Lead Regulator(s)Finanstilsynet

Lafferty Bank Quality RatingDNB




“Emirates NBD has a focused strategy based on the following core principles: Deliver an excellent customer experience; Run an efficient organisation; Drive core business; Drive geographic expansion; Build a high performing organisation.”

“2014 also witnessed Emirates NBD Group making significant contributions in taking Dubai closer to its vision of becoming the world capital of the Islamic economy.”

“The Emirates NBD Group remains committed to its ambition of becoming a Regional Banking Leader. In 2013, the Bank successfully completed the acquisition of BNP Paribas Egypt....In 2015, the Bank will continue to pursue organic growth in its current international markets and will continue to evaluate potential inorganic opportunities in selected markets.”

“In 2014, the Group focused on embedding its Customer Service Excellence Program in the organisational culture via proactive servicing and improved complaint management, resulting in higher customer satisfaction scores” (although the 2014 report has no mention of Net Promoter Score, which was mentioned in the 2013 report).

CEOShayne Nelson• Two years in current role• Background: Corporate banking• Banking Qualification: N/A

Chairman Sheikh Ahmed Bin Saeed Al Maktoum• Five years in current role

CFO/Finance Director Surya Subramanian• Background: Chartered Accountant

Head of StrategyNeeraj Makin

Head of Investor RelationsPatrick Clerkin

Head of Communications Ibrahim Sowaidan

Chairman – Audit committeeHussain Hassan Mirza Al Sayegh

Chairman – Remuneration committeeButi Obaid Buti Al Mulla


Legal Counsel Lubna Qassim


Lafferty Bank Quality RatingEmirates NBD




“Mr. Nnamdi Okonkwo holds a…Masters in Business Administration (Banking & Finance, 2000) from Enugu State University of Science and Technology.”

“[O]ur medium term strategic objectives…. Are anchored on the following pillars; improving the efficiency of our balance sheet, growing our retail and SME businesses, focusing on our niche corporate banking segments, increased migration of our customers to electronic channels and improving the customer experience across all our service channels.”

“Our retail banking strategy gathered increased momentum in 2014 with the bank acquiring over 471,000 new retail customers, consumer loans growing by over 21% and core low-cost retail deposits by 18%, which lowered our average cost of customer deposits.”

CEONnamdi Okonkwo• Two years in current role• Background: Corporate & Consumer banking• Banking qualification: Masters in Business

Administration (Banking & Finance, 2000) from Enugu State University of Science & Technology.

Chairman Christopher I. Ezeh, MFR• Ten years in current role

CFO/Finance Director Victor Abejegah• Background: FCA

Chief Operations & Information OfficerGbolahan Joshua• Background: ACA

Head of Investor RelationsSamuel Obioha

Head of Communications Charles Odibo

Chairman – Audit CommitteeAlhaji Bashari Gumel

Chairman – Remuneration CommitteeN/A

Auditor • Ernst & Young • PKF

Legal Counsel • Banwo & Ighodalo • Aluko & Oyebode


Lafferty Bank Quality RatingFidelity Bank




“Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio….Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Investment Advisors.”

“[W]e continue to pursue our four main strategies: distinctive execution, focused segmentation, innovation, and accelerating growth.”

“The Bancorp believes its affiliate operating model provides a competitive advantage by emphasizing individual relationships. Through its affiliate operating model, individual managers at all levels within the affiliates are given the opportunity to tailor financial solutions for their customers.” (Fifth Third operates 15 affiliates.)

“2014 net income available to common shareholders…[amounted] to a return on average assets of 1.1 percent, which is above the average of our commercial bank peers.”

CEOGreg Carmichael• Four months in current role• Background: Retail banking• Banking Qualification: N/A

Chairman James Hackett• Eight years in current role

CFO/Finance Director Tayfun Tuzun• Background: PHD – economics

Head of StrategyTimothy Spence

Head of Investor RelationsSameer Gokhale

Head of Communications Larry Magnesen

Chairman – Audit committeeEmerson Brumback

Chairman – Remuneration committeeMarsha Williams

Auditor Deloitte

Legal Counsel Heather Russell Koenig


Lafferty Bank Quality RatingFifth Third Bank




“FBN Holdings Plc is structured under four business groups, namely: Commercial Banking, Investment Banking and Asset Management, Insurance, and Other Financial Services.”

“[O]ur three-year strategic plan…[aims] to consolidate our position as the foremost financial services group in Sub-Saharan Africa, drive cross-entity synergies and enhance the contribution of non-banking subsidiaries to the Group’s portfolio.”

“Our diversity gives us great strength. The synergies created by the intertwining and collaboration between the Group’s subsidiary businesses means we are able to maximise opportunities from existing customers while increasing new ones, building a shared platform for growth.”

“In the African markets where we operate, current trends suggest that the winners would be the agile players with diversified income streams across customer segments, supported by innovative service and cost-efficient digital platforms.”

CEOAdesola Adeduntan • One month in current role• Background: Corporate banking• Banking Qualification: N/A

Chairman Ibukun Awosika• One month in current role

CFO/Finance Director Ini Ebong (acting)• Background: Treasury

Head of StrategyYvonne Johnson (acting)

Head of Investor RelationsOluyemisi Lanre-Phillips

Group Head, Marketing & Corporate Communications Folake Ani-Mumuney

Chairman – Audit CommitteeN/A

Chairman – Board Governance CommitteeAmbrose Feese

Auditor PwC

Legal Counsel/Company SecretaryOlayiwola Yahaya


Lafferty Bank Quality RatingFirst Bank of Nigeria




“[T]he group seeks to create long-term franchise value, deliver superior and sustainable economic returns to shareholders within acceptable levels of volatility and maintain balance sheet strength.”

“In its domestic market, the group will continue to protect and grow its lending and transactional franchises through innovation, disruption and specific crosssell initiatives across group customer bases.”

“In the rest of Africa, FirstRand is actively seeking to establish meaningful banking franchises in those countries that the group has prioritised as markets expected to show above average economic growth, and which are well positioned to benefit from the trade and investment flows between Africa, India and China. These markets are mainly in the SADC region and the west and east African hubs.”

“[I]t is partly our owner-manager culture that allows home-grown talent to rise to the top on merit, combined with our business model where business unit CEOs are highly empowered to drive strategy and operations albeit within broad strategic frameworks set at the centre.”

“FNB uses the internationally accredited and recognised South African Customer Satisfaction Index (SAcsi)….scores significantly better than the industry average with a score of 76.8 compared to the industry’s 73.7. With reference to complaints, FNB is on par with the industry.”

CEOJohan Burger• Two years in current role• Background: 30 years with FirstRand• Banking Qualification: N/A

Chairman Laurie Dippenaar• Seven years in current role

CFO/Finance Director Harry Kellan• Background: Chartered Accountant

Head of StrategyN/A

Head of Investor Relations and CommunicationsSam Moss

Chairman – Audit committeeHennie van Greuning

Chairman – Remuneration committeePat Goss

Auditor PwC

Legal Counsel Albert Zaayman


Lafferty Bank Quality RatingFirstRand




“[W]e have invested an enormous amount of time and resources to sustain our culture. Rigorous partner selection and aligning compensation with long-term performance reinforce an ethos of long-term ownership. The combination of a diverse set of businesses, effective risk management and a “pay for performance” culture has produced a track record of lower earnings volatility than our peers.”

“As of the date hereof, the aggregate amount of mortgage related securities sold to plaintiffs in active and threatened cases described in the preceding two paragraphs where those plaintiffs are seeking rescission of such securities was approximately $6.6 billion.”

“Our success is rooted in decades of investment, consistency of coverage and a broad client franchise by both industry and geography.”

“Institutional Client Services…is an expensive business to be in if you don’t have the market share and scale….This provides an opportunity for market share expansion for those firms with strong, global and stable client franchises.”

“Lending has become an increasingly important part of our strategy as it relates to corporate, real estate and private wealth clients…Since 2012, we’ve made great strides in this business, growing lending by roughly 100 percent.”

CEOLloyd Blankfein • Ten years in current role• Background: Corporate and Investment

banking• Banking Qualification: N/A

Chairman Lloyd Blankfein• Ten years in current role

CFO/Finance Director Harvey Schwartz• Background: MBA, Columbia University

Chief Strategy OfficerStephen Scherr

Head of Investor RelationsDane Holmes

Global Head of Corporate Communications Jake Siewert

Chairman – Audit CommitteePeter Oppenheimer

Chairman – Compensation CommitteeJames Johnson

Auditor PwC

Legal CounselGregory Palm

Lead Regulator(s)• FDIC• Office of the Comptroller of the Currency• Federal Reserve System

Lafferty Bank Quality RatingGoldman Sachs




“To remain the industry leader within all economies where we have a business foothold.”

“We set out to achieve this goal by focusing on service delivery, alternative channel accessibility and user experience, pioneering market innovations, deepening existing relationships.”

“Our dominance of the social media space gives us the opportunity to proactively engage our customers and provide real time and relevant information and solutions to their enquiries and complaints. We are available one Facebook, Twitter, Instagram, Google+, LinkedIn and Blackberry Messenger.”

“We aspire to offer a differentiated customer experience by delivering simple products that fit with our customers’ modern and mobile lifestyle and run on robust operational platforms.”

CEOSegun Agbaje• Five years in current role• Background: Corporate banking• Banking Qualification: N/A

Chairman Osaretin Demuren• One year in current role

CFO/Finance Director Adebanji Adeniyi• Background: Chartered Accountant

Head of StrategyDemola Odeyemi

Head of Investor RelationsGolden Nwaiwu

Head of CommunicationsLola Odedina

Chairman – Audit CommitteeAndrew Alli

Chairman – Remuneration CommitteeOlabode Agusto

Auditor PwC

Legal Counsel/Company Secretary Olutola Omotola


Lafferty Bank Quality RatingGuaranty Trust Bank




“Handelsbanken’s goal is to have higher profitability than the average of peer banks in its home markets. This is mainly to be achieved by having more satisfied customers and lower costs than those of competitors. One of the purposes of this goal is to offer shareholders long-term high growth in value.”

“Handelsbanken adapts its offering to each customer’s unique needs and circumstances. The Bank therefore has no requirements as regards volumes, budgets or centrally determined sales targets. Instead, the Bank measures its success in terms of customer satisfaction, profitability and cost-effectiveness.”

CEOFrank Van Jensen • One year in current role• Background: Corporate banking• Banking Qualification: N/A

Chairman Pär Boman• One year in current role

CFO/Finance Director Ulf Riese• Background: N/A

Head of StrategyRole does not existHead of Investor RelationsMikael Hallåker

Head of Communications Johan Lagerström

Chairman – Audit CommitteeBenthe RatheChairman – Remuneration CommitteePär Boman

Auditor • KPMG• Ernst & Young

Legal CounselMartin Wasteson


Lafferty Bank Quality RatingHandelsbanken




“Our first branch, launched in 1995, was backed by a core banking system offering real-time banking across channels for the first time in India. In 2000, we became one of the early adopters of data warehousing and analytics in the country.”

HDFC Bank has been fulfilling the financial inclusion mandate of the Pradhan Mantri Jan-Dhan Yojana (PMJDY). It is among the top private sector banks both in terms of account value and the number of accounts opened under the scheme.”

“Your Bank’s mission is to be a ‘World Class Indian Bank’, benchmarking itself against international standards and best practices in terms of product offerings, technology, service levels, risk management, audit and compliance.”

Managing DirectorAditya Puri• Background: nearly 40 years of experience

in the banking sector in India and abroad• Banking Qualification: N/A

ChairpersonShyamala Gopinath• One year in current role

CFO/Finance Director Sashidhar Jagdishan• Background: Chartered Accountant

Deputy Managing Director (Strategy)Paresh Sukthanka

Head of Investor RelationsBhavin Lakhpatwala

Head of CommunicationsNeeraj Jha

Chairman – Audit CommitteeShyamala Gopinath

Chairman – Remuneration CommitteeBobby Parikh

Auditor Deloitte

Legal Counsel/Company Secretary Sanjay Dongre (EVP [Legal] & Company Secretary)


Lafferty Bank Quality RatingHDFC




“In line with its growth strategy, Hong Leong Bank has been expanding its footprint in the Asian region.”

“Three priorities are....Transformation and Optimisation..; Digital Banking….; Re-strategise Wealth Management Proposition.”

CEODomenic Fuda • One month in current role• Background: Corporate banking• Banking Qualification: N/A

Chairman YBhg Tan Sri Quek Leng Chan• 22 years in current role

CFO/Finance Director Foong Pik Yee• Background: Chartered Accountant

Head of StrategyN/A

Head of Investor RelationsJason Teh

Head of Corporate Affairs and PR Norlina Yunus

Chairman – Audit CommitteeLim Lean See

Joint Chairmen – Remuneration Committee• YBhg Dato’ Nicholas John Lough• Sharif Lough bin Abdullah

Auditor PwC

Legal CounselChin May Han


Lafferty Bank Quality RatingHong Leong




“In 2013, we announced a set of three interconnected and equally weighted priorities for 2014 to 2016 to help us deliver our strategy: grow the business and dividends; implement Global Standards; and streamline processes and procedures.”

“The recent disclosures around unacceptable historical practices and behaviour within the Swiss private bank remind us of how much there still is to do and how far society’s expectations have changed in terms of banks’ responsibilities.”

“This year, a new requirement has been introduced for firms to ensure that clawback (i.e. a firm’s ability to recoup paid and/or vested awards) can be applied to all variable pay awards granted on or after 1 January 2015 for a period of at least seven years from the date of award.”

“[F]ollowing the publication in 2013 of the Parliamentary Commission on Banking Standards, considerable progress has been made in giving effect to its recommendations … In terms of our own governance of these areas, the Conduct & Values Committee of the Board that we created at the beginning of 2014 to focus on behavioural issues has established itself firmly as the central support to the Board in these important areas.”

“We….calculate a Customer Recommendation Index to measure performance. This is benchmarked against average scores of a peer group of banks in each market and we set targets for our business relative to our competitor set of banks.”

CEOStuart Gulliver• Five years in current role• Background: Corporate banking• Banking Qualification: N/A

ChairpersonDouglas Flint• Six years in current role

CFO/Finance Director Iain Mackay• Background: Chartered Accountant

Head of StrategyStephen Moss

Head of Investor RelationsNick Turnor

Group Head of Public AffairsKatja Hall

Chairman – Audit CommitteeJonathan Symonds

Chairman – Remuneration CommitteeSam Laidlaw

Auditor PwC

Legal Counsel Stuart Levey

Company Secretary Ben Mathews


Lafferty Bank Quality RatingHSBC




“The principal markets for these services are Huntington’s six-state retail banking franchise: Ohio, Michigan, Pennsylvania, Indiana, West Virginia, and Kentucky.”

“This year was the fourth year in a row with a return on average assets of over 1%.”

Our performance is driven by the execution of our differentiated strategy. We have positioned Huntington uniquely in an industry that many would consider filled with “me-too’s.” We know this because year after year, we receive multiple awards from the likes of J.D. Power.”

“Huntington has established a “Fair Play” banking philosophy and built a reputation for meeting the banking needs of consumers in a manner which makes them feel supported and appreciated. Huntington believes customers are recognizing this and other efforts as key differentiators, and it has earned us more customers, deeper relationships and the J.D. Power retail service excellence award for 2013 and 2014.”

CEOStephen Steinour • Seven years in current role• Background: Retail banking• Banking Qualification: N/A

Chairman Stephen Steinour• Seven years in current role

CFO/Finance Director Howell McCullough• Background: MBA

Head of StrategyN/A

Head of Investor RelationsMark Muth

Head of Communications Barbara Benham

Chairman – Audit CommitteeDon Casto

Chairmen – Remuneration CommitteeJohn Gerlach

Auditor Deloitte

Legal CounselRichard Cheap


Lafferty Bank Quality RatingHuntington Bancshares




“In 2014, we realized a net profit of RMB276.3 billion (or USD44.5 billion), [making ICBC] the world’s largest bank in terms of net profit.”

“We defined 2014 as the “Year of Reform”….in eight fields including organizational reform and human resources reform, credit business flow optimization and credit review reform, and performance appraisal system optimization, which reinvigorated operating vitality and comprehensively enhanced management effectiveness.”

“[R]isk management was made to be more forward-looking and precise. In the face of the rebounding trend of the banking industry’s NPLs as a result of the triple impacts of the change of the economic growth rate…we carried out two big projects of credit asset quality and credit base management, strengthened credit risk management, stepped up the pre-setting of lines of defense, adopted category-specific measures, addressed root causes, lowered existing loans, and controlled new loan extension.”

“[F]acing the surging wave of Internet-based finance innovation, we made great efforts to build the “e-ICBC” service and operation system and expedited integration of online and offline services.”

“At present, over 86% of our transactions are completed through e-channels, mainly Internet banking, and the number of E-banking customers reached 460 million, including 150 million mobile banking customers.”

CEOJiang Jianqing• Eleven years in current role• Background: Corporate banking• Banking Qualification: N/A

ChairpersonQian Wenhui• Nine months in current role

CFO/Finance Director Gu Shu• Background: Doctorate degree in

Economics from Shanghai University of Finance and Economics

Head of StrategyJiang Jianqing


Head of CommunicationsHu Hao (Board Secretary)

Chairman – Audit CommitteeOr Ching Fai

Chairman – Remuneration CommitteeYi Xiqun

Auditor KPMG

Legal Counsel/Company Secretary Jun He Law Offices


Lafferty Bank Quality RatingICBC (U)




“[W]e focused on continued strong growth in the retail portfolio” and “continued our calibrated approach to lending” in the struggling corporate & SME segments.”

“The retail loan portfolio (including business banking and rural banking) grew by 24.6% year-on-year at March 31, 2015.” (Total advances grew at a 14 percent rate.)

“The CASA [Current Account and Savings Account] ratio improved from 42.9% at March 31, 2014 to 45.5% at March 31, 2015.”

CEOChanda Kochhar • Seven years in current role• Background: Corporate banking• Banking Qualification: N/A

Chairman Mahendra Kumar Sharma• One year in current role

CFO/Finance Director Rakesh Jha• Background: MBA

Head of StrategyAnindya Banerjee

Head of Investor RelationsAnindya Banerjee

Head of Communications Kausik Datta

Chairman – Audit CommitteeHomi Khusrokhan

Chairmen – Remuneration CommitteeHomi Khusrokhan

Auditor BSR & Co. LLP

Legal HeadSanker Parameswaran


Lafferty Bank Quality RatingICICI




“In March 2014, ING launched its new banking strategy “Think Forward”, which outlines the actions we are taking to secure our future as a leading European bank. The Bank’s customer promise – to deliver a differentiating customer experience with clear and easy, anytime/anywhere services that empower customers and keep getting better – is at the core of the changes in Retail Banking.”

“Strategic Priorities: Earn the primary relationship; Develop analytics skills to understand our customers better; Increase the pace of innovation to serve changing customer needs; Think beyond traditional banking to develop new services and business models.”

“The Dutch State has been repaid in full. In November 2008, ING received EUR 10 billion in aid from the Dutch State in the form of core Tier 1 securities. In 2009, we started repaying the Dutch State and made the final payment on 7 November 2014.”

“[F]inancial targets for 2017…include a common equity Tier 1 ratio above 10 percent, a leverage ratio at around 4 percent, 50–53 percent cost/income ratio and a 10–13 percent return on equity…Effective from 2015, ING intends to pay a minimum of 40 percent of ING Group’s annual net profits by way of dividend.”

“Our customer-centric focus helped us achieve a first place ranking in nine countries, compared with two or more selected local peers. NPS surveys were held in 11 countries with retail banking activities.”

CEORalph Hamers• Three years in current role• Background: Corporate banking• Banking Qualification: N/A

ChairpersonJeroen van der Veer• Seven years in current role

CFO/Finance Director Patrick Flynn• Background: Chartered Accountant

Head of StrategyBen Issa

Head of Investor RelationsMalcom Brown

Head of CommunicationsRaymond Vermeulen

Chairman – Audit CommitteeHermann-Josef Lamberti

Chairman – Remuneration CommitteeJoost Kuiper


Legal Counsel/Company Secretary Diederik van Wassenaer


Lafferty Bank Quality RatingING



CEOCarlo Messina • Three years in current role• Background: Economics• Banking Qualification: N/A

Chairman of the Management Board Gian Maria Gros-Pietro• Three years in current role

CFO/Finance Director Del Punta• Background: N/A

Head of Innovation Research and AccelerationM. Costantini

Head of Investor Relations and Price-Sensitive CommunicationA. Tamagnini

Head of External Relations Vittorio Meloni

Chairman – Internal Control Committee (within the Supervisory Board)Giulio Stefano Lubatti

Chairman – Remuneration Committee (within the Supervisory Board)Piergiuseppe Dolcini

Auditor KPMG

Legal AffairsE. Lunati


Lafferty Bank Quality RatingIntesa Sanpaolo


“The [2014-2017 Business] Plan envisages measures in the following areas: ‘New Growth Bank’, to develop revenues with innovative growth engines, capable of identifying new market opportunities; ‘Core Growth Bank’, to capture untapped revenue potential of existing business, in terms of revenue development, reduction in operating costs, and credit and risk governance; ‘Capital-Light Bank’, to optimise the use of capital and liquidity, de-leveraging the bank’s “non-core” assets.”

“Because of the operating structure redefinition, the Group is now arranged into six business areas: Banca dei Territori, Corporate and Investment Banking, International Subsidiary Banks, Private Banking, Asset Management and Insurance.”

“In addition, a business unit named Capital Light Bank (CLB) was set up with the aim of extracting value from non-core assets and freeing up resources to serve growth. The unit…aims at managing the reduction of a significant stock of the Bank’s non-core assets, and specifically: non-performing loans, repossessed properties, discontinued business units, investments managed with a view to disposal and types of asset portfolios that do not respond to the lines of development specified in the Business Plan.”




“We intend to expand our operations in Brazil and abroad. In January 2014, we entered into an agreement with CorpBanca and its controlling stockholders for the merger of Banco Itaú Chile and CorpBanca.”

“Survey data collected from each segment are then consolidated into a global customer satisfaction index. In 2014, we achieved a score of 8.11, and since we only began to measure the Rede and Credicard in this same year, we cannot compare them with numbers from 2013 [8.01].”

“Our annual Speak Frankly survey measures all employees’ satisfaction in relation to the organizational environment and personnel management. In 2014, 89% of our employees in Brazil and in international units took part voluntarily, with a satisfaction rate of 80%. The overall results were four percentage points higher than the previous years.”

CEORoberto Egydio Setubal • 22 years in current role• Background: Corporate banking• Banking Qualification: N/A

Chairman Pedro Moreira Salles• Eight years in current role

CFO/Finance Director Eduardo Vassimon• Background: MBA


Head of Investor RelationsMarcelo Kopel

Head of Communications Claudia Politanski

Chairman – Audit CommitteeGeraldo Travaglia Filho

Chairman – Remuneration CommitteePedro Moreira Salles

Auditor PwC

Legal CounselClaudia Politanski

Lead Regulator(s)Banco Central do Brasil

Lafferty Bank Quality RatingItau-Unibanco




“We believe that we have well-fortified moats in the form of economies of scale, brand, expertise, technology and operations, and – importantly – competitive advantages created by our ability to cross sell.”

“Additionally, we have embedded strengths that are hard to replicate – the knowledge and cohesiveness of our people, our long-standing client relationships, our technology and product capabilities, our fortress balance sheet and our global presence in more than 100 countries.”

“One key measure that we track is our Net Promoter Score (NPS), which simply is how many customers say they would refer a friend to Chase. Since mid-2011, our NPS has roughly doubled in Consumer Banking and Card and tripled in Business Banking. In fact, nearly all CCB businesses are at or close to all-time highs.”

“While we acknowledge that our P/E ratio is lower than many of our competitors’ ratio, one must ask why. I believe our stock price has been hurt by higher legal and regulatory costs and continues to be depressed due to future uncertainty regarding both.”

CEOJamie Dimon• Ten years in current role• Background: Corporate banking• Banking Qualification: N/A

ChairpersonJamie Dimon• Ten years in current role

CFO/Finance Director Marianne Lake• Background: Chartered Accountant

Head of Corporate StrategyMax Neukirchen

Head of Investor RelationsSarah Youngwood

Head of CommunicationsJoseph Evangelisti

Chairman – Audit CommitteeLaban Jackson

Chairman – Compensation and Management Development CommitteeLee Raymond

Auditor PwC

Legal Counsel Stacey Friedman

Lead Regulator(s) • Federal Reserve System• Office of the Comptroller of the Currency

Lafferty Bank Quality RatingJPMorgan Chase




“KBank will focus on four key strategies: 1. To attain Main Bank status for all customer segments with strong brand positioning; 2. To become a leader in digital banking and transaction banking services; 3. To become an “AEC+3 Bank” to capture opportunities in the AEC plus China, Japan and South Korea; 4. To emphasize a delivery of excellent services and strengthen our market positioning.”

“In response to the broadened business opportunities offered by market liberalization within Asia and in Thailand’s provincial areas, KBank has adopted a business expansion strategy that covers both domestic and foreign markets. In Thailand, our focus remains on strategic provinces with economic growth potential and opportunities to reap benefits from further AEC advancement.”

“To enhance our efficiency in responding to business needs, we have established business hubs in each locality with focus on getting access to large corporate clients and/or industries with upstream and downstream businesses within their supply chains.”

“Internationally, we have continued to expand; we are gearing up for the ASEAN Economic Community (AEC) and will serve greater customer demand from regional business. We have forged alliances with organizations within the ASEAN+3 nations, including China, Japan, and Korea, Vietnam, Cambodia, Lao PDR, Indonesia, the Philippines, and Malaysia, as well as non-AEC partners including Germany and Italy.”

CEOBanthoon Lamsam • Twelve years in current role• Background: Corporate banking• Banking Qualification: N/A

Chairman Banthoon Lamsam• Three years in current role

CFO/Finance Director Chongrak Rattanapian• Background: MBA, William Paterson

University

Head of Strategy Ampol Polohakul

Head of Investor RelationsAdit Laixuthai

Head of Communications Adit Laixuthai

Chairman – Audit CommitteePiyasvasti Amranand

Chairman – Remuneration CommitteeKhunying Suchada Kiranandana

Auditor KPMG

Legal CounselAbhijai Chandrasen

Lead Regulator(s)Bank of Thailand

Lafferty Bank Quality RatingKasikorn (Thai Farmers)




“We have two major business segments: Key Community Bank and Key Corporate Bank.”

Key Community Bank serves individuals and small to mid-sized businesses….[which] is organized into eight internally defined geographic regions: Pacific, Rocky Mountains, Indiana, Western Ohio and Michigan, Eastern Ohio, Western New York, Eastern New York, and New England.

“Key Corporate Bank is a full-service corporate and investment bank focused principally on serving the needs of middle market clients in seven industry sectors: consumer, energy, healthcare, industrial, public sector, real estate, and technology.”

“Our strategic priorities for enhancing long-term shareholder value are..Grow profitably; Acquire and expand targeted relationships: Effectively manage risk and rewards; Maintain financial strength; Engage a high performing, talented and diverse workforce.”

“CAPITAL RATIOS: Key shareholders’ equity to assets 11.22 %.”

CEOBeth Mooney• Five years in current role• Background: Corporate and retail banking• Banking Qualification: N/A

ChairpersonBeth Mooney• Five years in current role

CFO/Finance Director Donald Kimble• Background: BSBA

Head of StrategyClark Khayat

Head of Investor RelationsDonald Kimble

Head of CommunicationsLaura Mimura

Chairman – Audit CommitteeRuth Ann Gillis

Chairman – Remuneration CommitteeJoseph Carrabba


Legal Counsel Paul Harris


Lafferty Bank Quality RatingKeyCorp




“We are meeting our customers’ needs by creating a simpler, more responsive organisation and are investing in our digital capability while maintaining a comprehensive branch network.”

“We have an extensive multi-brand, multi-channel offering…We serve millions of customers through our Lloyds Bank, Halifax, Bank of Scotland and Scottish Widows brands.”

“[I]t is essential that we also rebuild trust. This is a major challenge for the UK financial services sector, not just because of the damage caused by the financial crisis but also because of the continuing legacy of past industry misconduct. As well as the continuing impact of issues such as Payment Protection Insurance we also announced settlements on LIBOR and BBA repo rate issues.”

“Despite better results in 2014, the total bonus outcome for the year has decreased by approximately 3.6 per cent (after adjusting for TSB). This reflects the continuing overhang of past conduct issues. Discretionary bonus awards remain a very small percentage of revenues at approximately 2 per cent, and represent approximately 4.5 per cent of pre-bonus underlying profit before tax, compared to 6 per cent in 2013. Cash bonuses are capped at £2,000 with additional amounts paid in shares and subject to deferral and performance adjustment. Average bonus awards across all our staff are approximately £4,500.”

CEOAntónio Horta-Osório • Five years in current role• Background: Corporate and retail banking• Banking Qualification: N/A

Chairman Lord Blackwell• One year in current role

CFO/Finance Director George Culmer• Background: Chartered Accountant

Head of Strategy Simon Davies

Head of Investor RelationsDouglas Radcliffe

Head of Communications Matthew Young

Chairman – Audit CommitteeNick Luff

Chairman – Remuneration CommitteeAnthony Watson

Auditor PwC

Legal CounselKate Cheetham


Lafferty Bank Quality RatingLloyds




“M&T has long been a community bank focused on its customers, employees and shareholders. Our core tenets of serving the financial needs of people in our communities through simple, easily understood products, strong credit standards and an efficient operating model, remain our mission.”

“Last year’s net income, expressed as a return on average total assets..was 1.16%.”

“We remain confident that our essential community-oriented business model will continue to serve both our customers and investors well.”

“The imperative of distinguishing between what might be called Main Street and Wall Street banks..bears repetition. Simply put, the 6,482 community and regional banks of Main Street have a very different business model than the five large U.S. banks that dominate the activities traditionally associated with Wall Street.”

“Loans comprise 61% of assets at regional banks compared with just 31% for the five large, complex and globally interconnected U.S. bank holding companies. Core deposits fund 64% of assets at regional banks; the comparable figure for large banks is just 32%. Here at M&T, some 69% of our assets are simple lending agreements made in the interest of funding commerce and industry as well as the personal needs of individuals, particularly mortgages for their homes and financing for their automobiles. Core deposits fund 75% of our assets.”

CEORobert Wilmers• Nine years in current role• Background: Corporate banking• Banking Qualification: N/A

ChairpersonRobert Wilmers• Eleven years in current role

CFO/Finance Director René Jones• Background: CPA

Head of StrategyRené Jones

Head of Investor RelationsDonald MacLeod

Head of CommunicationsDarren King

Chairman – Audit CommitteeAngela Bontempo

Chairman – Remuneration CommitteeBrent Baird

Auditor PwC

Legal Counsel Drew Pfirrman

Lead Regulator(s) Federal Reserve System

Lafferty Bank Quality RatingM&T




“2014 saw a continuation of the growth strategy that the bank had embarked on starting 2012…Loans and Advances grew by 15.1% in the year. Customer Deposits grew at an even faster rate of 16.9%...and helped us to maintain conservative Advances to Deposits ratio of 84.8% at the end of 2014.”

“A shift in balance sheet structure towards higher proportion of earning assets and reduced cost of funds driven by high CASA have been the key reasons of Net Interest Margin (NIM) improvement from 2.9% in 2013 to 3.2% in 2014.”

“We continue to be optimistic about the performance outlook for the bank and are confident of maintaining the current growth trajectory.”

“Innovation will continue to be the key for the bank and we plan to maintain our lead in this important aspect in customer related products and processes as well as internal processes.”

CEOAbdul-Aziz Abdullah Al Ghurair • 25 years in current role• Background: Corporate banking• Banking Qualification: N/A

Chairman Abdulla Bin Ahmed Al Ghurair • 20 years in current role

CFO/Finance Director Ali Raza Khan • Background: Chartered Accountant

Head of Strategy Thomas K. Jacob

Head of Investor RelationsThomas K. Jacob

Head of Communications Huda Ismail

Chairman – Audit CommitteeSultan Abdulla Ahmed Al Ghurair

Chairman – Remuneration CommitteeAli Rashed Ahmad Lootah

Auditor Deloitte

Legal CounselFadi Mudarres


Lafferty Bank Quality RatingMashreq




“We lead the Malaysian financial services industry bringing to market differentiated value propositions through our extensive distribution footprint and an unrivalled digital banking presence.”

“Our presence in all 10 ASEAN countries places us in a favourable position to support and benefit from the ASEAN growth opportunities as we deliver innovative solutions to our clients.”

CEODatuk Abdul Farid Alias• Three years in current role• Background: Investment banking• Banking Qualification: N/A

ChairpersonTan Sri Dato’ Megat Zaharuddin Megat Mohd Nor• Six years in current role

CFO/Finance Director Dato’ Mohamed Rafique Merican bin Mohd Wahiduddin Merican• Background: CPA

Head of StrategyMichael Foong Seong Yew

Head of Investor RelationsNarita Naziree

Acting Head of Corporate AffairsPrakash Mukherjee

Chairman – Audit CommitteeTan Sri Datuk Dr Hadenan A. Jalil

Chairman – Nomination and Remuneration CommitteeDato’ Mohd Salleh Hj Harun


Legal Counsel Wan Marzimin Wan Muhammad

Lead Regulator(s) Bank Negara Malaysia

Lafferty Bank Quality RatingMaybank




“Leveraging our four key strengths: an integrated group, a global network, strong customer base and a firm financial foundation, we are moving steadily toward achieving our goal of becoming a leading provider of comprehensive global financial services.”

“Consolidating our leading domestic position, aiming for Asian top league, US top ten.”

CEONobuyuki Hirano • Three years in current role• Background: Corporate banking• Banking Qualification: N/A

Chairman Kiyoshi Sono• Two years in current role

CFO/Finance Director Muneaki Tokunari

Head of Strategy Tadashi Kuroda


Head of Communications Satoshi Murabayashi

Chairman – Audit CommitteeAkira Yamate

Chairman – Remuneration CommitteeKunie Okamoto

Auditor Deloitte

Legal CounselMichael Coyne

Lead Regulator(s)Financial Services Agency (Japan)

Lafferty Bank Quality RatingMitsubishi UFG (U)




The “One Mizuho Strategy” seeks to meet customers’ diverse needs by integrating “banking, trust banking, and securities functions.”

“[W]e have created our Corporate Philosophy, which states that our primary role is—“bringing fruitfulness for each customer and the economies and the societies in which we operate. Mizuho creates lasting value. It is what makes us invaluable.”

CEOYasuhiro Sato • Three years in current role• Background: Corporate banking• Banking Qualification: N/A

Chairman Hiroko Ota• Two years in current role

CFO/Finance Director Junichi Shinbo • Background: N/A

Head of Strategy Koji Fujiwara

Head of Investor RelationsKoji Fujiwara

Head of Communications Cheryl Gilberg

Chairman – Audit CommitteeHideyuki Takahashi

Chairman – Remuneration CommitteeTatsuo Kainaka


Legal CounselTheo Zhang

Lead Regulator(s)Financial Services Agency (Japan)

Lafferty Bank Quality RatingMizuho




“Our diversified business model combines [an] institutional franchise – our investment banking and institutional sales and trading businesses – with a leading wealth management organization and a strong and growing investment management business.”

“2015 Strategic Plan: Ongoing Wealth Management Upside through additional margin improvement; Continued execution of US bank strategy in Wealth; Management and Institutional Securities; Progress in Fixed Income and Commodities ROE; Tailwind from lower funding costs; Maintain focus on expense management; Steadily increase capital returns to shareholders.”

“How do we size a fixed income business to serve our clients while using capital efficiently and profitably? …optimize the commodities business by reducing our exposure to physical oil commodities..centralize the management of resources across all the fixed income businesses…continued reduction of the risk-weighted assets.”

Chairman & CEOJames Gorman• Two years in current role• Background: Corporate banking• Banking Qualification: N/A

CFO/Finance DirectorJonathan Pruzan

Head of StrategyJim Rosenthal

Head of Investor RelationsKathleen McCabe

Head of CommunicationsMichele Davis

Chairman – Audit CommitteeRobert Hertz

Chairman – Remuneration CommitteeHutham Olayan

Auditor Deloitte

Legal Counsel Eric Grossman


Lafferty Bank Quality RatingMorgan Stanley




“Our leadership team has put in a significant effort to address legacy assets and ….the demerger and IPO of our UK operations, Clydesdale Bank and Yorkshire Bank, is expected to be completed in early February 2016.”

“This was our first year of adopting the Net Promoter System (NPS), which measures the strength of our customers’ advocacy. NPS is now embedded in our leaders’ scorecards, helping us to deliver for our customers.”

“In 2015, we achieved modest gains, with NPS for priority segments improving from -18 to -16.”

CEOAndrew G Thorburn • Two years in current role• Background: Retail banking• Banking Qualification: N/A

Chairman Kenneth R Henry AC• One year in current role• Background: Over 30 years of experience

in economics, policy and regulation, governance and leadership

CFO/Finance Director Craig Drummond (to 15 March 2016) • Background: Chartered Accountant

Head of Strategy Craig Drummond (to 15 March 2016)

Head of Investor RelationsRoss Brown (Executive General Manager of Investor Relations)

Head of Communications Michaela Healy

Chairman – Audit CommitteeDavid H Armstrong

Chairman – Remuneration CommitteeDaniel T Gilbert AM


Legal Counsel (Group Executive, Governance and Reputation)Michaela Healey


Lafferty Bank Quality RatingNational Australia Bank




“After decades spent in the Bank’s service, Mr. Ibrahim Dabdoub retired as Group CEO and handed the reins to Mr. Isam Al- Sager, who was appointed as the Group Chief Executive Officer.”

“As Kuwait entered a new phase of economic growth and development, NBK’s leadership in financing mega governmental projects strengthened the bank’s position in the domestic market. On the regional front, especially in the GCC, NBK continued to leverage its presence in these promising markets, growing its contribution to the group.”

“Since turning Boubyan into a fully consolidated subsidiary of NBK Group in 2012, the bank has increased its efforts to establish stronger presence in Kuwait’s growing Islamic banking segment.”

“The bank achieved a strong return on assets of 1.28% and a return on equity of 11.0% at year end.”

Group CEO Isam Jasem Al Sager• Two years in current role• Background: Corporate banking;

Veteran in NBK since 1978• Banking Qualification: N/A

ChairmanNasser Musaed Al-Sayer• Two years in current role• Background: Corporate banking;

Veteran in NBK since 1978

CFO/Finance Director Jim Murphy

Head of StrategyMehmet Darendeli

Head of Investor RelationsAmir Hanna

Head of CommunicationsManal Al Mattar

Chairman – Audit Committee Hamad Mohamed Al-Bahar

Chairman – Remuneration Committee Ghassan Ahmed Saoud Al-Khaled

Auditor • Deloitte• Ernst and Young

Legal Counsel Dr Soliman Abdel-Meguid (In-house)

Lead Regulator(s) • Central Bank of Kuwait• Financial Conduct Authority (Kuwait)

Lafferty Bank Quality RatingNational Bank of Kuwait




“[W]e remain focused on growth as a super-regional bank. We see more opportunities in Quebec and across Canada, despite the competitive nature of our markets, and for higher revenues from carefully selected international activities.”

“Four priorities will drive our growth…The first priority is to deliver on our client promise of accessibility, proactivity and simplicity…Our second priority is to grow in Quebec and across Canada…The measured and disciplined expansion of our international activities is our third priority….Our fourth priority is to continue to engage partners and allies in innovative and mutually beneficial partnerships to broaden our distribution reach.”

“By executing against these four priorities, increasing operating efficiency, and exercising sound risk management, National Bank will be well-positioned to continue driving growth and sustaining its financial performance.”

“Over the past several years, the Bank has been deploying its strategic transformation program, which is based on the One client, one bank vision…The ultimate goal is to make the Bank the leader in client experience.”

CEOLouis Vachon • Eight years in current role• Background: Veteran of over 30

years in banking• Banking Qualification: N/AChairman Jean Houde• One year and nine months in role• Background: Career in business & finance

inclusive of being Deputy Minister of Finance of Quebec from 2005-2009

• Veteran of over 25 years in National Bank of Canada

CFO/Finance Director Ghislain Parent • Background: CA & Fellow of the

Ordre des comptables agréés du QuébecHead of Strategy Karen Leggett (Chief Marketing Officer and Executive Vice-President, Corporate Development)Head of Investor RelationsClaude Breton (Vice-President, Public Affairs and Investor Relations)Head of Communications Claude Breton (Vice-President, Public Affairs and Investor Relations)Chairman – Audit CommitteePierre BoivinChairman – Remuneration CommitteeAndré CailléAuditor DeloitteLegal CounselDominic Paradis (Vice-President, Legal Affairs and Corporate Secretary)Lead Regulator(s)OSFI

Lafferty Bank Quality RatingNational Bank of Canada




“Our growth-orientated strategy is underpinned by a strong wholesale business, growing retail franchise as well as our business into the rest of Africa.”

“Nedbank Group’s primary market remains SA, however, we are continuing to expand into the rest of Africa.”

“Net Promoter Score (NPS) – … Retail, Corporate and Business Banking reaching historic high scores.” (But score is not given.)

CE (Chief Executive) Michael William Thomas Brown• Five years in current role• Background: Chief financial officer

of Nedbank Group in June 2004 and chief executive from 2010

• Banking Qualification: N/AChairmanVassi Naidoo (Non-Executive)• Nine months in current role• Background: Deloitte Southern Africa from

1998 to 2006, a member of the Deloitte UK executive from 2006 to 2009 and a member of Deloitte global executive from 2007 to 2011, and thereafter vice chairman of Deloitte UK from 2009 to 2014.

CFO Raisibe Kgomaraga Morathi • Background: Senior positions in banking

and insurance for the past 20 years

Group Executive: Strategy Priya NaidooHead of Investor RelationsAlfred VisagieExecutive Head: Marketing and Group CommunicationsThulani SibekoChairman – Audit Committee Malcolm Ian Wyman (Senior Independent Non-executive Director)Chairman – Remuneration Committee Paul Mpho Makwana (Independent Non-executive Director)Auditor Deloitte and KPMGLegal Counsel Has relationships with multiple legal advisors Lead Regulator(s)South African Reserve Bank

Lafferty Bank Quality RatingNedbank




“Nordea is a universal bank guided by its established customer-centric and advisory-led relationship strategy.”

“Nordea market commitments: Strong capital generation and increased payout ratio in 2014 and 2015..: To reach a ROE of 13%...: Delivering low volatility results.”

CEOCasper von Koskull • Three months in this role• Background: Investment banking• Banking qualification: N/A

Chairman Björn Wahlroos• Five years in this role• Background: Investment banking

CFO/Finance Director Heikki Ilkka • Background: Chartered Accountant


Head of Investor RelationsRodney Alfvén

Head of Communications Claus Christensen

Chairman – Audit CommitteeTom Knutzen

Chairman – Remuneration CommitteeMarie Ehrling

Auditor Öhrlings PwC

Legal Counsel/independent legal advisorLena Erikson


Lafferty Bank Quality RatingNordea




“The inclusion of OCBC Wing Hang boosts OCBC Group’s Greater China strategy....we are strongly positioned to capture more of the trade, capital, investment and wealth flows that spring from the increased economic interconnectivity between Greater China and Southeast Asia.”

Lafferty Bank Quality RatingOCBC

CEO Samuel N. Tsien• Four years in current role• Background: Corporate banking• Banking Qualification: N/A

ChairmanOoi Sang Kuang• Four years in current role

CFO/Finance Director Darren Tan Siew Peng • Background: Chartered Accountant

Head of StrategyN/A

Head of Investor Relations Mr Collins Chin

Head of CommunicationsMs Koh Ching Ching

Chairman – Audit CommitteeTan Ngiap Joo

Chairman – Remuneration Committee Wee Joo Yeow

Auditor KPMG

Legal Counsel/independent legal advisor Loretta Yuen

Lead Regulator(s) Monetary Authority of Singapore




“Our strategic priorities work together to position us to achieve targeted outcomes – expanded market share, deeper customer relationships, increased fee income and improved operating efficiency – that form a solid foundation for long-term value creation.”

“[I]n 2014…return on average assets was 1.28 percent.”

“That’s what it means to us to be a Main Street bank rather than a Wall Street bank. Calling ourselves a Main Street bank is not a declaration of our capabilities or a comment on the sophistication of our people; it is a statement about the philosophy that governs how we relate to and serve our customers and communities. Those relationships are at the heart of our business model. By and large, we live and work where our customers live and work.”

“At the heart of our corporate culture is the fundamental belief that if we always strive to do right by the people we serve and if we treat our customers well, we will make money and be profitable through time. It is a simple model, the purity of which is well suited for the environment in which we are operating.”

Chairman, President & CEOWilliam S. Demchak • Three years in role• Background: Investment banking• Banking Qualification: N/A

CFO/Finance Director Robert Q. Reilly • Background: (BSBA in Finance)


Head of Investor RelationsBryan K. Gill

Head of Communications Donna C. Peterman (through March 31, 2016) then David Chamberlin

Chairman – Audit CommitteeRichard B. Kelson

Chairman – Remuneration CommitteeDennis F. Strigl (Personnel and Compensation committee)

Auditor • PwC

Legal Counsel/independent legal advisorPNC has relationships with multiple legal advisors


Lafferty Bank Quality RatingPNC Financial Services




“The Group’s strategy remains focused on organic growth in the retail banking business particularly on the retail consumers and small and medium enterprises (“SMEs”).”

“Public Bank’s Customer Service Charter sets out the standard of customer service the Bank is committed to deliver to its customers. It also provides the manner in which customers can contact the Bank to provide feedback on how the Bank can serve them better. All Public Bank’s staff are guided by the principles in the Customer Service Charter to deliver high quality customer service at every point of contact.”

“At the Public Bank Group, upholding service excellence and maintaining a customer-focused approach in all our dealings with customers have long been embedded in the Group’s customer care culture. We believe this is the key for establishing lasting relationship with our customers. The Group’s corporate tagline – “Excellence is Our Commitment” – reflects the commitment and integrated effort by all levels of staff within the Group to proactively anticipate our customers’ needs and exceeding their expectations. In today’s highly competitive business environment, the Group’s unwavering focus to provide high quality customer service has given it a strong advantage over its peers and is the underlying foundation of the Group’s long-term business growth strategy.”

Lafferty Bank Quality RatingPublic Bank

CEO Tan Sri Dato’ Sri Tay Ah Lek• 50 years in position • Background: Retail Banking,

Commercial Banking, Investment Banking & Islamic Banking

• Banking Qualification: N/A

ChairmanTan Sri Dato’ Sri Dr. Teh Hong Piow• 50 years in position

CFO/Finance Director Yik Sook Ling • Background: Chartered Accountant

Head of StrategyNg Seiw Kuan

Head of Investor RelationsTan Sri Dato’ Sri Tay Ah Lek

Head of CommunicationsDato’ Ab. Razak bin Md Dali

Chairman – Audit Committee Tang Wing Chew

Chairman – Remuneration Committee Lai Wan

Auditor Ernst and Young

Legal Counsel/independent legal advisor N/A





“Strategic Goals: In Canada - To be the undisputed leader in financial services; In the U.S - To be the preferred partner to corporate, institutional and high net worth clients and their businesses; In select global financial centres - To be a leading financial services partner valued for our expertise.”

“Our diversification by business and geography contributes to consistent performance and growth opportunities.”

The bank’ 2015 results “reflect our progress in attracting and serving the needs of personal, business and institutional clients, the power of our diversified business model, and our prudent approach to risk management. We also remained focused on managing costs and reducing the rate of growth of our expenses, while continuing to invest, with a particular focus on innovation, technology and digitization.”

Lafferty Bank Quality RatingRoyal Bank of Canada (RBC)

CEO David I. McKay• Two years in current role• Background: Retail and Corporate banking • Banking Qualification: N/A

ChairmanKathleen Taylor • Two years and three months in current role

CFO/Finance Director Janice Fukakusa • Background: Chartered Accountant

Head of StrategyAnn Louise Vehovec

Vice President & Head of Investor RelationsAmy Cairncross

Head of CommunicationsDiane Salt

Chairman – Audit Committee D.F. Denison

Chairman – Remuneration Committee Richard George (Head of Human Resources Committee,which overseas compensation policies)

Auditor • Deloitte (for 2015 fiscal year) • PwC (for 2016 fiscal year)

Legal Counsel/independent legal advisor David Onorato (Head of legal group)

Lead Regulator(s) OSFI




“To make this a great bank for our customers; a bank that will earn back their trust, and in turn win more of their business.”

“Last year we identified the areas we needed to improve in order to deliver our strategy - cost, complexity, capital, and trust from our customers.”

“We stopped offering zero per cent balance transfers on credit cards that trap customers in spirals of ever increasing debt, we ended teaser rates that penalise existing customers, and we now explain all of our fees and charges on one side of A4 paper for both our personal and business customers.”

“Net Promoter Score…Personal Banking…. RBS (Scotland) -16 (Year End 2013) -13 (Year End 2014).”

“By 2019 RBS intends to be a low cost business focused on effective, efficient delivery for our customers. It will be a bank based in the UK and RoI, with a presence in Western Europe, the US and Singapore.”

CEORoss McEwan • Three years in current role • Background: Retail Banking• Banking Qualification: N/A

ChairmanHoward Davies • Six months in current role

CFO/Finance Director Ewen Stevenson

Head of StrategyRichard Kibble

Head of Investor Relations Richard O’ Connor

Director of Media RelationsChris Turner

Chairman – Audit CommitteeBrendan Nelson

Chairman – Remuneration CommitteeSandy Crombie

Auditor Ernst and Young

Legal Counsel/independent legal advisorChristopher Campbell

Lead Regulator(s)• PRA• FCA

Lafferty Bank Quality RatingRoyal Bank of Scotland




“With Simple, Personal and Fair as our guiding principle, we will focus on the following: People - A strong internal culture…; Customers - Earn the loyalty of our retail and commercial customers; and improve our franchise;….Operational Excellence; …Shareholders - Reinforced capital and risk management.”

“We will focus on organic growth – mainly in Europe and the Americas; be stricter in our capital allocation – allocating capital to businesses with higher potential returns; and although acquisitions are not a priority, were we to consider an acquisition, we would be stricter in our criteria. Our goal is a ROTE of 12-14% by 2017.”

“The NEO CRM project is a novel tool for organising commercial activity that enables us to gather and analyse the information of each customer and have a 360º vision of their performance and relationship with the Bank. This information enables customer needs to be anticipated and tailored solutions to be offered.”

CEOJosé Antonio Alvarez• Since 25 Nov 2014 • Background: Retail Banking• Banking Qualification: N/A

Group executive chairmanAna Botín • Since 10 Sep 2014

CFO José García Cantera

Senior executive vice president & head of Group Strategy & Executive Chairman’s OfficeVíctor Matarranz

Head of Investor Relations Sergio Gámez

Senior executive vice president & head of Communications, Corporate Marketing & ResearchJuan Manuel Cendoya

Chairman – Audit CommitteeJuan Miguel Villar Mir (non-executive director [independent])

Chairman - Appointments committee, remunerations committee & risk supervision, regulation & compliance committeeBruce Carnegie-Brown Vice chairman, non-executive director (independent) & coordinator of the non-executive directors (lead director)

Auditor for 2016, 2017 and 2018 PwC

General Secretary & Secretary of the BoardJaime Pérez Renovales


Lafferty Bank Quality RatingSantander




“Based on annual customer survey results, the Net Promoter Score, i.e., readiness to recommend Sberbank, increased by 6 pp over the year, reaching 60%. These were the best survey results in Russia’s banking sector.”

“Growing non-interest income is one of Sberbank strategic goals. As of the end of 2014, the share of net non-interest income in the Operating income before provision charge was 22.5%.”

“As part of its Strategy 2018 goal implementation to expand the Group’s business in the insurance and pension markets, Sberbank registered and obtained licences for Sberbank Insurance and Sberbank Insurance Broker subsidiaries that successfully started their business in 2014.”

“Cross-sell promotion enabled Sberbank to increase its retail product sales per active customer from 1.6 to 2.0 over the year.”

Lafferty Bank Quality RatingSberbank

CEO Herman Gref• Acting President & CEO• Nine years in current role• Background: Law & PhD Economics• Banking Qualification: N/A

ChairmanHerman Gref

CFO/Finance Director Alexander V. Morozov • Background: Economics

Head of StrategyYulia Chupina Senior Vice-President

Head of Investor RelationsAnastasia Belyanina

Head of CommunicationsSvetlana Mironyuk

Chairman – Audit Committee Galina A. Golubenkova

Chairman – Remuneration Committee Georgy I. Luntovskiy


Legal counsel Igor Kondrashov Vice-President and Director of the Legal Department

Lead Regulator(s) Central Bank of Russia




“Average assets by geography: Canada 59%; US 15%; Pacific alliance 9% (Mexico, Peru, Chile, Colombia); Asia/Europe/other international 17%.”

“As an overall strategy, we continue to believe strongly in our diversified business model, and our geographic mix. We have well-defined growth plans for Canada, and are focused on growing in our priority international markets.”

“As part of our strategic agenda, we have identified five important priorities to guide the Bank’s efforts: Customer Focus; Leadership; Low Cost by Design; Digital; Business Mix.”

“We are adapting to these operating conditions with increased investments in technology, to transform and simplify the customer experience. These investments will also help to enhance our growth and reduce our structural costs.”

CEOBrian J. Porter • Two years and four months in current role• Background: Corporate banking

Chairman Thomas C. O’Neill• Two years in current role

CFO/Finance Director Sean D. McGuckin• Background: CPA, CA

Head of StrategyRandy Lyons

Head of Investor Relations Jake Lawrence

Head of Communications Scott Bonikowsky

Chairman – Audit CommitteePaul D. Sobey

Chairman – Remuneration committeeAaron W. Regent

Auditor for 2016, 2017 and 2018 KPMG

Legal counsel/independent legal advisorDeborah Alexander


Lafferty Bank Quality RatingScotiabank




“Net Promoter Score 2014….Sweden: Retail Customers…33.”

“In its ambition to be the leading Nordic bank for corporates and financial institutions and the top universal bank in Sweden and the Baltic countries, SEB has adopted a strategy based on three pillars: long-term customer relationships, resilience and flexibility, as well as growth in areas of strength.”

“Long-term customer relationships.....Performance is monitored by external and internal measurements of customer satisfaction.”

“GROWTH IN AREAS OF STRENGTH….Large corporate and institutional business in the Nordic countries and Germany…..Be the leading Nordic bank for large corporate customers and financial institutions and to be the preferred bank for targeted corporate customers in Germany.”

Lafferty Bank Quality RatingSEB

CEO Annika Falkengren• Eleven years in current role• Background: B.Sc. (Econ)• Started in the bank in 1987• Banking Qualification: N/A

ChairmanMarcus Wallenberg

CFO/Finance Director Jan Erik Back

Head of StrategyWilliam Kadouch-Chassaing

Head of Investor RelationsJonas Soderberg

Head of CommunicationsViveka Hirdman-Ryrberg

Chairman – Audit Committee Birgitta Kantola

Chairman – Remuneration Committee Sven Nyman

Auditor PwC

Legal counsel N/A

Lead Regulator(s) ECB




“Societe Generale has built a solid universal banking model designed to meet the needs of its 30 million customers.”

“The Group plans to pursue its development while maintaining its model’s current balance in terms of geographic presence (about 75% of revenues generated in mature markets and 25% in fast-growing emerging markets) and business portfolio (about 60% of revenues and risk-weighted assets in Retail Banking activities, about 20% in Private Banking, Asset Management, Financing and Advisory activities, and limited to 20% in Global Markets activities).”

“The Group’s top strategic priority is to sustain its sales momentum through increased efforts in customer satisfaction, quality of service, added value and innovation.”

“The excellent quality of the relationships built every day by the banks in this network, which are based on personal attention and advisory services, is reflected in the competition surveys(1) conducted by CSA with the customers of major French banking groups. Conducted in spring 2014 on representative samples, these surveys once again ranked Crédit du Nord as a leader in the individual and professional customer markets (No. 3) in terms of overall satisfaction.”

Lafferty Bank Quality RatingSociété Générale

CEO Frédéric Oudéa• Nine months as CEO only & chairman

and CEO since 2009• Background: Corporate banking• Banking Qualification: N/A

ChairmanLorenzo Bini Smaghi• One year in current role

CFO/Finance Director Philippe Heim

Head of StrategyWilliam Kadouch-Chassaing

Head of Investor RelationsAntoine Loudenot

Head of CommunicationsCaroline Guillaumin

Chairman – Audit Committee Alexandra Schaapveld

Chairman – Remuneration Committee Jean-Bernard Lévy

Auditor • Deloitte • Ernst & Young

Legal counsel Gilles Briatta





“The group’s strategy has evolved organically in line with the development of our franchises…In our pursuit of leadership as an African financial services organisation, we continue to pursue growth – mainly organic growth – in Africa. Our businesses outside Africa exist primarily to link African enterprises to global pools of capital.”

“The Africa opportunity is compelling as many of the continent’s economies continue to grow at higher rates than other regions….Our strategic relationship with the Industrial and Commercial Bank of China (ICBC)…provides us with increasing opportunities to drive Africa’s growth.”

“While we remain firmly aware of the challenges of doing business in Africa and in growing our franchises in line with our strategy, we believe these are outweighed by the opportunities open to us, given our unique competitive position on the continent.”

“For Personal and Business Banking South Africa, the globally accepted net promoter score, which we introduced in 2013 as our key measure of customer loyalty, improved to 36 during the year.”

“Where we have received fines for failures in our anti-money laundering controls, we have implemented remedial actions to prevent future transgressions and to ensure that our business meets the highest regulatory standards.”

Lafferty Bank Quality RatingStandard Bank

Joint Group CEOs Ben Kruger• Three years in current role• Background: Investment banking• Seasoned bank professional of over

30 years in Standard Bank• Banking qualification: N/ASim Tshabalala• Three years in current role• Background: Investment banking• Veteran of 16 years in Standard Bank• Banking qualification: N/A

ChairmanThulani Gcabashe

Group Financial DirectorSimon Ridley (to 30 April 2016)Dr Arno Daehnke (from 1 May 2016)

Head of StrategyN/A

Head of Investor RelationsDavid Kinsey


Chairman – Audit Committee Richard Dunne

Chairman – Remuneration Committee Ted Woods

Auditor • KPMG• PwC

Legal counsel Ian Sinton

Lead Regulator(s) South African Reserve Bank




“We bank the people and companies driving investment, trade and the creation of wealth across Asia, Africa and the Middle East, where we earn around 90 per cent of our income and profits.”

“The Board continues to believe that there are significant opportunities for the Group in the medium to long term across our footprint, and that is why we have been careful not to take any knee-jerk actions that may damage the long-term prospects of the business.”

“It should be no surprise that impairment increased in 2014. GDP growth in key markets has been slower, commodity prices fell sharply, and we faced some specific challenges in particular markets, such as the Personal Debt Rehabilitation Scheme (PDRS) in Korea.”

“Despite all the turbulence and shifts in sentiment, the underlying drivers of economic growth – demographics, urbanisation and investment in infrastructure – remain immensely strong, and the demand for financial services is rising rapidly. Our challenge is to capture these opportunities in a disciplined, return-focused way to drive shareholder value.”

“We are extremely fortunate to have Bill Winters.. taking over as Group Chief Executive.”

CEOBill Winters, CBE • Group CEO since June 2015• Background: Investment banking• Banking Qualification: N/A

Chairman Sir John Peace• Six years in current role• Background: Honorary Doctorate from

The University of Nottingham

CFO/Finance Director Andy Halford• Background: FCA

Group Head of Strategy Julian Durant

Head of Investor Relations James Hopkinson

Head of Communications Jon Tracey

Chairman – Audit CommitteeMr N Kheraj

Chairman – Remuneration committeeMrs C Hodgson

Auditor KPMG

Legal counsel/independent legal advisorDavid Fein (Group General Counsel)

Lead Regulator(s)• FCA • PRA

Lafferty Bank Quality RatingStandard Chartered Bank




“In October 2013, when I took charge as Chairman, I had set six strategic goals for SBI. These six goals were: NPA reduction, risk management, cost control, improving delivery standards, non-interest income and leveraging technology. As I look back today, tangible progress has been made on all the six fronts.”

“State Bank of India is deeply entrenched in rural banking arena, by covering over 1.11 crore customers under agriculture segment. The local Branch Manager is not only the Banker to the villagers, but is also a friend, philosopher and guide for them.”

Lafferty Bank Quality RatingState Bank of India

Chairman/CEO Smt. Arundhati Bhattacharya• Three years in current role• Background: Merchant banking,

investment banking• Banking Qualification: N/A

CFO/Finance Director Smt. Anshula Kant

Head of StrategySmt. Manju Agarwal

Head of Investor RelationsAsst General Manager & team posted in Corporate Centre Mumbai

Head of CommunicationsVinod PandeChairman – Audit Committee Sanjiv Malhotra Chairman – Remuneration Committee (Below all Senior members)• Dr. Hasmukh Adhia, GOI Nominee –

Member (Ex-Officio)• Dr. Urjit R. Patel, RBI Nominee –

Member (Ex-Officio) • Shri M. D. Mallya, Director – Member• Shri Deepak I. Amin, Director – Member

Auditor • S R R K Sharma Associates, Bangalore• Mehra Goel & Co., New Delhi • V Sankar Aiyar & Co., Mumbai• B Chhawchharia & Co., Kolkata• S N Mukherji & Co., Kolkata• M Bhaskara Rao & Co., Hyderabad• Varma & Varma, Kochi• Amit Ray & Co., Allahabad• S L Chhajed & Co., Bhopal• Mittal Gupta & Co., Kanpur• G S A & Associates, New Delhi• Chatterjee & Co., Kolkata• Manubhai & Shah, Ahmedabad• Bansal & Co., New DelhiLegal counsel In-houseLead Regulator(s) Reserve Bank of India




CEO “Yemi Adeola holds a Bachelor of Law (LLB) degree from the University of Ife and Master of Law (LLM) degree (with specialisation in law of secured credit transactions, comparative company law and international economics law) from the University of Lagos, Nigeria.”

“During the year, we invested substantially in the upgrade of our technology infrastructure and the reengineering, centralisation and automation of processes to improve customer experience. Our credit processing engine for the retail and SME space was re-engineered to streamline the process from origination to disbursement to enhance service delivery. Various projects are at varying stages of implementation.”

“The Bank at its last Board strategy retreat unwaveringly committed to supporting Management in promoting innovation across the institution.”

CEORazack Adeyemi Adeola • Seven years in current role• Background: Law, Corporate &

Commercial Banking • Banking Qualification: Master of Law (LLM)

degree (with specialisation in law of secured credit transactions, comparative company law and international economics law) from the University of Lagos, Nigeria

Chairman Asue Ighodalo• One year and eight months in current role

CFO/Finance Director Abubakar Suleiman• Background – FCA/CA/MBA: Treasury

& Finance Management

Head of Strategy Shina Atilola

Head of Investor Relations Chima Nwaokoma

Head of Communications Shina Atilola

Chairman – Audit CommitteeRasheed Kolarinwa

Chairman – Remuneration committeeTamarakare Yekwe


Legal Counsel/independent legal advisorN/A


Lafferty Bank Quality RatingSterling



Lafferty Bank Quality RatingSumitomo Mitsui Banking Corporation

CEO Takeshi Kunibe• Five years in current role• Banking qualification: N/A

Chairman Teisuke Kitayama

CFO/Finance DirectorJun Ohta

Head of StrategyMasaki Tachibana

Head of Investor RelationsRole subsumed within IR Department

Head of Communications Jun Ohta Chairman – Audit Committee Kuniaki Nomura

Chairman – Remuneration Committee Yoshinori Yokoyama

Auditor • Hiroshi Takahashi• Katsuyoshi Shinbo• Masaaki Oka

Legal Counsel/independent legal advisorYujiro Ito

Lead Regulator(s) Financial Services Agency (Japan)


“We will become a global financial group that, by earning the highest trust of our customers, leads the growth of Japan and the Asian region.”

“Initiatives to achieve the management goals: (1) Develop and evolve client-centric business models for main domestic and international businesses Initiatives to achieve the management goals; (2) Build a platform for realizing Asia-centric operations and capture growth opportunities; (3) Realize sustainable growth of top-line profit while maintaining soundness and profitability; (4) Upgrade corporate infrastructure to support the next stage of growth.”

“SMBC is expanding its overseas networks to provide further services for Japanese corporate clients operating overseas and to strengthen its capability to develop banking businesses in emerging and growth markets. SMBC provides support for clients’ global business development by leveraging our expanding worldwide network.”




“We have a strong market position and continue to execute on our strategic priorities: Deepen client relationships; Enhance Returns by Optimizing Balance Sheet and Business Mix; Improve efficiency.”

“We have the scale to compete with the largest banks, but are also small enough to remain nimble and to respond effectively to changing market conditions and consumer preferences.”

“Adjusted return on average assets improved 10 basis points to 0.98%.”

Chairman & CEOWilliam H. Rogers, Jr. • Four years in current role• Background: Corporate & Commercial

banking • Banking Qualification: N/A

CFO/Finance Director Aleem Gillani• Background: CMA & Graduate Harvard

Business School

SVP, Head of StrategyMike Menyhart

Head of Investor Relations Ankur Vyas

Head of Communications Sue Mallino

Chairman – Audit CommitteeThomas R. Watjen

Chairman – Remuneration committeeKyle Prechtl Legg


Legal CounselRaymond D. Fortin


Lafferty Bank Quality RatingSunTrust




“Accessible full-service bank....with decision-making close to our customers....low risk....and high cost efficiency.”

“Our goal for 2014 was to raise customer satisfaction in all our home markets. Satisfaction among Swedish customers is below the industry average, and according to the Swedish Quality Index (SQI) was 64 (–2) for private customers and 66 (+2) for corporate customers. According to the Customer Satisfaction Index (CSI), which provides large branches with insight into what they need to improve, there was an increase of 2 points. SQI encompasses around 300 of the bank’s customers and CSI 40 000.”

Lafferty Bank Quality RatingSwedbank

CEO Birgitte Bonnesen• Acting President & CEO• One month in current role; 29 years

in banking• Background: Retail and Corporate banking• Banking Qualification: N/A

Chairman Anders Sundstrom • Three years in current role

CFO/Finance DirectorGoran Bronner• Background: BSc in business

Administration and Economics

Head of StrategyMikael Bjorknert

Head of Investor RelationsGregori Karamouzis

Head of Communications Cecilia Hernqvist

Chairman – Audit Committee Ulrike Francke

Chairman – Remuneration Committee Anders Sundstrom

Auditor Deloitte

Legal Counsel/independent legal advisorCecilia Hernqvist





“Bharat Masrani completed a very successful first year as TD’s Group President and CEO.”

“The Power of One TD is a key competitive advantage in TD’s strategy. By leveraging the organic growth opportunities which exist between all of our businesses, we are creating even more value.”

“TD made a number of bold moves in 2015 that we believe will help us compete, win and grow in the coming years. This included taking decisive steps to optimize our operations and put in place a more streamlined, agile organizational structure. It has freed up resources to reinvest in our people, culture and brand promise.”

“We also elevated our game in the digital space. TD established a technology innovation centre in Waterloo, Ontario, which is becoming a hotbed of ideas to make the customer experience better.”

“Moving forward, you will see TD continue to grow organically – a proven capability of ours.”

“TD Canada Trust (TDCT) was named highest in Customer Satisfaction for the tenth year in a row by J.D. Power in the Canadian Retail Banking Study.”

Group President & CEOBharat Masrani • One year and five months in current role• Background: Corporate banking• Banking Qualification: N/A

Chairman Brian Levitt• Five years in current role• Background: legal

CFO/Finance DirectorRiaz Ahmed • Background: FCA


Head of Investor Relations Gillian Manning

Head of Communications Ali Duncan Martin

Chairman – Audit CommitteeWilliam E. Bennett

Chairman – Remuneration committeeWilbur J. Prezzano


Legal Counsel/independent legal advisorNorie Campbell

Lead Regulator(s) OSFI

Lafferty Bank Quality RatingToronto Dominion




“Strategic priorities: Provide great banking to more people; Help more people borrow well; Provide the kind of banking experience people want and deserve.”

“TSB’s efforts to differentiate its customer experience are now starting to be recognised…Our progress is also evident from a 29 point increase in our customer net promoter score (NPS) since December 2013, which turned positive in the second half of the year.”

“Every employee was made a Partner in the business by awarding them TSB shares, and the incentive to deliver shareholder value through a differentiated customer experience.”

“A new remuneration approach, aligned to and reinforcing TSB’s values, was announced for the Group’s executive which was further rolled out to all TSB Partners in early 2015.”

Lafferty Bank Quality RatingTSB

CEO Paul Pester• No. of years in post to Feb 2016:

Two and a half years• Background: Retail banking • Banking qualification: N/A

Chairman Will Samuel • Two years in current role

CFO/Finance DirectorDarren Pope• Background: FCA/CA/MBA

Head of StrategyKat Robinson


Head of Communications Charlotte Sjoberg/Emma Byrne

Chairman – Audit Committee Polly Williams

Chairman – Remuneration Committee Professor Dame Sandra Dawson

Auditor PwC

Legal Counsel/independent legal advisorSusan Crichton (General Counsel)

Lead Regulator(s) • PRA• FCA




“The Bank’s 2014 strategic imperatives were driven by our vision to be the undisputed leading and dominant financial services institution in Africa leveraging the competitive advantages inherent in our large customer base, vast geographical footprint, highly skilled workforce and cutting edge technology infrastructure.”

“Some of these imperatives included growing our low cost deposit base, enhancing the customer service orientation within the Bank, improving our market share in the e-Banking space and consolidating the competitiveness of our African subsidiaries among others.”

“In 2014, we ..grew our loan book by 14% to cross the N1 trillion mark. We remained focused on creating quality assets, as reflected in the moderated impairment charge and overall cost of risk.”

“Reflecting our renewed effort towards mobilising low cost stable retail deposits, our cost of funds remained one of the lowest in the industry, thus ensuring our stable net interest margins.”

CEOPhillips Oduoza • Six years in current role• Background: Banking career spanning

over two decades• Harvard Business School graduate• Banking qualification: N/A

Chairman Tony O. Elumelu• Two years in current role

CFOUgochukwu A. (Ugo) Nwaghodoh • Background: FCA

Head of Strategy Anant Rao

Head of Investor Relations Abiola Rasaq

Head of Communications Charles Aigbe

Chairman – Audit CommitteeMr. Adekunle Olumide

Chairman – Remuneration committeeMrs. Rose Ada Okwechime

Auditor PwC

Legal Counsel/independent legal advisorSamuel Adikamkwu

Lead Regulator(s) Central Bank of Nigeria

Lafferty Bank Quality RatingUnited Bank for Africa (UBA)




“In 2012, the year of our 150th anniversary, we accelerated our strategic transformation of the firm to create a business model that is better adapted to the new regulatory and market circumstances and that we believe will result in more consistent and high-quality returns.”

“Our strategy centers on our leading wealth management businesses and our premier universal bank in Switzerland, enhanced by our strong asset manager and investment bank. These businesses… benefit from a strong competitive position in their targeted markets, are capital-efficient, and offer a superior structural growth and profitability outlook.”

“In 2014, we achieved the key strategic targets we set out in 2011 and 2012. Since the end of 2011, we have reduced RWA by over CHF 160 billion, particularly in the Corporate Center – Non-core and Legacy Portfolio, and added almost 700 basis points to our fully applied Basel III CET1 capital ratio, surpassing our long-stated target of 13%. Furthermore, our Investment Bank today is less complex and delivers more consistent underlying returns.”

“During 2014, we established UBS Group AG as the holding company of UBS Group. This change is intended, along with other measures already announced, to substantially improve the resolvability of UBS Group in response to evolving too big to fail (TBTF) regulatory requirements.”

CEOSergio Ermotti • Four years in current role • Veteran of almost 30 years in banking• Background: Investment banking• Banking qualification: Swiss-certified

banking expert

Chairman Axel A. Weber• Two years in current role• Background: PhD Economics

CFO/Finance DirectorKirt Gartner • Background: MBA


Head of Investor Relations Caroline P. Stewart

Head of Communications Mark Hengel

Chairman – Audit CommitteeWilliam G. Parrett

Chairman – Remuneration committeeAnn F. Godbehere


Legal Counsel/independent legal advisorMarkus U. Diethelm

Lead Regulator(s) • Swiss Financial Market Supervisory

Authority (FINMA)• Swiss National Bank

Lafferty Bank Quality RatingUBS (U)




“In 2014, we returned to profitability, reaping the rewards of our hard work to strengthen our capital position, simplify our processes and increase our efficiency. Now we are again able to concentrate on the pursuit of growth.”

“The plan emphasizes investment, development of our commercial banking activities, realization of greater value from our core assets, and reduction of non-core assets.”

“Our key objective now is to establish UniCredit as the premier bank in Europe for quality of service. In particular, we plan to differentiate ourselves from other players in the sector by thoroughly assessing and participating in the digital revolution.”

“Our customer satisfaction TRI*M index scored 80 and it is at par with our main competitors.”

Lafferty Bank Quality RatingUniCredit

CEO Federico Ghizzoni• Five years and five months in current role• Background: Retail and Corporate banking • Banking qualification: N/A

Chairman Giuseppe Vita• Three years and nine months in current role

CFO/Finance DirectorMarina Natale• Background: Business economics,

at UniCredit since 1988

Head of StrategyMarina Natale

Head of Investor RelationsPiero Munari

Head of Communications Maurizio Beretta

Chairman Internal Controls & Risk Committee Alexander Wolfgring (Director of UniCredit)

Chairman – Remuneration Committee Alessandro Caltagirone (Director of UniCredit)

Auditor Deloitte & Touche

Legal Counsel• Peter ten Broeke• Luca Vestini

Lead Regulator(s) ECB




“Growth Strategy: Capitalising on regional growth drivers; Reinforcing fee income growth; Investing in enablers to support business growth; Balancing growth with stability.”

“We will stay focused on delivering quality growth, while remaining watchful over emerging risks.”

“Through the years, UOB has invested resources and energy into realising its regional ambitions. We have been guided by the premise that the long-term interests of shareholders are best served by an expansion strategy that is considered.”

“Much as we are watchful of competitive threats from within the industry, we are also mindful of the longer-term trend the industry is facing from disruptors with digital business models…Only by harnessing the potential of new trends will traditional players, such as ourselves, be able to respond.”

“UOB...scored 71.4 in the Customer Satisfaction Index of Singapore, a respected industry benchmark administered by the Singapore Workforce Development Agency and SingaporeManagement University (SMU). The score was an improvement over the Bank’s 71.2 score from the previous year and above the national average of 70.7. It was also above the overall Finance and Insurance sector’s score of 69.1.”

Lafferty Bank Quality RatingUnited Overseas Bank (U)

CEO & Deputy ChairmanWee Ee Cheong• Eight years in current role• Background: Corporate banking,

30 years of banking experience• Banking Qualification: N/A

Chairman Hsieh Fu Hua• Three years and nine months in current role• Background: Corporate

CFO/Finance DirectorLee Wai Fai• Background: MBA

Head of StrategyIan Wong Wah Yan (Group Strategy & International Management)

Head of Investor RelationsJimmy Koh

Head of Communications Michelle Quah

Chairman – Audit Committee Willie Cheng Jue Hiang

Chairman – Remuneration Committee Wee Cho Yaw


Legal Counsel/independent legal advisorSamantha Chong/RHTLaw Taylor Wessing

Lead Regulator(s) Monetary Authority of Singapore




“Our Return on Average Assets (ROA) of 1.54 percent, our Return on Average Common Equity (ROE) of 14.7 percent and our Efficiency Ratio of 53.2 percent were once again among the best in the banking industry.”

“The diversification of U.S. Bancorp’s business profile continues to be one of our most significant strategic advantages. We balance our revenue generation between margin and fee businesses, and we leverage our competitive strengths in our chosen market segments.”

“With Consumer and Small Business Banking; Wholesale Banking and Commercial Real Estate; Wealth Management and Securities Services; and Payment Services, we are in precisely the markets where we compete the best, and we are confident this mix of businesses has us well positioned for the future.”

CEORichard K. Davis • Ten years in current role• Background: Retail and Corporate banking • Banking qualification: N/A

Chairman Richard K. Davis• Two years in current role

CFO/Finance DirectorKathy Rogers

Head of Strategy Kate Quinn

Head of Investor Relations Sean O’Connor (left bank end of February 2016)

Head of Communications Dana Ripley

Chairman – Audit CommitteeOlivia F. Kirtley

Chairman – Remuneration committeeDavid O’Maley


Legal Counsel/independent legal advisorN/A


Lafferty Bank Quality RatingUS Bancorp




“Our vision is to satisfy all our customers’ financial needs, help them succeed financially, be recognized as the premier financial services company in our markets and be one of America’s great companies.”

“Important to our strategy to achieve this vision is to increase the number of our products our customers use and to offer them all of the financial products that fulfill their financial needs.”

“We report cross-sell metrics for our Community Banking and WBR operating segments based on the average number of retail products used per retail banking household. For Community Banking the cross-sell metric represents the relationship of all retail products used by customers in retail banking households.”

“Capital ratios, At year end: Wells Fargo common stockholders’ equity to assets 9.86[%].”

“Full-year return on assets was 1.45 percent.”

Lafferty Bank Quality RatingWells Fargo

CEOJohn Stumpf• Nine years in current role• Background: Corporate banking • Banking qualification: N/A

Chairman John Stumpf• Eight years in current role

CFO/Finance DirectorJohn R. Shrewsberry• Background: MBA

Head of StrategyChristine Deakin

Head of Investor RelationsJames Rowe

Head of Communications Oscar Suris

Chairman – Audit Committee James H. Quigley

Chairman – Remuneration Committee Cynthia H. Milligan (Credit Committee)

Auditor KPMG

Legal Counsel/independent legal advisorJames M. Strother





“We appointed a new CEO, refreshed the Group’s strategy, and proactively responded to regulatory change.”

“As a result, earlier this year we added the small, but important word ‘service’ into our overall company vision – to be one of the world’s great service companies.”

“We have therefore translated our strategy into a 3-5 year program that we call the ‘Service Revolution’. The program is comprised of five strategic priorities, 1. Performance discipline; 2. Service leadership; 3. Digital transformation; 4. Targeted growth; 5. Workforce revolution.”

“Net Promoter Score (NPS) Australia - consumer 1.1 (2015) 0.9 (2014).”

CEOBrian Hartzer • One year in current role• Background: Retail banking• Banking Qualification: N/A

Chairman Lindsay Maxsted • Five years in current role

CFO/Finance DirectorPeter King • BEc, FCA, worked in banking for 22 years

Chief Strategy Officer: Gary Thursby

Head of Investor Relations Andrew Bowden

Head of Communications Carolyn McMann

Chairman – Audit CommitteePeter Marriott

Chairman – Remuneration committeeEwen Crouch

Auditor PwC

Legal Counsel/independent legal advisorRebecca Lim

Lead Regulator(s) APRA

Lafferty Bank Quality RatingWestpac



Lafferty Bank Quality RatingZenith Bank

CEOPeter Amangbo• Two years in current role• Background: Corporate and

Investment banking • Banking qualification: N/A

Chairman Jim Ovia• Two years in current role

CFO/Finance DirectorStanley Amuchie• Background: FCA

Head of StrategyAdaora Umeoji

Head of Investor RelationsMichael Anyimah

Head of Communications Victor Adoji (Corporate Communications)

Chairman – Audit Committee Alhaji Hamis B. Musa

Chairman – Remuneration Committee Steve Omojafor

Auditor KPMG

Legal Counsel/independent legal advisorMichael Osilama Otu

Lead Regulator(s) Central Bank of Nigeria


“One of the main thrust of our strategy in the last couple of years was the expansion of our business beyond the shores of Nigeria. This was largely accomplished commencing with expanding into the West Africa sub-region (Gambia, Ghana, Sierra Leone), while consolidating our position as a leading financial services provider in Nigeria with branch network expansion from about 100 in 2004 to over 340 as at December 2014.”

“Our international expansion will continue to be propelled by: The planned integration of the African states under the proposed African Union provides a unique opportunity for the bank to build a strong banking franchise based on its experience and local expertise; The number of small to medium-sized banks operating in the ECOWAS and African region that require correspondent banking services, trade finance and related services as their operations expand.”

“The Group aims to enhance customer service experiences by implementing high quality information and communication technology (“ICT”) platforms in order to create convenient banking channels and products for its customers. The Group has recently implemented ETHIX banking software which will allow it to continue to develop e-banking products.”



CULTUREby Aongus Buckley

CULTURE IS WHAT Peter Drucker called “the spirit of an organisation”. It is more difficult to measure than “harder” characteristics such as

capital and liquidity, which is perhaps why the UK’s Financial Conduct Authority recently dropped its study on the matter.

But perhaps the Financial Conduct Authority’s interview-based method of assessing culture was flawed. After all, HBOS whistleblower Paul Moore revealed that management were bullying staff into answering questions in the MORI employee poll in the “correct” way. Unsurprisingly, the 2007 annual report shows that 76 percent of HBOS employees spoke highly of their employer, compared with a 50 percent industry norm.

Even though it contains red herrings, an annual report provides an extremely valuable alternative data source for the assessment of culture. The length of the document ensures that signs of the truth emerge: it is difficult to lie consistently over 300 pages.

We will use the HBOS 2007 annual report to highlight signs of a poor culture – armed with the benefit of hindsight provided by Moore’s recent book, reviewed elsewhere in this issue, as well as the report by the parliamentary enquiry into the bank. We will then look to the 2014 annual reports of the banks in the sample to see how they compare.

We have broken HBOS’ cultural problems down into the following elements. This is done for discursive purposes, and comes at the risk of shoehorning the evi-dence into categories that not everyone will agree with.

CULTURE PROBLEM ONE: NOT LISTENING TO THE CUSTOMER

A decade ago, HBOS was very much focused on its retail customers, for which it won many plaudits.

But it is clear from the 2007 annual report that the bank was not listening to those customers.

A search of the report’s text for the phrase “customer satisfaction”, or any similar variant, draws a blank. The bank did not report on any survey of customer satisfaction in the 2007 annual report. Admittedly, customer surveys were less common

in general in 2007, although Handelsbanken was at that stage using the customer service category of the Swedish Quality Index (Svenskt Kvalitetsindex: SKI).

Andy Hornby, who had by 2007 replaced James Crosby as HBOS CEO, mentions many “Key Performance Indicators” (KPIs) in his address to shareholders, but customer satisfaction is not one of them.

HOW DOES THIS COMPARE WITH 2014?

Handelsbanken’s obsession with what customers have to say provides a stark contrast to HBOS. Apart from fussing over the SKI, Handelsbanken listens with an open mind at each customer meeting, before making an offering from its product range. It does not ‘segment’ the customer beforehand, nor does it offer multiple brands.

Andy Hornby told shareholders in the 2007 report that the “multi-brand” strategy allowed the bank to “segment and manage more effectively the risk: reward potential of individual customer groupings”.

HBOS was offering products under the following brands: Halifax, Bank of Scotland, Birmingham Midshires, Intelligent Finance and The Mortgage Business. It is hard to see how this could have been in the best interest of customers. If the bank was truly interested in providing its customers with simple, low-cost products, then it would have picked the simplest and best-value products out of the range and eliminated the others.

Capitec’s 2014 report shows that it is also refreshingly different from the HBOS of 2007:

“Our client philosophy is to strive for simplicity and transparency, giving clients greater control over their banking. Our fees are transparent and easy to understand. We don’t have different fee packages which confuse clients or which give some clients a better deal than others”, (page 38).

OTHER EVIDENCE FROM 2014

Many of the banks in the sample use independent measures of customer satisfaction, and the practice

Lafferty Bank Quality Ratings: Essays


is most common in Scandinavia, the UK, South Afri-ca and Singapore. The good news is that it is becom-ing more geographically widespread.

The two German banks in the sample use the Net Promoter System, while Crédit Agricole uses a similar system, indice de recommandation client (IRC), or customer recommendation index, for which the third national survey was carried out in 2014. And National Australia Bank said in its 2015 report: “This was our first year of adopting the Net Promoter System (NPS), which measures the strength of our customers’ advocacy. NPS is now embedded in our leaders’ scorecards, helping us to deliver for our customers”.

Some other banks in the sample also now use NPS: Barclays treats it as an input into one of the five categories on its balanced scorecards, which its stakeholders can use to hold it to account.

CULTURE PROBLEM TWO: PRODUCT DEVELOPMENT

A risk manager in the HBOS retail division told Paul Moore that “the development of financial products was neglected because top managers in Retail were mainly consultants and marketing specialists, not bankers”.

So it seems that, in the recruitment of staff and in the way the staff spent their time, HBOS expended its energies on selling rather than on developing quality products that would sell themselves – even though the margins and speed of turnover might be lower.

Following on from the last category, which was about listening to the customer, we look for signs that banks provide products that those customers want. Again, HBOS provides examples of bad prac-tice: Paul Moore alleges HBOS had a target of selling protection insurance to 75 percent of those taking out new loans, and it transferred deposits into its corporate bond fund for a negligible yield pick-up.

EVIDENCE FROM 2014

Malaysia’s Public Bank is a standout example of obsession with the provision of quality service.

When reading through the product develop-ment part of Public Bank’s annual report, one does not encounter high-octane stories of new technol-ogy. Rather, it tells you that, through continuous enhancements, the bank has kept its ISO 9001:2008 certification for “Provision of Cus-tomer Service at Front Office” and “Provi-sion of Customer Service in Loan Delivery”. These certifications are based on the ability to

deliver consistent service across the branch network, and “include a 2-minute standard waiting time to serve customers at teller counters, wherever the branch is located”, (page 72).

It was tasks such as these that the FT’s John Kay was talking about when he described (in the Finan-cial Times of 16 June 2015) the culture of retail bank-ing as “intrinsically bureaucratic, perhaps boring, driven by the routinisation needed to allow the ac-curate completion of millions of transactions every day”. Kay believes this culture to be “incompatible with the entrepreneurial, buccaneering environment of the investment bank”.

Public Bank’s annual report also said: “The Bank has appointed over 550 Customer Service Represen-tatives (‘CSRs’) across its branches to provide person-alised services to customers on all matters pertaining to the delivery of banking services. These CSRs are trained to provide the best customer care and gather feedback for continuous service enhancement and improvements.” (Page 24).

When reading the report, one is inclined to believe that the bank’s Customer Service Charter really does guide staff behaviour – in contrast to HBOS, where even top management appear to have ignored the many guidelines they had.

At the other end of the technological scale, but equally welcome to customers, is the “paperless banking” being rolled out in Africa.

Barclays Africa said that, in 2014, it “rolled out ‘pa-perless banking’ to Botswana, Kenya, Tanzania and Zambia and implemented digital remote account opening which reduced handling time from 24 hours to 20 minutes in selected markets.”

In it’s annual report, Capitec noted: “Uniquely in banking, all our products are delivered in real time. New clients who apply and qualify for a loan, receive the funds before they leave the Capitec Bank branch”, (page 38).

Another welcome development in products is the fact that RBS “stopped offering zero per cent balance transfers on credit cards that trap customers in spi-rals of ever increasing debt, we ended teaser rates that penalise existing customers, and we now explain all of our fees and charges on one side of A4 paper for both our personal and business customers.”

CULTURE PROBLEM THREE: REMUNERATION STRUCTURES

Even if one has the most suitable products possible, a bonus culture can create the wrong incentives and oversell these products, to the long-term detriment of the bank. The HBOS 2007 annual report says the remuneration policy was “increasingly weighted



towards incentive plans that are aligned with the de-livery of both shorter-term operating plans and lon-ger term increases in shareholder value…the short term incentive plans will be based on the delivery of operating plans….In broad terms, for 2008 and be-yond, for every £100 of target reward for Executive Directors, about £26 is fixed and £74 is performance contingent…Of the performance element of reward, between 15% and 25% is based solely on annual performance.”

The report goes on to say that “HBOS has short term incentive plans which are annual, operating plan aligned, generally team based and built around line of sight issues. Participants know that these incentives give a real chance of a zero outcome and, equally, a real chance of a maximum outcome which, in cash terms, may be equivalent to 20% of salary or more.”

The evidence is clear that the HBOS system was geared towards selling as much as possible and at the highest margin possible. Almost as an aside, Paul Moore describes in his book how his Ameri-can Express-owned previous employer, Acuma, had tried to bring to the UK the fee-based retail financial planning that had proved so successful in the US. But trouble at other parts of its investments business forced American Express to drop the initiative.

EVIDENCE FROM 2014

Again we look to Handelsbanken as an example of a bank that does things very differently to the way HBOS did them.

Although pay is decided locally in Handelsbank-en’s decentralised system, it is mainly fixed-rate.

“The principle of only having a fixed salary applies to more than 97 percent of the Group’s em-ployees, and is applied without exception to executive officers, all staff who decide on the Bank’s granting of credits, and employees in the Bank’s control func-tions” (page 60).

“Our employees who meet customers are not paid variable remuneration, either in the form of bonus-es or commission, and therefore have no financial incentive to convince the customer that a certain service or product suits them best”, (page 13).

Variable compensation goes into a foundation, which employees can access from the age of 60.

“The salary and pension systems, combined with the Oktogonen profit-sharing scheme, are other ways of boosting the corporate culture by pro-moting long-term employment. Allocations to the Oktogonen scheme are made if Handelsbanken’s

profitability is better than the average of peer banks. The profit-sharing scheme contributes to the em-ployees’ interests being in agreement with the Bank’s corporate goals. In this way, cost-awareness and cau-tion will become part of Handelsbanken’s corporate culture”, (page 52).

But the evidence from the sample is not all good. Having decided to stick with investment banking, the Barclays 2014 annual report shows that the bonus issue still exerts a nefarious influence.

With a net income of minus £174 million in 2014, Barclays still had an “incentive pool” of £1.86 billion. That was down on 2013’s £2.378 billion, but the in-troduction of “Role Based Pay” for senior executives meant that the like-for-like fall in the incentive pool was only 11 percent (page 27).

“A small number of senior employees receive a class of fixed pay called RBP to recognise the seniority, breadth and depth of their role. RBP was introduced in 2014 to enable Barclays to remain competitive for global talent, given the CRD IV 2:1 maximum ratio of variable to fixed pay which came into effect in 2014”, (page 81).

“RBP is delivered quarterly in shares which are subject to a holding period with restrictions lifting over five years (20% each year)”, (page 86).

On the positive side is the aforementioned balanced scorecard, which determined 35 percent of the 2014 bonus. The five elements on the scorecard include a return-on-equity measure, conduct reputa-tion based on a poll, a citizenship plan, an employee engagement measure and a customer measure based on Net Promoter Score (page 11).

And there are also some positive signs at Lloyds, which said that, from “2015 onwards, we have made the decision to remove the last of the sales targets in our Retail customer-facing roles and focus solely on performance metrics based on customers, risk and people”. It also says “[d]iscretionary bonus awards remain a very small percentage of revenues at ap-proximately 2 percent, and represent approximate-ly 4.5 percent of pre-bonus underlying profit before tax, compared to 6 percent in 2013. Cash bonuses are capped at £2,000 with additional amounts paid in shares and subject to deferral and performance adjustment. Average bonus awards across all our staff are approximately £4,500.”

CULTURE PROBLEM FOUR: EXCESSIVE FOCUS ON GROWTH AND MARKET SHARE

Mike Haworth’s introduction to Paul Moore’s book says HBOS “set demanding targets and wanted an-other 11 per cent sales growth”. Moore frequent-



ly talks of the bank having a “growth at all costs” approach. There is plenty of evidence of this approach in the 2007 annual report, where the word “growth” features again, although one must remember that every bank at the time seemed to believe that 20 percent balance sheet growth was possible in econo-mies that were growing at five percent nominal rates.

The 2007 strategy was mainly about growth. CEO Andy Hornby says that growing the UK franchise was the number one priority, with the other prior-ities being targeted international growth, cost lead-ership, capital discipline and colleague development. (Worse still, the desire for growth was translated into market-share targets of 15-20 percent across the product range.)

This indicates that one can look to the strategy for signs of cultural problems. In other words, certain strategies are more likely to engender bad cultures – particularly those that seek to grow more quickly than the markets they operate in.

EVIDENCE FROM 2014

The contrast between HBOS and the utility-type approach of many Scandinavian banks, which are now designed to operate in a now-growth environment, is enormous.

But one can also contrast it with many other banks, such as Brazil’s Bradesco which wishes to grow organically.

While developing Asia can still look forward to much higher economic growth rates than Europe or Japan for the foreseeable future, we saw some signs that many banks in the new ASEAN region had become a bit dizzy about growth prospects there.

This led many of them to come up with strategies of cross-border expansion, without specifying what it was in their business model that would make it likely that they would be successful in their target countries.

CULTURE PROBLEM FIVE: THE CEO

One of the best studies of organisational culture is Peters and Waterman’s 1982 classic, In Search of Excellence.

The authors found that “associated with almost every excellent company was a strong leader (or two) who seemed to have had a lot to do with making the company excellent in the first place….The excellent companies seem to have developed cultures that have incorporated the values and practices of the great leaders” (Page 26). Paul Moore found that this works

in reverse for companies with poor cultures, as he laid most of the cultural problems at James Crosby’s door. Moore said of this culture that “[f]ear, blame and pride were at its heart but it did drive short term sales, and that was what Crosby wanted”.

One of Paul Moore’s main criticisms of the cul-ture at HBOS was that there was a “cultural indispo-sition to challenge”. He found this very different to one of his previous employers, Allied Dunbar, where differing views were welcomed. Even though Allied Dunbar also had a strong sales culture, it also had a strong compliance department, in sharp contrast to HBOS.

It seems that all of these are down to the personality and background of the CEO, to whom we pay close attention in assessing culture.

There are some outstanding examples in the sample of excellent CEOs, who fit with the bank they lead. But there is no doubt that some come from a background that is unsuitable to banking.



STACK-EM HIGH AND SELL-EM CHEAP: THE WIDESPREAD LACK OF BANKING EXPERIENCE AT CROSBY’S HBOSby Aongus Buckley

THE IMPRESSION THAT LOOMS largest, as one reads Paul Moore’s book on HBOS, is just how widespread the lack of banking

experience was within the organisation. The two highest-profile examples of this were

former supermarket executive Andy Hornby, who joined as head of Retail without any banking expe-rience, and Jo Dawson, who assumed the position of Group Risk director despite being devoid of experi-ence or training in the field.

But the list goes on. CFO Mike Ellis spent much of his career in the public sector, chairman Lord Dennis Stevenson had minimal banking experience, while Charles Dunstone, the non-executive who chaired the Risk Control Committee, had none.

All owed their positions either to their sales and marketing acumen or their acquiescence to James Crosby, HBOS CEO between 2001 and 2006.

Moore unequivocally holds Crosby responsible for the bank’s “stack-em high and sell-em cheap” strate-gy. As for the culture, Moore observes that “Crosby had ganged around him an obedient management team that mimicked his flamboyant style and drove his hard-sell culture all the way down the line”.

Interestingly, there is little probing of the role played by the lack of banking experience of Cros-by himself, who worked first as an actuary and lat-er a fund manager in the assurance industry, having studied mathematics at university.

Moore initially headed the risk function of the HBOS Insurance and Investment division, and is at his strongest describing the products that emerged from this division and were sold through Retail. He does not deal in great detail with the granting of loans, although he does briefly describe the shocking credit record of Peter Cummings’ Bank of Scotland Corporate division.

Payment protection insurance, or PPI, is of course one of the products that kept Moore awake at night, because it ac-counted for “nearly 12 percent of HBOS Group-wide profits” in 2001.

“Hornby’s Retail division was set specific ‘conver-sion ratio targets’ for the number of PPI contracts to be sold as a percentage of the number of loans sold. It was around 75 percent, if my memory serves me correctly”. Moore was told by Hornby that as many as 17 percent of those sold PPI would not have been covered because they were self-employed, and that PPI policies were often not cancelled when the insured loan was paid off early.

The Corporate Bond Fund, to which 167,000 customers had signed up, was another troublesome product. Moore estimates that “the money made from a Halifax customer investing in a Halifax Corporate Bond Fund was probably twice that of leaving it on deposit with the bank and, as the bank now told itself that it had unlimited access to wholesale funds and did not need the deposits, it wanted to switch customers into corporate bonds”.

Moore managed to address the Corporate Bond Fund issue to the satisfaction of the Financial Ser-vices Authority (FSA), which itself carried out a “themed review” of the product.

Crash Bank Wallop: The Memoirs of the HBOS Whistleblower by Paul Moore (with Mike Haworth) York: New Wilberforce Media, 2015; ISBN: 9780993451805



In fact, the FSA comes across as being on top of its job in the early part of Moore’s story. In mid-2003 the agency carried out a so-called Arrow (Advance Risk Operating Framework) assessment, rating HBOS as a High Impact Risk.

All HBOS divisions had to work out risk manage-ment plans with the FSA, and, in September 2003, Moore was promoted to head of Group Regulatory Risk (GRR) to “head off the FSA at the pass”.

The FSA planned to probe the balance between sales and controls at the HBOS Retail division, but Moore persuaded them to let him carry out this work as part of a Sales Culture and Controls Review.

During this review, Moore was told by Jack Cullen, an experienced banker who headed the Re-tail division’s risk function, that there was a “70/30 imbalance between focus on sales and management of risk”.

Cullen also made the point that “the develop-ment of financial products was neglected because top managers in Retail were mainly consultants and marketing specialists, not bankers”.

Moore found that these often unsuitable products were sold in “an atmosphere of fear and blame....there were examples of management bullying peo-ple to hit sales targets as well as a number of total-ly inappropriate incentive schemes run by branch managers”. One cashier at Scunthorpe told him, “we’ll never hit our sales targets and sell ethically”.

In contrast to his former employer, Allied Dunbar, where diversity and dissenting voices were welcomed, Moore found that HBOS had a “cultural indisposition to challenge”.

He managed to present the key messages of the resulting Sales Culture and Controls Review to the board in July 2004, in spite of CFO Mike Ellis having already circulated a heavily watered-down version of the report.

Moore told the board verbally that “very careful consideration should be given in the devel-opment of Retail’s operating and strategic plans as to exactly what level of sales growth is achievable, given current capacity, without putting customers and colleagues at risk”.

This appears to have led directly to Moore’s dismissal in November 2004, when Jo Dawson was appointed to a new, board-level risk position.

Attempts to rein in the group’s growth seem to have ended there. Moore notes that, “as late as 29 June 2006, the FSA was continuing to have serious concerns about HBOS. So why didn’t the FSA do anything about it? Was it because of the influence of James Crosby on the Board of the regulator?” Crosby had been appointed a non-executive director of the FSA in January 2004. Moore is also scathing about HBOS auditor KMPG, one of his former employers, for (at the very least) turning a blind eye: “KPMG knew what was going on at HBOS even if it was not its formal legal role to report on it”.

KMPG conducted an “independent” review of Moore’s dismissal, which the latter claimed was anything but independent, given its position as HBOS auditor.

As the banking crisis recedes in time, accounts of it are either becoming dry and academic, or overly emotional, in the good-versus-evil mould. The real strength of Moore’s book is that he does not stray too far in either direction: while he reveals to us how appalling the culture was at HBOS, he also demon-strates how many well-meaning people were swept along by it. And the main factor that allowed them to be swept along was their lack of banking knowledge.

WHILE HE REVEALS TO US HOW APPALLING THE CULTURE WAS AT HBOS, HE ALSO DEMONSTRATES HOW MANY WELL-MEANING PEOPLE WERE SWEPT ALONG BY IT. AND THE MAIN FACTOR THAT

ALLOWED THEM TO BE SWEPT ALONG WAS THEIR LACK OF BANKING KNOWLEDGE.

“ “



POST TRAUMATIC STRESS:STANDARD CHARTERED VS HANDELSBANKby Bruce Packard

THE ANSWER DOES NOT LIE ON THE FACE OF THE BALANCE SHEET

The difference between the two banks is not ad-equately explained by the financial ratios, for, if anything, Handelsbanken has a less conservative balance sheet. Tangible Equity (that is, sharehold-ers less goodwill and intangible assets deducted) is lower, and the Loans/Deposit ratio is far higher than Standard Chartered. The Swedish bank is less prof-itable when measured on a Return on Assets basis. Leverage is normally associated with higher levels of risk and more probability of failure, and yet in recent years Handelsbanken’s reputation for conservativism remains enhanced.

In part some of this can be explained by the na-ture of the economies that both banks operate in. Handelsbanken operates in Northern Europe, in countries such as Sweden – where GDP per cap-ita is $49,000 according to the World Bank. The two home economies the Asian bank operates in are Singapore ($53,000) and Hong Kong ($42,000).

Both banks operate primarily as corporate lenders, normally an area associated with higher risk than retail banking. Both banks have expanded interna-tionally, away from their home markets to become regional banks. Yet Handelsbanken’s reputation for conservativism has translated into share price performance and higher valuation. Standard Char-tered has imploded.

Hence, we believe, when looking at banks’ Annual Reports, the financial ratios calculated from the face of the balance sheet and income statement are useful but only tell half the story. Instead we think a close reading of the management commentary and outlook statements helps explain the difference in per-formance. We identify ‘red flags’ which highlight that Standard Chartered management were losing their way, where what management said did not quite fit with their actions.

TO UNDERSTAND THE PRESENT, START WITH THE PAST

Although we could go back further, we start our story in 2002. Brazil had beaten Germany in the World Cup Final in Tokyo. Enron had proved to be the largest corporate fraud in history. Corporate credit default rates were rising sharply in the aftermath of the TMT boom, airline companies were defaulting post September 2001, and banks were dealing with a global recession. Yet shareholders in both Standard Chartered and Handelsbanken had reasons to be optimistic.

MUCH HAS BEEN written about the 2007-8 Global Financial Crisis. Much less has been written about the very different post-crisis performance of banks that survived the crisis in good shape. Handelsbanken’s share price is currently close to all-time highs, and the bank’s reputation for a

sustainable, growing culture has been enhanced. Although Standard Chartered came through the crisis well (even advising the UK government on the bailout of the other UK-headquartered banks), it is now currently in turmoil: the chief executive was replaced, a rescue rights issue was launched and the share price is down by two-thirds in the last couple of years. This paper compares the history of the two banks over the past 15 years, and looks for clues to explain why some banks perform well through the decades, while others go from bust to boom and back to bust again.

In truth this table understates the difference in Total Shareholder Returns between the two banks. Standard Chartered’s number of shares outstanding has doubled due to the large number of dilutive rights issues – two of which were at distressed valuation levels – that management has carried out over the years.*


Table 1: Year End Share Price HB STAN

SEK GB pence

2002 39 567

2012 79 1497

2015 114 563

Increase from 2002* 192% -1%


Table 2 shows the two banks ratios in 2002.

Chairman and CEO Statements suggest that the future looks bright. Naturally it is harder to make direct comparisons between qualitative sentences. But to only focus on the numbers, without looking at what the management say and do, is to only see half of the moon.

Handelsbanken versus STAN 2002 management commentary: selected highlights

• HB: “Operations in Great Britain became the Bank’s eleventh regional bank”

• HB: “Four new branches were started outside Sweden: one in Denmark, two in Great Britain and one in the Netherlands”

• STAN: “We completed the acquisition of Grindlays in Middle East and South Asia and India. The Nakornthon acquisition in 1999 began to deliver profits this year. This is another example of our ability to take on an existing organisation and integrate it profitably with ours.”

• STAN: “Consumer Banking continues to offer the highest potential for growth. We have excellent positions in a number of markets with scale and momentum.”

Implication:Handelsbanken’s international expansion focuses on what the bank does well (that is the segments of the market where the bank does well in its home country) and how it might expand the model overseas. Many banks have made expansion a goal, without thinking about which of their competitive advantag-es can be exported across borders and which can’t be. For instance, if STAN really did have excellent positions in attractive markets, an organic strategy of expansion would be a better way to expand than buying a bank in a mature market (Korea) and buying American Express Bank in 2008.

• HB: “The British market provides a number of examples of new banks that have attained a position on the market with massive advertising and tempting offers over a short period, while making consider-able losses. But this is not how Handelsbanken views marketing. A large volume is not important in itself. Profitability – profitability as soon as possible – is the important thing. At the outset, costs must be adapted to the potential income. We never make large investments in marketing, not even when breaking into a new market, since such investments delay the break-even point even more.”

“Handelsbanken had the most satisfied customers of the major Swedish banks, both private and corporate, according to the Svenskt Kvalitetsindex annual survey.”

• STAN: “We have increased our emphasis on Consumer Banking. This is where the greatest oppor-tunities lie as the middle income earners increase in size and prosperity in all our markets. In 1993 Consumer Banking accounted for about 33% of our revenues, now it is 53%.”

Implication:Long before it was fashionable, Handelsbanken made satisfied customers part of their strategy. In the short term mis-selling financial products can result in higher reported profits, yet over the long term this almost always misfires. Instead, Handelsbanken shareholders have been well re-warded for management taking the long view. STAN management did not execute on their stated strategy. Instead the Wholesale Bank grew much more quickly. They never explained the reason for the change in strategy. If Standard Chartered had implemented its 2002 strategy, it seems likely that the bank would have avoided many of the difficulties it is now facing.

Table 2: Ratios 2002A

(%) HB STAN

Cash/Total Assets 0.6% 1.0%

Tangible Equity/Total Assets 3.6% 4.6%

Loans/Deposits 287% 80%

Return on Assets 0.6% 0.6%

Return on Equity 14.6% 13.40%



• HB: “All banking experience shows the advantage of having long-term relationships with customers. It is not only because of the obvious – that customers who stay do so because they are satisfied, but also because customers who stay are more inclined to entrust us with a greater proportion of their business. A customer we get to know well is a considerably lower credit risk than a new and unknown customer.”

• STAN: “Wholesale Banking: We have deliberately traded revenue for lower risk, exiting relationships not generating the right return, and have taken a more disciplined approach to pricing risk.”

Implication:Handelsbanken has a long track record of explaining its strategy, and then executing. We do not disagree with STAN’s stated strategy, but events proved that STAN management became obsessed with revenue growth for its own sake.

Fast forward to 2012, and it is possible to do a comparative analysis.

Over time the ratios have changed relatively little, with similar levels of Loans/Deposit ratios, profitability and leverage. The greatest difference for both banks is that the levels of cash and central bank reserves held on bank balance sheets have increased by an order of magnitude post crisis.

But we can see from the management commentary what has changed. For instance STAN’s management commentary has become noticeably ‘fluff ’, while at the same time trumpeting the very rapid pace of expansion. Although the $667 million that manage-ment paid to the US authorities for breaking mon-ey-laundering sanctions is mentioned, the episode is played down. Similarly, the bank blames increased amounts of regulation as one of its headwinds. Perhaps the change in style has something to do with the promotion in 2006 of Peter Sands from finance director to chief executive. Prior to joining Standard Chartered, Sands had been, since 1988, a director at management consultancy McKinsey & Co.

But most significantly the bank’s management are no longer saying that they will accept a lower rate of revenue growth in the Wholesale Banking division, in exchange for lower risk.

Despite the strategy in 2002, which suggested the greatest opportunities were in the Consumer Bank and a growing Asian middle class, instead Whole-sale Banking has contributed two-thirds of the rev-enue growth and four-fifths of the profit growth.

Table 3: Ratios 2012A HB STAN

(%)

Cash/Total Assets* 9.9% 9.6%

Tangible Equity/Total Assets 4.2% 6.0%

Loans/Deposits 246% 75%

Return on Assets 0.6% 0.8%

Return on Equity 14.7% 12.8%

Ten Years Later (2012A): STAN

“To be the world’s best international bank, leading the way in Asia, Africa and the Middle East. We believe our existing culture and values put us in a good position to achieve this and we aim to protect and reinforce them at all times.”

“The essentials of our strategy remain the same: we want to lead the way in Asia, Africa and the Middle East, and we want to be Here for good.”

“Over the past decade, Standard Chartered has…tripled the number of people we employ…and we have increased our lending more than fivefold to $289 billion.”

“We also suffered significant headwinds from a multitude of regulatory changes.”

“Wholesale Banking continues to deepen client relationships, becoming the core bank to more clients.”

The cash/total assets ratio is rarely an area of focus among regulators or investors. This may be because the ratio is relatively easy to ‘game’, using year-end window dress-ing techniques. And yet looking at the balance sheets of banks just before they failed, banks as diverse as HBOS and Dexia had very low levels of cash on balance sheets.*



At precisely this point in the cycle, management should be prepared to step back and think about how much additional risk they are taking for this rapid expan-sion. Instead STAN commentary talks about “deep-ening client relationships”. In practice this means tak-ing on large single-name exposure to the same risky clients and reliance on the commodities boom.

By contrast the Handelsbanken strategy and its ar-ticulation has remained consistent across the decade. Naturally there are challenges – for example, custom-ers visiting the branch less frequently – but much of what the bank has written has not changed over the years. Rather than top-down double-digit revenue growth targets from on high, the successful decen-tralised structure with greater employee autonomy has proved far more successful through the cycle.

Noticeably the bank continues to say what it won’t do. The bank continues to avoid heavy marketing spend. And it continues to turn away business that (it considers) does not make sense on a risk-reward basis. These are easy words to write, but all the evidence is that Handelsbanken does what it claims.

CONCLUSION

While Handelsbanken has continued to go from strength to strength, the wheels have come off at Stan-dard Chartered. Both the chairman and chief execu-tive and other senior figures have departed. The Stan-dard Chartered share price is back below where it was in 2002, following yet another rights issue (the 2015 capital raise was $5.5bn, a similar size to the 2010 rights issue and larger than the £1.8bn announced in 2008). Naturally some of this is cyclical, with emerging markets and commodity lending struggling. Arguably the chosen time period from 2002 to now has been much tougher for European banks than Asian banks, but Handelsbanken has come out ahead.

The above analysis shows that it was not just the strength of the balance sheet that counted, but also the conservative and well-executed strategy. Moreover, there were warning signs that appeared in management commentary, which a subtle reading could and did pick up. Around 2011-12 the author of this report was not invited to several Standard Chartered analyst presentations, presumably because the bank’s management did not like the thrust of my analysis.

STAN

Revenue 2002 2012 CAGR Change (%)

Consumer Banking 2,416 7,202 12% 4,786 33%

Wholesale Banking 2,123 11,869 19% 9,746 67%

Total 4,439 19,071 15% 14,532 100%

Profits 2002 2012 CAGR Change (%)

Consumer Banking 623 1,778 11% 1,155 21%

Wholesale Banking 795 5,098 20% 4,303 79%

Total 1,418 6,876 17% 5,458 100%

Ten Years Later (2012A): Handelsbanken

“The absolutely vital factor for our growth is our long-term ability to attract and retain satis-fied customers. Once again this year, on all our home markets, we top the customer satisfaction surveys carried out by independent organisation SKI/EPSI. Satisfied customers do more business with us, and they recommend us to good, new customers. All our expansion in the UK has taken place without any type of external adver-tising in the press or radio or TV commercials.”

“On each local market, the branch manager decides what business the Bank will offer in that particular location. All the important business decisions are taken by our branches. We believe this is a better principle for the Bank as a whole.”

“The Bank’s strict approach to risk means that it deliberately avoids high-risk transactions, even if the remuneration may be high at the time.”



Handelsbanken CAGRSEK (M) 07 - 02 12 - 07 14 - 12

2002 2007 2012 2014

Revenue 21,367 27,126 35,062 38,314 4.9% 5.3% 4.5%

Costs 9,470 12,368 15,780 16,865 5.5% 5.0% 3.4%

Bad debts 595 27 1,251 1,781 -46.1% 115.4% 19.3%

Net Income 7,282 15,508 14,548 15,184 16.3% -1.3% 2.3%

EPS continuing operations 11 17 23 23 10.6% 5.8% 0.8%

Number of Shares (m) 714 624 650 653 -2.7% 0.8% 0.2%

Cash & Balance with central banks

8,166 13,590 236,545 454,532 10.7% 77.1% 38.6%

Loans 839,340 1,292,988 1,680,479 1,807,836 9.0% 5.4% 3.7%

Deposits 292,838 512, 841 682,223 1,022,267 11.9% 5.9% 22.4%

Equity (ex goodwill) 45,734 68,208 99,691 118,695 8.3% 7.9% 9.1%

Total Assets 1,277,514 1,859,382 2,387,858 2,816,676 7.8% 5.1% 8.6%

Appendix: Performance of STAN versus HB back to 2002

STAN CAGRUSD (M) 07 - 02 12 - 07 14 - 12

2002 2007 2012 2014

Revenue 4,539 11,067 19,071 18,334 19.5% 11.5% -0.2%

Costs 2,557 6,215 10,896 11,045 19.4% 11.9% 0.7%

Bad debts 705 818 1,415 1,738 3.0% 11.6% 10.8%

Net Income 654 2,813 4,786 2,512 33.9% 11.2% -27.6%

EPS continuing operations 57 199 200 102 28.3% 0.1% -28.7%

Number of Shares (m) 1,172 1,415 2,451 2,473 3.8% 11.3% 1.1%

Cash & Balance with central banks

1,100 10,175 61,043 97,282 56.0% 43.1% 26.2%

Loans 57,009 154,266 282,885 284,695 22.0% 13.0% 0.1%

Deposits 71,625 179,790 377,639 405,353 20.2% 16.0% 3.6%

Equity (ex goodwill) 5,209 14,471 38,050 40,006 22.7% 21.3% 2.5%

Total Assets 113,010 329,205 636,518 725,914 23.8% 14.1% 6.8%



WHAT DO THE RATINGS TELL US?by Aongus Buckley

WHAT ARE the characteristics that quality banks have? Which of the world’s banks rank highest in terms of overall

quality? What does “overall quality” mean?Lafferty Bank Quality Ratings was born during an

extensive inquiry into bank quality, involving academic research and interviews with market participants. It produced a star-based scoring system, which allows us to provide robust answers to the first question.

We have applied the methodology to 100 banks worldwide, and the results are not exactly what one might expect.

WHAT ARE THE RESULTS?

The only bank to achieve five stars is Capitec, a South African consumer bank, while the only bank to achieve one star is UK-based Barclays.

The fourteen banks in the four-star category are spread widely across the globe, with two from Africa, three from Europe, one from the Americas, five from Asia, and three from the Middle East.

The three-star category is quite crowded, with 53 banks involved.

The two-star category has 31 banks.

WHAT DO THE RESULTS MEAN?

The Lafferty Bank Quality Ratings (LBQR) method-ology includes financial measures, such as capital, but also qualitative measures, such as strategy.

The ratings are based on the annual report, which has a unique status in the corporate world (although in France we used the registration document). We rate the most recent annual report available, which for most banks is the 2014 report.

Many of the banks on the list have come up with new strategies since their last annual report was pub-lished, and it is important to point out that these will be considered when we rate their next annual report, but will not show up in the current ratings. Wait-ing for the annual reports means that LBQR does

not seek to compete with those reporting quarterly earnings figures. But the annual report contains so many signals, both intentionally and unintentionally made, that it is worth the wait.

Snapshots of banks’ profit figures, which are now coming out for 2015, focus too much on the numbers themselves and are often hugely distorted by one-offs.

These numbers are no doubt important, and they form the first of our two-part ratings methodology: the quantitative side. Here we look, inter alia, at cap-italisation, profitability, and liquidity. (We also look at the education of the CEO and whether customers are treated fairly.)

For the second, qualitative part of the ratings pro-cess, we scour the annual reports for those diffi-cult-to-measure aspects of a bank, such as strategy, culture, brand promise and management experience. We believe that these qualities can be detected from the annual reports.

The aim is to measure the long-term standalone quality of a bank. This approach is in marked con-trast to those of rating agencies such as Moody’s, for whom the bail-out capacity of the bank’s home coun-try is all-important.

Nor do we include measures of asset quality, as we found these to be better at showing a bank’s locus on the credit cycle rather than its quality.

The ratings system is global and takes a cross-sec-tional view of the world’s banks. Unless the credit cycles were totally synchronised, using asset quali-ty measures would penalise regions in a down-cycle and reward those in an up-cycle. And, in the current environment, it would boost the ratings of banks that have had state help in the clean-up of their balance sheets.

Each bank’s quantitative and qualitative scores were added together to give a mark out of 100, and the scores were divided into five bands, ranging from one star to five star.

We must now mention the way in which the 100 banks were selected. They are all quoted banks, and we have included most of the large-cap banks in all regions. But we have also included some smaller



banks because of their stand-out quality, and these will have displaced some larger-cap banks from the list.

A CLOSER LOOK AT THE RESULTS

South Africa’s Capitec was the only bank to achieve five stars. The bank has a level of focus, geographical-ly and strategically, which boosted its scores across all of the metrics in the ratings process.

The fourteen banks that gained four stars are as follows: from Africa they include another South African bank, Barclays Africa, and Nigeria’s Sterling Bank. From Europe, they include Swedbank and Handelsbanken and the UK’s TSB. Discover is the only representative from the Americas. From Asia, there is Malaysia’s Public Bank and Hong Leong Bank, Singapore’s OCBC, Indonesia’s BCA, and India’s HDFC. From the Middle East, there is ADIB, National Bank of Kuwait and Saudi Arabia’s Arab National Bank.

There is some true excellence within this group. These banks tend to be very focused, by region or business line.

The three-star category is quite crowded, with 53 banks involved. We might well call this the ‘Goldilocks’ category, as the scoring is often ‘not too hot, not too cold’. It is no accident that there is a heavy concentration of universal banks in this band, as trying to be all things to all people is often a recipe for mediocrity.

The two-star category has 31 banks, while the one-star category has just one bank: Barclays.

We will now extract some of the themes that emerge from the star ratings.

THEME 1: BEAUTY BEFORE AGE

One of the first observations to make is that there is a preponderance of young banks in the four- and five-star categories.

Discover was formed in 1985, HDFC in 1994 and Capitec in 2001. Public Bank was formed in 1966 but, with its founder still acting as chairman, it is in many ways still like a new bank.

One could interpret this ‘new-bank’ theme in a number of ways, which is a useful way to think about what makes banks excellent.

Firstly, IT could play a role. Most of these banks do not have to cope with creaking computer systems dating back decades. We are living in an era of rapid technological change, and it might be that the digital

capabilities of these banks are driving their success.For example, Capitec’s annual report says that it “de-

veloped and implemented a new front-end banking system during the year. This was a massive and expen-sive effort, entailing the training of 6,823 employees. As part of this development we introduced ‘side-by-side’ consulting, a Capitec Bank first, where the client and consultant both face the computer screen. The cli-ent is treated as a participant in the process” (page 38).

Secondly, it could be to do with regulatory interfer-ence. The smaller, newer, more focused banks at the top are attracting far less regulatory attention than the larger universal banks.

Thirdly, the success of these new banks might be down to the maintenance of strong, healthy cultures by staff who have been there from the start, while older banks find the cultures that initially made them successful have dissipated or been contaminated.

Fourthly, it could be about strategy. On finding suc-cess in what they set out to do, these banks have not been tempted to try other business lines or regions, but rather have stuck to that strategy. It remains to be seen whether some of them will stray somewhat, but at the moment their clarity of strategy shines through in their annual reports.

There could well be feedback loops between strategy and culture among these banks. Banks whose strate-gies keep them restricted to a small number of busi-ness lines are less likely to see an influx of staff with a different business culture, which can sweep aside the existing culture. One could certainly make the point that the rise of investment bankers to the top of many retail banks in the US and UK swept away the existing cultures of those organisations.

WHAT MAKES THE GOOD BANKS GOOD

Strategy is probably the area in which the four- and five-star banks stand out the most. Almost all have extremely clear strategies, while banks on fewer stars often have much fuzzier strategies.

We will look first at Malaysia’s Public Bank and South Africa’s Capitec, which share many character-istics. They were both set up as retail banks, Public in 1966 and Capitec in 2001, and they have stayed focused on retail.

Public Bank’s annual report says: “The Group’s strat-egy remains focused on organic growth in the retail banking business particularly on the retail consumers and small and medium enterprises” (page 14).

Richard Rumelt in Good Strategy/Bad Strategy says good strategy usually looks simple and obvious and



“should not take a thick deck of PowerPoint slides to explain”. (page 1).

Capitec’s annual report says: “Capitec was established to provide essential banking services to all South Africans. It conducts its operations through Capitec Bank, a retail bank that has changed the landscape of South African banking and is empowering South Africans financially” (page 21).

“The singular focus on retail banking by Capitec Bank and the innovative application of the build-ing blocks across everything the bank has devel-oped make it unique as a service provider in this industry” (page 21).

The chairman and CEO’s statement goes on to say: “Our client philosophy is to strive for simplicity and transparency, giving clients greater control over their banking. Our fees are transparent and easy to understand. We don’t have different fee packages which confuse clients or which give some clients a better deal than others” (page 38).

HDFC also states its strategy very simply and clear-ly. The annual report says that rural India “demands greater choices and access to the same opportuni-ties as urban India. Rising incomes and consumer prosperity have also intensified the need for better banking and financial services. HDFC Bank spotted this opportunity early and ventured into the rural frontier with locally adapted products and cost effective go-to-market models”. HDFC, 55 percent of whose branches are located in semi-urban and rural locations, outlines three approaches to banking in rural India.

The bank’s “Hub-and-Spoke” method plac-es standard branches with one, two or three staff members in unbanked, remote locations; the “Grameen” method places a rural branch within reach of ten or more villages where the branch staff travel out into the community once a week; HDFC also has 1,100 arrangements under which it uses stores or individuals as Business Correspondents.

STRATEGIES OF OLDER BANKS

It is not so easy for older banks to remain as strategi-cally focused as they were in their early years, partic-ularly if they have had to digest acquisitions, or have branched into many different business lines.

Sometimes this leads to statements of strategy be-ing replaced by trite, meaningless phrases, such as: “Our goal is to become the ‘Go-To’ bank for our clients, customers, colleagues and our stakeholders” (Barclays, 2014). And, in some countries, govern-

ment ownership or influence can further cloud a bank’s strategic vision.

The Chinese banks in our sample are torn between the opposing forces of supporting the State and max-imising profits. This shows up in the annual report of Bank of China, which follows the “strategic goal” of “Serving Society, Delivering Excellence” (page 16). And the Agricultural Bank of China’s report speaks of supporting the government’s “‘Three Eco-nomic Pillars’ (developing the Silk Road Economic Belt and the 21st Century Maritime Silk Road, the Beijing-Tianjin-Hebei Region and the Yangtze Economic Belt)” (page 19).

Several Indonesian banks also show a similar State influence, which can cloud their strategic vision. In Mandiri’s case, the bank’s manifold priorities led to the presentation in its 2014 annual report of the dreaded “template strategy”.

Rumelt (2012) contains a trenchant critique of this type of strategy: “The current fill-in-the-blanks template starts with a statement of ‘vision’, then a ‘mission statement’ or a list of ‘core values’, then a list of ‘strategic goals’, then for each goal a list of ‘strate-gies’, and then, finally, a list of ‘initiatives’” (page 43).

Template strategy does not do what strategy formulation is meant to do. In addition to producing fluff, it usually also involves the mistaking of goals for strategy.

As Rumelt says: “The core of strategy work is always the same: discovering the critical factors in a situation, and designing a way of coordinating and focusing actions to deal with those factors” (page 2).

Mandiri presents numerous such statements in its annual report, few of which illuminate what the bank is actually trying to do.

NOT A ZERO-SUM GAME

When describing the strategies of individual banks, one can forget that banks are competing head-to -head against each other, where a perfectly feasible strategy can be trumped by that of a competitor.

The most visible example of head-to-head competition in our 100 banks is that between Amer-ican Express and Discover, both of which combine a bank with a card network.

Both have extremely clear strategies and are very focused.

American Express’ strategy involves using the richer information provided by its closed-loop network (it controls the merchant side and the card-member side) to create value for customers.



Amex has a “spend-centric” model, and the major-ity of its revenue comes from the fees charged to retailers.

American Express tends to charge higher fees than other networks, and it returned almost 30 percent on its equity in 2013 and 2014. But in 2015 it was hit by competitors’ efforts to muscle in on its business and a DoJ ruling that it was acting anti-competitive-ly by forbidding merchants to steer their customers towards lower-fee networks.

The US retailer Costco announced in 2015 that it would not be renewing a 16-year co-branded-card agreement with American Express, in a sign of increasing price competition.

Discover, which tried a low-price strategy on its card network in the late 1990s, only to be thwarted by the merchant agreements of its competitors, could once again try to compete aggressively on price (assuming a higher court does overrule the decision in favour of the Department of Justice).

Discover also has a very clear and straightfor-ward strategy: “Five years ago, we set our sights on becoming the leading US direct bank and a flexible global payments partner”, (letter to shareholders).

The head-to-head competition between Discover and American Express can be followed through the prism of LBQR.

Our customer loyalty metrics picked up a swing away from American Express and towards Discover between the 2013 and 2014 annual reports. Discover’s 2014 annual report says: “Discover received the high-est customer satisfaction ranking among US credit card companies, tying for the top ranking in the 2014 J.D. Power US Credit Card Satisfaction Study”.

This resulted in American Express dropping from a four-star down to a three-star rating and Discover moving in the opposite direction.

So does American Express carry on with its current strategy, take the long view and judge that those un-dercutting it on price are charging uneconomic rates?

Or will it have to adapt its strategy and perhaps become more of a niche player, serving more affluent customers?

THEME 2: LEARNING FROM PAST CRISES

The first theme we picked up in our 100 banks was the large number of new banks in the higher-star bands. Perhaps it is stretching the “new-bank” idea too far, but one could make the point that the two Nordic four-star banks, Swedbank and Handels-banken, were totally reborn during devastating

financial crises. So perhaps a second theme could be that the top echelons contain some banks that learned from past crises.

Handelsbanken, which dates from 1871, faced a severe crisis in 1969 and was completely recast under the leadership of Dr Jan Wallander, who became CEO in 1970. It has since unerringly followed the same strategy, which saw it successful-ly through the Nordic banking crisis of the 1990s and the recent financial crisis (See Bruce Packard’s article elsewhere in these pages, which discusses how Handelsbanken came through the recent crisis).

Swedbank, by contrast, was in expansionary mode in the run-up to the recent financial crisis, buying Hansabank for example, which caused it significant problems.

But Michael Wolf, who became CEO in 2009 (and has recently departed), changed the bank significant-ly, mainly by copying what Handelsbanken does.

Swedbank’s rise up the LBQR scoring system indicates that winning strategies do not have to be unique. There is nothing wrong with copying a strategy, as long as it is not done in a half-baked fashion.

HANDELSBANKEN’S CRISIS RESPONSE

Handelsbanken itself borrowed its strategy from a regional bank called Sundsvallsbanken, which in fact was run by Dr Wallander in the 1960s. When Dr Wallander joined as Handelsbanken CEO in 1970 he decentralised the bank, thereby running counter to a general trend in banking for some 200 years or more.

Branches were formed into regional groups of about 70, the size of Sundsvallsbanken’s entire network, with each new group having its own board and a considerable degree of independence. The practice of central budgeting, which Dr Wallander considered a “necessary evil”, was ended.

The focus shifted to profitability rather than volume, and Handelsbanken adopted the goal of beating the return-on-equity of the other listed banks. That goal was met in 1972 and, in 1973, Han-delsbanken began to pay into a profit-sharing fund known as Oktogonen. When the goal is met, the bank still pays an equal amount for each staff member into Oktogonen, which largely invests in Handelsbanken shares. This is the only form of bonus the bank pays to the vast majority of employees (97 percent), and the funds can only be accessed on retirement.

Since then, the Handelsbanken annual report has had a reassuring feel of déjà vu about it.



The 2014 version says:“Handelsbanken’s goal is to have higher profit-ability than the average of peer banks in its home markets. This is mainly to be achieved by having more satisfied customers and lower costs than those of competitors. One of the purposes of this goal is to offer shareholders long-term high growth in value” (2014 report, page 52).

While the 1998 version said that “Handelsbanken’s overarching objective is to have higher profitability than a weighted average of the other quoted banks in Sweden, Norway and Finland.”

“The quality of the bank’s services must live up to customer expectations, and we will take a reasonable payment for our services. Costs will be lower than in other banks. Profitability will always take precedence over volume”.

Since 2009, Swedbank has adapted itself to follow the “church-spire” philosophy, as Handelsbanken’s decentralised model is sometimes known. Swedbank describes itself as an “Accessible full-service bank....with decision-making close to our customers....low risk....and high cost efficiency” (page 1).

Like Handelsbanken, Swedbank does seem to have put customer satisfaction at the heart of what it does. Both use the Swedish Quality Index as a measure of customer loyalty. “Handelsbanken adapts its offering to each customer’s unique needs and circumstances. The Bank therefore has no requirements as regards volumes, budgets or centrally determined sales targets. Instead, the Bank measures its success in terms of customer satisfaction, profitability and cost-effective-ness” (page 13).

While Swedbank says:“Our goal for 2014 was to raise customer satisfaction in all our home markets. Satisfaction among Swed-ish customers is below the industry average, and according to the Swedish Quality Index (SQI) was 64 (–2) for private customers and 66 (+2) for cor-porate customers. According to the Customer Satis-faction Index (CSI), which provides large branches with insight into what they need to improve, there was an increase of 2 points. SQI encompasses around 300 of the bank’s customers and CSI 40 000” (page 177). Customer loyalty is a good measure on which to highlight the contrast between the Nordic banks and the large German banks, which appear to have learned less from the financial crises that they faced. It is right at the heart of the former’s strategies, but does not appear to play a significant part in the latter’s. Commerzbank and Deutsche Bank both use Net Promoter Score, and, while Deutsche Bank does not report on its score, Commerzbank has

set itself an extremely low target of 30 percent. Commerzbank says, concerning the 2014 customer satisfaction scores: “in every month the Net Pro-moter Score, which indicates customers’ willingness to recommend the Bank, was well above the target 30% level in both Retail and Business Customers and Wealth Management, with the third quarter of 2014 even seeing the highest scores since they were first measured” (page 72).

The same could be said of the three Japanese banks in our sample: Mizuho, Sumitomo and MUFG.

None make significant use of customer loyalty surveys (although SMFC does mention a voice-of-customer survey), nor have they recast themselves as successfully as Handelsbanken and Swedbank after their financial crises.

In terms of strategy, Mizuho shows few signs of having a clear direction, apart from the goal of integrating the bank’s diverse parts. Its “One Mizuho Strategy” seeks to meet customers’ diverse needs by integrating “banking, trust banking, and securities functions”.

In terms of culture, there is talk in the annual report of putting a corporate philosophy in place, but there are signs that the three banks that make up Mizuho are having difficulty integrating, which reiterates the point we made earlier about new banks finding it easier to maintain their cultures.

SMFG’s vision statement contrasts sharply with the sharp and focused nature of the statements issued by Public, Discover or Capitec.

SMFG’s annual report says “We will become a global financial group that, by earning the highest trust of our customers, leads the growth of Japan and the Asian region” (page 3).

MUFG’s annual report talks of declining home market and overseas opportunities, but not what it can do better.

SMFG expresses the goal of integrating SMBC Nikko Securities, while MUFG believes one of its four key strengths is that it is an integrated group. The other three are a global network, strong customer base and a firm financial foundation.

THEME 3: THE IMPORTANCE OF THE CEO

When discussing the nature of bank quality with cen-tral bankers, regulators and bankers, we found that all placed a great deal of weight on the CEO of the bank. Details of the current CEOs of the 100 banks are shown elsewhere in these pages. Apart from the recent troubles at Swedbank, there are several very impressive figures at the top of the banks in the four- and five-star categories.



One such figure is Dr. Teh Hong Piow, who founded Malaysia’s Public Bank and still acts as its chairman.

And we could also mention Dr Jan Wallander, who set Handelsbanken on the road to success in the early 1970s.

Another equally important figure is Mr Aditya Puri, who has been CEO of India’s HDFC Bank since September 1994.

CEO EDUCATION

The HBOS whistleblower Paul Moore bemoaned the lack of banking education at that institution. But, in our view, he did not direct enough of his ire at the background of CEO James Crosby: while Moore probed the lack of banking experience of Andy Hornby, the head of Retail, and Jo Dawson, the one-time head of Risk, he does not spend long pondering the lack of banking qualifications and experience of CEO James Crosby.

Mr Crosby studied mathematics, trained as an actuary and worked as a fund manager, but his first real experience of banking was as the head of Hali-fax. Perhaps if he had more knowledge of banking, he would have realised that the bank’s sales strategy, while boosting short-term revenue, was bound to damage the bank in the long run.

We examined the banking qualifications and expe-rience of all of the CEOs of the 100 banks.

Two of the CEOs of the four-star banks, Sterling and Barclays Africa, have educational qualifications in banking. It should be noted that we are at risk of making a circular argument here, because the Lafferty Bank Quality Ratings methodology awards marks for banking education, which therefore helped to propel those banks up the ratings. Our education metric is predicated on the view that banking is a profession in its own right, so the management teams should be trained in this profession. This is the stated aim of the Banking Standards Board in the UK.

In fact, African banks take banking education much more seriously than banks from other conti-nents. Barclays Africa CEO Maria Ramos holds an Institute of Bankers’ Diploma (CAIB), in addition to her BCom and MSc (Economics). And Ster-ling Bank CEO Yemi Adeola has a Master of Law (LLM) but gains the credit because he specialised in secured credit transactions. Access Bank CEO Herbert Wigwe holds an MA in Banking and Finance from the University College of North Wales (now Ban-gor). Fidelity CEO Nnamdi Okonkwo has a Masters in Business Administration (Banking & Finance,

2000) from Enugu State University of Science and Technology.

None of the CEOs of the other banks have banking qualifications.

A NOTE ON WHAT MAKES UP THE SCORES

The Lafferty Bank Quality Ratings scoring system is made up of a qualitative group of metrics and a quantitative group, which are summed together to get an overall score.

A general pattern that emerges is that banks in the developed world tend to do poorly on the quantitative scoring, while emerging market banks tend to do better. Two of the main reasons are that emerging market banks tend to have higher returns-to-assets and, often as a consequence of this, tend to have higher equity-to-assets.

We use equity-to-assets in the system, rather than CET1, and we are being joined by more and more academics in our line of thinking here. The latest to join us is Lord King, who proposes a ten percent equity-to-assets ratio for banks in his new book, The End of Alchemy.

So the quantitative metrics give many emerg-ing markets a good head start. But many then fall down on our qualitative measures, which include strategy, culture and customer loyalty.

For examples of the pattern mentioned above in the developed world, consider Handelsbanken and Swedbank, which both struggle in our quantitative section. Like most other European banks, they fall short of our capitalisation threshold. And while the two Nordic banks produce good RoE figures, they do not pass our profitability threshold, which looks at return on assets.

On top of this, they both fall short of our depos-it-funding threshold, as they source a significant amount of funding in local mortgage-bond markets.

But they both perform almost flawlessly in our qualitative section.

Perhaps because they are used to a difficult financial environment, they have learned to keep costs low and produce decent returns – and per-haps they are showing other European banks how to survive in a low-interest rate world.



What approach do you take to maintain and develop ADIB and its people?

We have a balanced scorecard at the bank, with four sections: think of a table that stands on four legs.

One section deals with the shareholders, and that is the return that we produce for shareholders – which is a function of many things. But most importantly it is a function of the Return on Assets there.

In the second section, we look at customers. We look at customer experience in the bank, we look at the customer service indicators and we look at customer attrition ratios, which can reflect customer loyalty. We look at our branding with customers.

We have something also for customers, which is embedded in our values: that is mutual benefit. That means that what we do for customers has to be mutu-ally beneficial, and basically prevents the bank from doing things that are profitable for the bank but don’t add value for the customer. That is a very important driver of value in the customer area.

The third element deals with staff, our employees. So we look at staff training, we look at satisfaction – and we have something we call the “Voice of the Employee”, where we look at the employee satisfac-tion index and a number of things that affect the satisfaction of the employee and affects their loyal-ty to the bank, their productivity, their commitment and their passion. We look at how well we are doing in training and developing staff.

The fourth section is governance. This deals with regulatory governance, corporate governance, process issues, controls and all the things that ensure the organisation is healthy – and so we don’t have any surprises. We have an internal audit process that goes to check all the bank’s units, and see how well all the units are doing on regulatory and corporate compliance.

These four sections are broken down at different levels of the bank so that they become more relevant. So if you are an employee in the branch, what does it mean to you to pass the governance test? If you ask a junior clerk in a branch about governance, they may have to look it up in the dictionary to under-

stand what you mean. So we take the aspects in their job that affect governance, we zoom in on that, and explain what we want them to do in that area. That is how we run the bank.

What is the mix of businesses in ADIB?

In respect to the business mix in the bank, we intentionally want the retail bank to be 60 percent of the business, not less. It can be from 60 to 65 percent. The balance is non-retail. The focus on the figure of 60 to 65 percent for retail is because we think it will give a more stable profile to the organisation over the long term, for the shareholders and the investors. It’s a more actuarial and more predictable revenue and risk profile.

We do non-retail business, which we think should not be more than 40 percent of the business. Why is that? We think that non-retail tends to have more concentration and risks, is lumpy, and can have ma-jor swings in its revenue and risk profile. Over time, once we have been able to pass all of our initiatives, most of which have reached maturity, you will see even much better performances of revenues and returns overall. Some of our initiatives are still in embryonic stage and so have not fully produced their dividends for the bank. Once those initiatives reach maturity, you will see something even better than what you see today.

Those initiatives will be in terms of training and so on?Yes: they will be in staff training, where you will see a far better and more homogeneous behaviour of our front-line staff, the customer touch points. In my view, we have been doing very well. We have been the best customer service bank in the country for five years running; so we’re not doing badly, but our aspi-ration is not to be number one but to be something different and better for the customer and for the staff. So we want to make sure that all of our people who deal with customers move to an even higher level of performance with the customer. If I want to use one word to describe what I am talking about, it is hospitality. So our branches are becoming hospitality

INTERVIEWTirad Mahmoud, CEO of Abu Dhabi Islamic Bank



centres, and our customer touch points have a hos-pitality feature in them, which means that when you come in to a branch or call the bank, or come through electronic channels, there is a person on the other end and not a machine, and the person will deal with you in the most hospitable way possible. There are many descriptions of hospitality in ADIB – what do we mean by that? When people come into ADIB, physically or electronically, they feel wel-come, they feel wanted and they don’t want to leave us. They should think, “I feel at home here, this is my bank, these are my people”. That is what we are moving towards.

So hospitality is a way to differentiate your bank based on local strengths and the Arab tradition of hospitality?

Well, you can’t become this way all of a sudden. McDonald’s and Starbucks do all their own be-havioural and appearance standards in their out-lets and have been able to create training centres for that. What we are trying to do is take a cultural attribute of hospitality and make it a standard issue in the bank.We are trying to industrialise the prac-tice of hospitality, if I can use that term. I know this takes away some of the warmth it has but that is not our intention. Industrialising it is not mechanising it, but making it more predictable, more consistent. You get the same flavour in 88 branches.

With this concept of hospitality, do branches remain fundamental to your business?

We need to have the best of both worlds. We want to have our hospitality centres and we want to have our digital capability. I think that customer behaviour will determine the direction in terms of having branches or not having branches. I don’t think we should tell the customer to come through the digital channels only. That is a cost-driven strategy. Our strategy is not cost-driven but growth-driven. We want to grow the business base, not cut costs.

It is like mobile phones: think of the traditional Nokia phone – you can’t even buy it anymore today. It’s been replaced by other smartphones. It’s not that Nokia stopped producing phones, but customers stopped buying them. Customer behaviour rather

than cost-driven behaviour will determine the num-ber of physical branches out there and the kind of services those branches deliver. I would rather fol-low growth and follow the customer, and let the cus-tomer decide in the end how we will get reorganised. This is a much more daring strategy on our side, but if we get it wrong on this one, it’s not such a big deal: we won’t have lost customers.

We will have continued to grow our customer base but we would look slightly less efficient than oth-er banks, which means our cost-income ratios will start to look worse than other banks – if we get this strategy wrong. However, this is easier to cure. If we end up being a more expensive organisation than other banks, it’s easier to cure. It’s easier to shut down branches when you know that nobody comes to branches anymore, because customers just don’t like to go to branches anymore. That’s better than discovering that if you are cutting branches, you look efficient but you lose a lot of customers, and your customers are going somewhere else. That is a more expensive situation to fix.

Do you have a target equity capital ratio for ADIB for three to five years into the future?

Our requirements are driven by regulatory stan-dards, so whatever those standards are, we intend to be always above them. So, today, the standard is 12 percent; we are at 15 percent. All I can tell you here is that whatever the regulators want, we will be better than that, and not better by half a point but by at least one to two or three points higher. If I say I want to be at 16 percent, and the regulator says ‘be at 12 percent’, why would I do that? What is the point of having four percentage points extra? People own capital, it is the shareholders’ money, and I am following a balanced scorecard so I need to look after the shareholders.

Whose interests are the bank staff expected to serve – customers, management and shareholders – in order 1, 2 and 3?Management does not feature in this. What features into this is staff. So it is customers, shareholders, staff and then it’s governance. Again, it is the bal-anced scorecard, like the four legs of the table. If one leg is short, then the table is not stable. I have 88

SO WE WANT TO ATTRACT YOUTHS IN THE BANK, AND WE WANT THEM TO SEE US AS A COOL BANK THAT IS VERY WELL EQUIPPED TO DEAL WITH THE WAY THEY LIKE TO DO THINGS

“ “

Lafferty Bank Quality Ratings: Interview


branches, and I look at the branch managers, who are rewarded on the balanced scorecard. If they fail the audit, they don’t get their bonuses, even if they have met their revenue targets. They have to respect the balanced nature of the scorecard, and this is the mes-sage to the people in the bank. We don’t really say that customers are more important than sharehold-ers or shareholders are more important than staff. All are important – the word “balanced” is important.

What importance do you attach to banking education?

It is very important. Our goal in the bank is to be-come self-sufficient from our own internal resources by 2020. That means we have to have a very strong training capability in the bank, so we have home-grown talent coming out continuously. So we have invested in ADIB Academy, in having self-learning as well as in-classroom environment learning for the staff.

For us, training and development is a critical part of the staff section of the scorecard. The primary driv-er of that section is the satisfaction index, which in turn is driven by training and development. We find that people who get good training are much more satisfied than people who are paid more money but not getting training. For us to have people who are well trained is important for our future as this is our talent base. Banking is about people. Yes, it’s good to have good computers, but if you don’t have people who can run the computers, you are in trouble.

What’s your view on the role of a separation of the roles of CEO and chairman of a bank?

I would rather have the separation as we have it here. The CEO should not be the chairman. The chair-man’s role becomes much more important as a per-son who brings better oversight and better balance on the board to make sure management does its job. I would say that the CEO and management team run the business and the chairman of the board and the board of directors supervise management. They su-pervise me and my team to make sure that we are actually delivering against required deliverables. I can’t fire them but they can fire me if they don’t like my performance. But they don’t run the bank and

should not run the bank. If the CEO and the chair-man are one and the same person, who is going to fire whom?

Can you describe the mix of people on the management committee?

The management includes all my direct reports, so the group head for retail, the group head for whole-sale banking, the group head for treasury, financial markets, the group head for HR, the group head for legal, the group head for risk management, the group head for operations and technology, the chief operat-ing officer, the group head for finance and the group head for finance and strategy. So each business in the bank has a group head who sits on the management committee. So although retail is 60 percent of the bank, retail doesn’t have three seats on the commit-tee, they just have one.

We found that the Annual Reports send signals, both intentional and unintentional, about the bank. Who takes ownership of your Annual Report?

The head of strategy and finance is in charge of the Annual Report. Last year it was Andrew Moir, who was the CFO of the bank and had strategy under him. Certain sections are written by each department. For the retail strategy for example, the retail section will write their strategy and give it to the CFO who will read it and make sure the numbers are consistent with audited numbers. So management committee members will write their individual sections and give it to the CFO.

Can you describe the bank’s strategy?

Our vision is to become the largest retail bank in the United Arab Emirates by 2020, and by “largest” we mean by number of customers and revenue in re-tail banking. The vision is also to be the most pro-fessionally run and most profitable wholesale bank, and similarly for the private bank – so private and wholesale banking should be the best run for quality and profitability. We see treasury as a utility for all of them, so we do not have a vision for it per se. We also want to be a bank that has a very attractive interna-

CUSTOMER BEHAVIOUR RATHER THAN COST-DRIVEN BEHAVIOUR WILL DETERMINE THE NUMBER OF PHYSICAL BRANCHES OUT

THERE, AND THE KIND OF SERVICES THOSE BRANCHES DELIVER“ “



tional presence in the Middle East and North Africa. We see ourselves as a very good regional bank for regional players who are in multiple countries in the Middle East and North Africa. That, in general, is the aspirational target we want to achieve.

The strategy to get there in the UAE is through cus-tomer acquisitions, and the customer acquisitions are focused on the expatriate group in the UAE, be-cause they are a very large part of the population. We did not focus on them in the past because we focused on nationals only, so the strategy is to grow the ex-patriate component of our business, which is why we went and acquired the Barclays retail business in the UAE: it was part of our strategy. It accelerated our growth in the expatriate business. Our branch bank-ing expansion is another way to grow the retail bank – through more branches, which will enable us to ac-quire more customers. Our digital banking strategy will also enable us to acquire more customers than we have done in the past. Customer acquisition in the retail space is what we intend to do to deliver the size that we spoke about.

In the wholesale bank, we have established what we would call a global relationship banking group within the wholesale bank that defines the cus-tomers and the prospects who have a business in multiple countries in the Middle East and North Africa. We have created a value proposition for them, and we have created an internal organisation to focus on them.

In the private bank we have created for ourselves a gold-standard reputation that customers who do business with us get the best service. We don’t want to be the biggest private bank, but to be the most professional and most profitable, and we have been very successful, winning twice in a row the best pri-vate bank in the region, and we have a very good reputation with our customers in that area.

Our treasury also won the prize of being the best treasury in the area – and they are the utility in the bank for all the businesses, so that is very important.

So I gave you the vision, and, basically, it is very ambitious. Each component in that vision has a strategy of how to get there.

To return to the point on digital banking and acquiring customers, how does that work?

Easily – for the youth, the underbanked and the expatriates. There is a lot of turnover in expats: the average life of an expat here is about five years. So we have digital kiosks in malls, manned by one or two people maximum, where all you have to do is turn up with your United Arab Emirates-issued ID. Then you can open an account there and then, quickly,

standing there. Think of a machine where you dip in your ID card, your biometrics are immediately fed into the machine, your account opening informa-tion is instantly printed out, you sign there, they take a photograph of you and they have an embossing capability to give you your credit card on the spot – think of something like that.

So our ability to convert an expat – a potential customer – into a customer is going to be enhanced dramatically. Being present in the malls where there is a lot of traffic of people will bring us into the footfall area.

Look at the use of Facebook in Society: eventually these people want to do banking, and, if we are dig-itally enabled, we will become an appealing institu-tion to do business with. So we want to attract youths in the bank, and we want them to see us as a cool bank that is very well equipped to deal with the way they like to do things. That is a source of new cus-tomers, and those young people become eventually like you and me, working people with salaries and financial needs.

What priority do you assign to IT robustness?

It is the backbone of the bank. It’s the hygiene factor. It’s not for debate.



Craig, what drives quality at Barclays Africa?

There is huge consumer and regulatory pressure to offer these services and to take banking to the unbanked. Our goal is to offer cheap, effective and customer-centric banking.

There’s much conversation around digital banking: how deep a role does it play at Barclays Africa? We prefer to take a holistic approach.

South Africa was always a long way ahead in elec-tronic banking, and that is in our DNA. The talk now is that everyone is doing digital banking. Lots of people don’t have smartphones or access to the in-ternet or wi-fi, so, until that changes – and it will change – the only way to access a bank is to walk into a branch. And we have the biggest retail base.

Key to our thinking is the focus on custom-er adoption of the right channels rather than migration. They sound like they are the same thing, but migration implies us moving the customer whereas adoption puts the choice in the hands of the customer and allows them to select, from the variety of great banking options which we provide, the right channel for their specific need.

We have invested heavily in how to automate, using advanced robotics to simplify the systems and take out lots of costs.

So, despite your investment in digital banking, the other channels remain crucial to your business?

We have invested a lot in our own channels, branch-es and call centres. We just had a record month for current account sales. The business has a much crisper feel, with the right leadership in place and a lot of external hires, many from outside banking.

We signed up to fundamentally change the bank. As an example the head of our channels and distribution, Marius Van Reenen, was previous-ly head of one of South Africa’s biggest coffee and

restaurant chains, and he brings with him a strong customer-first, retailer ethos which is invaluable in our leadership team discussions.

We are investing heavily in cash-accepting ATMs. Also, with JVs and strategic partnerships – such as Woolworths, which is one of South Africa’s largest retailers, and PEP stores, a major mass-market retail-er. We have launched South Africa’s cheapest bank account in terms of a commercial arrangement with PEP Stores (the customer purchases a blister pack at PEP till points, which offers an instant bank account, debit card and basic cellphone banking for low-value transactions). PEP provides customer access, distri-bution and brand whilst we provide the IT, payments and product infrastructure, and compliance and liquidity. Customers can deposit and withdraw cash at the till points of PEP’s 1,650 branches and at our 10,000 Barclays/ABSA ATMs.

Our 50/50 equity joint venture with Woolworths is different in that it is a credit lending business that runs the store card, credit card and personal loans of Woolworths and is fully integrated into the Wool-worths W Rewards programme. Woolworths is not the largest retailer in SA but is definitely regarded as South Africa’s premier and most successful retailer.

We look at the best local solutions. In Kenya, for example, we signed a deal with the Post Office – be-cause in Kenya the law requires a post office to be in every town and village. That gives our customers more convenience.

There is a school of thought that claims branches are soon to be dead. What is your position?

We are not of that school of believers that the branch is dead. Branches are still dominant because of cash. This is partly a cultural issue: the lion’s share of GDP is driven by cash, so cash is still king in Africa. There is a massive new middle class, but because of issues of trust, people still prefer to look someone in the eye. So, even for customers that are digital-ly active, when there is a big decision to be made, people want to make it face-to-face. Therefore all our customer channels, be they physical or digital, are equally important for us.

INTERVIEWCraig Bond, CEO of Personal & Business Banking, Barclays Africa



What is it that is special about retail banking?

Retail is about the complexity of the detail. As a for-mer investment banker, I am happy to acknowledge that retail banking is a far more complex business. There are a million moving parts, huge volumes and a lot that can go wrong with the service experience. It’s the little things that make the greatest difference when caring for the customer.

Let’s address the issue of IT and technological innovation?

We used to do all our IT coding in India and now we are moving much of it back in-house, in South Afri-ca, and now we have a creative centre in Cape Town – and our output has greatly improved. Our accel-erator programme attracts start-ups from around the world and the best we either invest in or give contracts. You cannot build everything yourself!

For the first batch of 200, we had applicants mostly from South Africa and places like Kenya. By the second batch, we were getting applicants from as far away as Russia and Lithuania.

How would you define leadership at Barclays Africa?

Leadership is key in setting the tone in terms of what we stand for and how we position ourselves. We utilise survey tools, such as Barrett, in our organisation to understand the cultural dynamics at play, and we work hard to adapt these so that our aim of being a caring, customer-centric organisation is achieved through our people.

Our culture is about moving from a hierarchical structure into something leaner and more caring. A big part of our approach is to be customer-needs led, centrally solutioned and then locally owned and executed. This means that our teams on the ground are able to understand our customers and make the right calls to meet their specific needs. We are moving to simplify the organisation and overcome the problem where parts of the business are siloed.

WE LOOK AT THE BEST LOCAL SOLUTIONS. IN KENYA FOR EXAMPLE WE SIGNED A DEAL WITH THE POST

OFFICE – BECAUSE IN KENYA THE LAW REQUIRES A POST OFFICE TO BE IN EVERY TOWN AND VILLAGE.

“ “



Why do you think Capitec come out on top for quality in our initial survey of 100 banks?

It’s an interesting question. When we started the bank 15 or 16 years back we had the privilege to start from scratch so we took a completely client-centred view. We moved our model to what the client really wants, backwards. We are looking from the point of what the client wants and built the model from there. A lot of people were thinking we were looking at what other banks were doing and trying to do the opposite, but it’s the other way around. We found there are four basic fundamentals we wanted to look at:

1. Affordability2. Accessibility3. Simplicity 4. Service

So we built the whole model around those four fundamentals.

Probably our biggest advantage is our focus, because we only specialise in retail banking and we’re only focused on the needs in South Africa, so we haven’t got commercial banking or investment banking to worry about.

We structured it in a way that we only have one product: the Global One product. All 11,000 people working at the bank eat, drink and live that Global One product. Other banks are segmenting the market into income segments and then have different prod-ucts for each segment, which makes it quite complex, whereas in our case we have a simple, transparent product offer that our people understand. If you look at the product it’s straightforward and simplistic, and if you look at our pricing, banks normally tend to go for ad valorem fee charges, a percentage, and the cli-ents don’t really know what they are paying. We said, what you see is what you get, a fixed fee, so clients can understand it. Those are the types of things we have done to differentiate ourselves.

We believe transparency and simplicity lie in the front end and complexity lies in the back end. We have side-by-side consulting, meaning that the client and the consultant look at the screen. By do-ing that, your screens are designed for the client and

for the consultant. You need to offer that product in a very simplistic, transparent manner so that both the client and the consultant can fully understand it. To create that [situation], your complexity lies in the back end and that’s where you need to have very good systems for the way you show it to your client. Simplicity and transparency puts the client in control and that’s what we strive for.

Is there any significance to the top banks in our review being South African? I don’t know. We travel the world and look at what other banks are doing. Looking at the hours that we operate (open on Saturdays and Sunday morning), our transparency, the look and feel of the branches, we believe that the three areas to differentiate your-self are positioning, which includes your branch look and feel and the positioning of your advertising, the hours that you work and your accessibility, and then on your product (which I’ve spoken about already) and then the most important is probably on your service – your system and your people. I can’t comment on our opposition or the rest of the world.

Is culture and strategy clear and understood by your employees?

We spend a tremendous amount of time in the branch communicating our strategy and, because we have one product, it’s amazing if we focus on one particular area – we see results immediately. Every-one understands our focus and what is important.

We also measure everything that moves, so the amount of detail and client information and efficiency information that we go through helps us to provide better service. I can tell you for example that, for every minute a client is in a branch, it costs us X amount, and for every call that comes through that costs so much, and we can do XYZ to improve efficiencies. My Ops executive sitting next door has a big screen that shows us exactly how many cli-ents are in a branch; we know which branches are under pressure; we know what is our staffing re-quirement per branch. Those are the things that are making the difference, and that’s where the perfor-

INTERVIEWGerrie Fourie, CEO of Capitec Bank



mance culture and the service culture comes from. Every single person in the bank comes through to Stellenbosch [the Capitec headquarters] and spends ten days here where we go through training and the culture of the company. I actually handed over the certificates last week to all the people who qualified as bankers and are going back into the branches. We are appointing close to 300 people a month. I spend a lot of time with those people and the execs spend a lot of time with them on communication, strategy and what we want to achieve.

Is cash still important there and how do you use your digital channels – and what is the relationship between these two?

Ourselves and MasterCard have been trying to move people away from cash to card and various strategies were implemented. But cash is still king: about 90 percent of transactions are still in cash.

We have a lot of emphasis on the mobile site. We believe there are a lot of opportunities there and the more people get a flavour of cell phones as well as online, the more they start using it. It’s a continual process. The mobile or digital channels are a very im-portant part of what our bank is going to be involved in over the next ten or 15 years.

Are branches a significant part of the operation?

Well you have financially literate people and fi-nancially illiterate people. There are a lot of people over 60 who are financially illiterate, meaning they prefer still to go to a branch. In the rural areas people prefer to have contact with a person and don’t want to do it on digital. If you go to England and Europe and those places, the ratio is probably 80 percent financially literate and 20 percent financially illiterate. Here it is probably the other way around.

We believe branches are still a critical part of the fu-ture, but we also believe that the digital side is going to be a branch of the future so you need to position yourself on the digital side. I don’t think we are ever going to be in a position where banks are without

branches. You will probably use fewer branches, but your digital side will get more and more important.

How proactive are you with your customers?

It’s an interesting question. We spend quite a lot of time on the floor, visiting branches, walking the streets, trying to understand what our clients are doing and where they are. We do a lot of workshops with our consultants, with our branch managers, with our operational channels.

Myself, I try to be walking the streets and talking to clients six or seven times a year, for a week at least per time – for about eight weeks [in total]. Out of that you adjust and make changes to the product offering, so we are very involved with our clients.

Capitec was coming through from the lower LSMs [Living Standards Measure – a common measure-ment in South Africa] and now we are moving up to higher LSMs. The best way to understand the customer is to be with them, and that’s why we spend the time on the floor talking to them.

Is the SME a significant sector for you?

It’s a very small part: non-existent really. I think that, in South Africa, no one has figured out how to crack that market. For us, it is an area that we are start-ing to look at, but it will be long-term. You get your formal commercial side, where people have balance sheets and income statements and cash flow state-ments and you borrow from there or do transactions from there, but in your typical informal market, in South Africa, nobody has really cracked that partic-ular market. We see it as an opportunity.

You said that you have travelled looking for who is doing best in other places: has any particular bank or country had an influence?

I would say it is not any bank. We look at the clients and we try to understand how a particular bank is servicing a particular client. It is never one thing that you are doing right, it is almost always a combination of smaller things that you are doing right. So you ob-

WE BELIEVE TRANSPARENCY AND SIMPLICITY LIE IN THE FRONT END AND COMPLEXITY LIES IN THE BACK END. WE HAVE SIDE-BY-SIDE CONSULTING, MEANING THAT THE CLIENT AND THE CONSULTANT

LOOK AT THE SCREEN. BY DOING THAT YOUR SCREENS ARE DESIGNED FOR THE CLIENT AND FOR THE CONSULTANT

“ “



serve, and look, and out of that you learn. It is more a combination of what everyone is doing but, at the end of the day, it is all about understanding the client.

We believe in being very focused. We are also very conservative. We are a young bank, and everything we have done we have done from a conservative approach – because we want to build a bank to last for one hundred years. Our management style and philosophy is to be very conservative about what we are doing. So, if you look at our capital adequacy, our funding etc., it is a very conservative approach.



Does TSB see itself as a universal bank combining commercial and investment banking or as a commercial bank combining retail and corporate banking?

At its heart, TSB is a large-scale, full capability UK retail bank. We were built to bring more competition to UK banking and that is exactly what we have been doing since we launched onto high streets across Britain in September 2013.

However, we don’t see our role as being simply to enter the market and do things in exactly the same way they have always been done. Instead, TSB’s role – and the real value of having greater levels of com-petition in banking more broadly – is to be able to offer customers more choice and therefore deliver better banking for all UK consumers.

We are doing this by building the sort of bank that customers have told us they want. A transpar-ent and straightforward bank that focuses on being true to the original purpose of banks – to support local economic growth and to help local people help themselves. We call this “Local Banking for Britain”.

Roughly what proportions of profits come from the different business lines, especially retail banking? We are a retail-only UK bank and therefore our prof-its will be driven by growth in this area. Our business model is focused on delivering a straightforward and simple approach to banking and our strategy is one of growth.

What will those proportions be in three to five years time?

When we completed our Initial Public Offering in June 2014, we set a clear plan to grow market share in the current account and mortgage markets. In the five years from IPO, we expect TSB to be consis-tently chosen by at least six percent of all customers moving their bank account or opening a new one in the UK. Over the same period, we want to help more people to borrow well by lending to more people right across Britain and we expect the Group’s Fran-

chise lending balances to be 40 to 50 percent higher in 2019 than they were at the time of our IPO.

How does the bank do transfer pricing when one part of the group like retail provides funding to other parts like corporate or investment banking?

We’re a retail only bank – high street not Wall Street. We don’t use our retail customers’ deposits to play the money markets or invest in overseas property.

What is your objective in terms of the equity/capital ratios considering that regulators are increasingly talking about the importance of equity capital?

Our capital position remains one of the strongest in the UK with a Common Equity Tier 1 ratio of 17.8 percent, leaving us well positioned to pursue our strategy of growing our balance sheet.

Do you have a target equity/capital ratio for the bank three to five years out – and some other overriding financial target?

We will retain a strong core equity Tier 1 position – it’s the only bulletproof way of building resilience into a bank.

It is the delivery of our three strategic pillars that will continue to establish TSB as Britain’s challenger bank and provide more competition to UK banking – to provide great banking to more people, to help more people to borrow well with TSB and to provide the kind of banking people tell us they want and we believe they deserve.

Providing a great customer experience is how TSB will stand out, and it is through this that we will create long-term relationships – or what we call partnerships – with our customers. By embed-ding a culture where the needs of our customers – as well as UK consumers more widely – are par-amount, we can drive the long-term, sustainable growth of our bank and bring about genuine cul-tural change across the industry. Putting service at the heart of everything we do is the way to help rebuild consumer trust in the banking industry.

INTERVIEWPaul Pester, CEO of TSB



Looking to financial metrics, at IPO we set out our key strategic objectives of delivering circa 50 percent balance sheet growth, which, when com-bined with the normalisation in UK interest rates and our continued focus on cost management, is intended to deliver double-digit return on equity five years from our IPO. And we remain very much on track to deliver against these.

How much importance do you attach to the cost/income ratio?

This is very important. While we have been in-vesting in our growth, we have maintained a focus on costs by simplifying our business. Our underlying costs for 2015 were almost £40 million lower than we predicted at the time of the IPO, and we expect to hold costs broadly flat over 2016.

Can you discuss the bank’s overall strategy?

Since launching back onto high streets across Britain in 2013, our three strategic pillars have remained the same, as I mentioned earlier.

Turning to the first of these and our strategy to attract more current account customers to TSB, I am pleased to say that over 370,000 customers flocked to TSB during 2015, growing customer deposits by five percent. That is more than 1,000 customers a day choosing TSB as their bank.

Across the whole of 2015, 6.8 percent of all customers who opened a new current account or switched banks in the UK chose TSB. This means we have now seen eight consecutive quarters in which we’ve beaten our six percent share of flow target.

Contributing to this strong performance has been the continued success of our Classic Plus account and the success of our “555” current account launch in September, which, in addition to five percent interest on their current account, gives custom-ers up to £5 per month cashback on contactless payments, including Apple Pay, and five percent interest on their monthly savings. 2015 was also a standout year for the second part of our strat-egy – to help more customers borrow well with TSB. Our mortgage broker service got off to a flying start when it launched just over a year ago in January 2015, and customers are really starting to

see TSB as an attractive destination for mortgages. We are now one of the fastest-growing mortgage providers in the UK and, of course, our loan book has also benefitted from the acquisition of over £3 billion of former Northern Rock mortgages and loans at the end of last year, which will significantly enhance our profitability over the coming years.

The third pillar of our strategy is to provide the kind of banking people tell us they want – and I am pleased to say that we’re continuing to make progress here. We have thrown sales targets out the window and all 6,400 of our customer-facing partners have participated in a bespoke training programme fo-cused purely around service and around improving the way we serve our customers.

What is more, we continue to invest in our branch, digital and telephony channels to improve the choices that TSB customers have in managing their money how, when and where they want – what we like to call “Local Banking on Demand”.

These sorts of changes are being noticed by our customers since more customers than ever before are now recommending TSB to friends and family. This means our Net Promoter Score, which is how we measure our performance on customer service, improved by eight points, increasing to 17 points from nine last year.

Can you discuss the bank’s culture?

One of the defining features of TSB’s culture is our focus on how we behave. It is about service not sales and moving away from the mindset that led to PPI and other products previously designed for the short-term benefit of the bank – rather than custom-ers – and moving to the sort of service that turns cus-tomers into advocates. We know that when custom-ers are happy they will want to carry on banking with TSB, and a good way to make sure they are happy is by working in partnership.

We have embedded this mindset into the fabric of our culture and that is why we call all our staff “partners” and reward them when they do as much as they can to actively help people, not when they just sell them things. And this partnership ethos doesn’t just stop with our interactions with custom-ers – it flows through everything we do, including our community programme.

WE’RE A RETAIL ONLY BANK – HIGH STREET NOT WALL STREET. WE DON’T USE OUR RETAIL CUSTOMERS’ DEPOSITS TO PLAY THE MONEY MARKETS OR INVEST IN OVERSEAS PROPERTY

“ “



Whose interests (shareholders, customers, management) are the bank staff expected to serve in order 1, 2, 3?

First and foremost, our partners’ role is to serve our customers and to provide more competition for all UK consumers. By doing that well we will deliver a good return to our shareholders.

Do you regard your retail banking staff primarily as a sales resource?

Not at all. In fact, quite the opposite. We have thrown sales targets out the window and our focus is purely around service, with partners only rewarded when they do as much as they can to actively help people, not when they just sell them things.

What is your remuneration formula for retail staff?

When we completed our IPO in 2014, we talked about having a different kind of reward strategy built around providing outstanding customer service, not sales. This included introducing an annual variable pay award for all partners from branch staff to the CEO. It rewards both business and personal perfor-mance and recognises partners who deliver the kind of service customers tell us they want. Furthermore, it only pays out if the bank is profitable. We call this the TSB Award.

We recently announced details of our very first TSB Award, with partners sharing in the success of a great year and receiving a TSB Award of 12.5 per-cent of their salary. That’s an additional six and a half weeks’ pay for partners and an overall pot of over £26 million being shared out.

What, in your view, are the essential characteristics of a banking profession?

In our view, it is essential that trust and transparency are at the core of the banking profession if we are going to build a sustainable and successful sector that can deliver for customers and shareholders.

I believe the fundamental problem that led to the financial crisis was that the system was built around complexity and opaqueness and banks lost their connection with the people and the lo-cal economies they were supposed to serve. If we are going to build a sustainable and successful sector, we need to move to a strategic long-term mindset, focused on a customer experience that delivers a long-term relationship with customers,

where they understand and recognise the benefits received from products and services: a two-way relationship based on honesty, openness and trust.

Understanding that the more open and transpar-ent you are with customers and the more you focus on genuine service, rather than short-term sales, the more you can build a loyal customer base who are confident in the products they are using and are genuine advocates for your business.

Which, if any, of the following ought to be a profession: retail banking, corporate banking, investment banking?

This would depend on the role undertaken. As a regulated industry, there are banking roles within each of these areas where an employee must hold a professional qualification – and rightly so.

As a retail bank it is our responsibility to ensure customers’ money is safe and that we can help people manage their money, providing them with the tools to make sound financial decisions.

What is your view on the separation of the roles of chairman and CEO in a bank?

There is a clear division of responsibility between the two roles. In summary, it is for the CEO to run the business and it is the role of the chairman to lead the operation of the board.

Please describe the composition of your executive management board/committee in terms of the numbers of corporate, retail, and other executives on it?

We are a retail-only UK bank and the experience of our executive team and the bank’s board reflects this. As we went about building TSB we spent thousands of hours talking to customers and consumers about banking and what they wanted from their bank. We learnt that customers want something different. We wanted to build a bank that reset the relationship between banks and Society by creating a bank that put customers and communities before short-term profit, as Henry Duncan sought to do when he set up the Trustee Savings Bank over 200 years ago.

How would you describe the CEO in terms of background: corporate banker, non-banker, retail banker and so on?My background is primarily within retail banking. Having joined Lloyds Banking Group (LBG) in 2010,



I was appointed chief executive officer of the Verde programme in 2011, through which I led the devel-opment and establishment of the new TSB within LBG. In 2013, I was appointed as chief executive officer of TSB Bank plc and led the launch of the bank, its separation from LBG and listing on the London Stock Exchange. More recently, in June 2015, TSB was acquired by Sabadell Group and I became a member of the group’s Global Manage-ment Committee.

Previously, I spent six years as the Group CEO at Virgin Money and two years working at Santand-er UK where I led the acquisition of Bradford & Bingley and the subsequent integration of Abbey, Alliance & Leicester and Bradford & Bingley to create a single UK business. My early career was spent in management consultancy, principally at McKinsey & Company.

The Annual Report sends signals about the bank, intentional or not. Who prepares the bank’s Annual Report? Is it internally or externally written – and who takes charge of the process?

The ultimate responsibility of the Annual Report sits with the board and is driven by myself, as CEO, as well as our CFO. The drafting of it takes place in-house and is owned by our Finance team, with input of course from around the business.

It is important to keep people informed as to how TSB is performing against its strategy and providing better banking to more people. When designing our report, we involved TSB Partners in the process and focused a lot of time and attention on making sure it is both accessible for people and reflects the values of the bank. In particular, we wanted it to be transparent and straightforward. We believe people have the right to – and should – understand how their bank works. Our Annual Report is designed with this in mind and that is why we make it very clear within it how TSB makes money. But it doesn’t stop there. We have also launched a customer portal called Truth & Banking, which is focused solely on increasing transparency.

Truth & Banking can be viewed on our website at www.tsb.co.uk/straightforward-money/truth-and-bank-ing and aims to demystify the world of banking. We believe we are the first bank to lay our cards out on the table in this way and it is here that you will find our How We Make Money animation. We want to lift the bonnet on our bank and demonstrate to people that we are different.

How would you rate the importance of your Annual Report versus the importance of your CSR (Corporate Social Responsibility) report, if the bank produces one?

Our Annual Report is naturally very important to us, as is our Community agenda. However, we do not currently publish a separate CSR report. Instead, details of our community initiatives are included within the Annual Report itself.


TSB is committed to making customers’ bank-ing experience as safe as possible. IT security is of paramount importance to us and we take seriously our duties to protect customers and their money. We have in place robust technology to identify and prevent any suspicious activity through the use of transaction monitoring systems and other prevention systems.

What are the main criteria you take into account in judging the quality of other banks?

TSB was built to bring more competition for UK con-sumers and we believe that all banks must remember the origins of banking and the relationships they should have with their customers and wider society. At TSB, we have built our whole business around the idea of a bank that returns to what the basic role of banking in society should be – with trust and trans-parency in our customer relationships at our core. And our focus is therefore on how we are delivering this, rather than judging the quality of other banks.

IT IS ABOUT SERVICE NOT SALES AND MOVING AWAY FROM THE MINDSET THAT LED TO PPI AND OTHER PRODUCTS

PREVIOUSLY DESIGNED FOR THE SHORT-TERM BENEFIT OF THE BANK – RATHER THAN CUSTOMERS – AND MOVING TO THE SORT

OF SERVICE THAT TURNS CUSTOMERS INTO ADVOCATES

“ “


http://www.tsb.co.uk/straightforward-money/truth-and-banking




We believe that there is a significant lack of competi-tion in the UK retail banking market, which has been fuelled by a lack of transparency, low levels of switch-ing and a switching service that does not cater for all UK consumers.

In a truly competitive market, consumers will be offered genuine choice and a level of transparency they have never seen before, so that they can make informed choices and switch with ease. The switch-ing service needs to be improved for those who are trapped by their current provider and the provision of a standard format monthly bill that spells out the true cost of banking should be mandatory.

At TSB we believe that banking needs to be exposed to the full force of competition – only then will consumers really start to see a change in an in-dustry that has been stacked against them for far too long. To this end, we will continue to work with the CMA to push forward our recommendations on how to bring real competition to the UK banking market and to break the stranglehold of the Big Five. We believe that it is only competition that can shift big banks’ focus towards the long-term interests of their customers.



What is Sterling Bank’s strategy?

Our strategy is a fusion of the bank’s appraisal of our operating environment and the vision we have set for ourselves: “to be the financial institution of choice”. We have therefore, over the years, incorpo-rated a good degree of flexibility in coming up with our action plans, bearing in mind how dynamic our operating environment is, amongst other driv-ing elements. In keeping with global trends and the peculiarities of the Nigerian business environment, we realigned our operations more efficiently along business segments, with the Retail & Consumer Banking segment dominating our strategy for our liability generation and the Corporate & Invest-ment Banking segment for our risk asset creation. This is based on our belief that the key objectives of Nigerian banks will centre on efficient liquidity management, cost efficiency, excellent service deliv-ery and asset protection in order to sustain optimal returns on capital.

To achieve these goals and play optimally in the en-vironment, we have scaled up our business through M&A and various capital raising activities. Thus, we have been able to increase our distribution network, enhance our technological capabilities to improve operating efficiency and entrench a customer-centric business model.

Can you address the Sterling culture? Having metamorphosed into Sterling Bank through a merger of five banks, and a subsequent acquisi-tion of one more bank a few years later, we faced the challenge of incongruence which is typical in new unions. As one of our long-term goals, we want to be “A Great Place to Work” by driving a culture where people take the initiative but with our customers’ needs guiding all we do.

We came to the realisation that what holds us to-gether as a group of people is that we feel a sense of purpose when we enrich the lives of those we come in contact with, which is also in line with the culture we are trying to build. Following from this, we em-

barked on various projects to instil and inculcate this purpose in our system. We started with the Sterling Volunteer Programme – an initiative that allows us to give back to our communities through education. Staff are encouraged to volunteer to teach various subjects ranging from mathematics to financial lit-eracy in government-owned schools. This was im-mediately followed by the Sterling Environmental Makeover (STEM) – an environmental cleanliness exercise that galvanises staff to clean the dirtiest lo-cations in our areas of operation. This was for two reasons: (a) to bring dignity to the work of our street cleaners and make them realise that we (the society) appreciate and respect their work; and (b) to raise awareness on the importance of a clean environment to the health and well-being of the society.

We partner State Government waste management agencies through the provision of kits for street sweepers and highway managers. In the coming years, we would like to take on other environmen-tal issues such as tree planting in the desert areas of Northern Nigeria and waste recycling, among others.

To further instil our culture, we have embarked on a Culture Transformation Project in conjunc-tion with an external organisation, Great Place to Work Nigeria, which is facilitating boot camps, in-class trainings, weekly learning sessions and town hall meetings. Furthermore, upon entry into the institution, all new staff are taken through a culture curriculum before they [commence] work to ensure that the dominant culture is entrenched as they come into our system.

What place does customer-centricity have at Sterling Bank?

We made bold in 2009 to declare that we are the “one-customer bank”, in direct correlation to our mission to “deliver solutions that enhance stakehold-ers’ value”. Through our brand promise, products and channels, we pursue our customer-centric goals; and we are building an intelligent customer-centric banking system using technology. In order to further understand our customers, we have invested in a

INTERVIEWAdeyemi Razack Adeola, CEO of Sterling Bank



robust Customer Relationship Management System (CRMS) and are committed to ensuring the world revolves around our customers as is portrayed in our newest commercial advert.

We have a fully equipped contact centre that attends to customers at all times (24/7/365), con-sisting of people who, in totality, speak at least ten different languages and can be reached via various platforms: telephone, text messaging, social media messaging and live chats on the web.

Our branding is also very customer-centric as we have embarked on creating a “friendly, fun and more vibrant look” with our retro design that contains many different shapes and colours all around the number 1. This design we interpret as represent-ing the diversity of our environment and the fact that Sterling Bank recognises this and treats every customer uniquely.

For our corporate clientele, we focus on building advisory skills, leveraging on our expertise in finance to facilitate transactions between them and develop-mental finance agencies. This allows for appropri-ate risk management for the bank, while enabling our clients to conduct or scale their business with long-term financing. Furthermore, our transaction banking platform is designed to enable self-service for corporate customers, minimising the risk of fraud and creating convenience in transacting and managing these organisations’ finances, globally and locally.

In a business environment where competition is stiff, customer-centricity is our differentiator, and our most important means of growing the customer base – another aspect we are taking very seriously this year and beyond.

Can you address Sterling’s retail-centricity?

Our approach is that we want to fit into the lifestyle of the customer. We want all transactions to take place within our ecosystem whether the custom-er is buying a new wristwatch or paying a medical bill. For us, this is what retail banking is about, that all the consumers’ needs are met in one space. As a result, we have expanded our products, channels and offerings.

• Our branches have been designed to be less daunting and more conducive for our custom-ers to transact and ‘relax’. We have areas that do not have the security specifications and barriers that our environment requires. In our opinion, the only customers who appreciate the barriers are the ones who want to transact in cash. Our branch network is now designed on a ‘hub-and-spoke’ basis with one large (hub) branch and smaller sub-branches around it. This is both cost-efficient and effective as it allows us roll out branches quicker than we used to. In 2013, we launched our agent banking service to bridge the gap for customers who find coming to a bank branch tedious but would still like the ‘human feel’ that branches provide. We have grown our network by 600 agents across Nigeria in the last year.

• Our electronic channels, which consist of ATMs, POS, Internet Banking and Mobile Banking, have been designed to serve customers conve-niently. We recently tested a mobile form of our internet banking to allow authentication through One-Time Passwords, which are both more timely and cost-efficient for the bank and customers, as hard tokens are expensive and cumbersome. Our short (USSD) code service *822# is targeted at those who may not have ac-cess to the internet but require quick service, and customers are able to buy airtime, transfer funds, retrieve their account numbers and bank bal-ances on this platform. As we expand our scope, the aim is for this to become a full self-service platform for all types of transactions.

• To shorten our loan processing cycle, we invest-ed in the AXE credit portal which analyses and responds to loan requests within a few hours. Over the years, we have gathered experience of consumer needs which allows us to create product programmes that can be fully automat-ed to allow for efficiency.

• In order to deepen our penetration in the retail space, we sought a Non-Interest Banking (Islamic Finance in other jurisdictions) licence

OUR APPROACH IS THAT WE WANT TO FIT INTO THE LIFESTYLE OF THE CUSTOMER. WE WANT ALL TRANSACTIONS TO TAKE PLACE

WITHIN OUR ECOSYSTEM WHETHER THE CUSTOMER IS BUYING A NEW WRISTWATCH OR PAYING A MEDICAL BILL

“ “



from the Central Bank of Nigeria in view of the huge opportunities that exist in that space. We are also investing in private banking capabilities, with both value propositions aimed at catering to specific demographic and income groups.

• We have also designed propositions targeted at the youth, through our social media chan-nels and education sector proposition. We recently launched a pioneering product, “Social Lender”, targeted at the social media audience, which offers quick credit based on social media reputation. The product earned us the Most Innovative Bank/ICT Product at the tenth Annual Telecoms Awards.

What is the relationship between Head Office and branches in terms of responsibility?

Sterling Bank runs a centralised system where the Head Office takes major decisions and houses the support functions for the organisation. For efficien-cy, where it becomes necessary, certain departments build regional desks within the network to serve branches in that vicinity. This is in line with our hub-and-spoke approach. These regional officers are em-powered from the centre to carry out their functions without hitches. However, for units that have busi-ness development responsibilities, a different model is adopted. Representatives are selected by regional heads (Business Executives) from among their staff to take on the responsibility of identifying opportu-nities, following up on leads generated from the cen-tre and consummating sales. These teams go on joint calls with the branch staff to get results.

What is the relationship between branches and digital banking?

Initially, our digital banking was directed at only serving existing customers. However, we have expanded the scope to also include customer acqui-sition. The relationship between branches and digi-tal banking is complementary, where customers can transact or initiate a relationship in one space and conclude it on another channel. For example, our digital channel on BBM generated over one hundred thousand leads for the sales teams to consummate. Customer complaints and requests that were tradi-tionally branch driven are now being attended to on digital channels with input from the branches.



Does the old retail culture of Sears, Roebuck & Co still manifest in the culture of Discover?

I would say that the original people that started Discover – which we call Dawners* , who have been with us since the dawn of Discover and we’re cele-brating 30 years now – had a huge focus on custom-ers and on innovation, starting a new network from scratch, the first with no annual fee, the first reward programme, the first 24-hour-7-day-week customer service, at least in the US, and I think we have tried to nurture that ever since.

Do you intend to expand the credit cards business of Discover outside the US at some stage? We have no plans to have our Discover direct bank-ing outside of the US; we feel like there’s a huge potential to gain share and add products and bet-ter serve consumers across the US, which is where Discover is most known. Our payments business, however, is very much global, in 185 countries, and with partners, other networks and Diners Club fran-chises and net-to-net partners. The payments system we do expect to extend: we do have the third-largest global network with 37 million locations, so we do have good aspiration for that.

Could you tell me what part of Diners do you now own and which parts are still franchised?

Well, we own the brand and the network and all our issuing is done by franchises. But I would say that when we think about a lot of the new partners, whether it is a PayPal in the US or a new network we started in India, or Brazil, or Korea, all those net-works use the Diners Club global networks. The way we think about it is that we’ve got multiple sources of volume and multiple partners – kind of using one railroad track but with multiple brands.

What’s your take generally on the state of the US credit cards industry at the moment?

I would say that credit has never been better, loan losses are just over two percent, and I think con-sumers are healthier with their own balance sheets that they’ve been in years. The lower energy prices are helping in that regard and consumers have been saving the money and paying down debt. The issuers industry is consolidated and so I think issuers who remain are careful on credit. I think sales continue to be steady but we would love to see them grow-ing faster: we would love to see more expansion in the economy. There is the long-term trend though of payments moving electronic and new features functionality being added [that] would cause peo-ple to shift more and more spending onto cards, and so our industry continues to benefit from the long-term trends.

Do you have an overriding financial target of some kind, and is that RoE or RoA or something else?

We set a minimum 15 percent return on equity. We’ve been actually achieving far better than that last year: we were at 21 percent return on equity, even with the highest equity as a percentage of total capital of all the top thirty or so banks in the country.

What kind of target equity capital issue will you be looking at three to five years down the road?

We look most closely at Common Equity Tier One and the long-term target is 11 percent. We were just under 14 percent in the fourth quarter, so we have been working to return a good amount of that excess capital to shareholders – we’ve been buying back about two percent of our stock every quarter.

The “dawners” were so-called because of the original Discover television ad, which used an orange sun rising to form the “o” in the word “Discover”.

INTERVIEWDavid Nelms, CEO of Discover

*



Let us turn now to overall strategy: could you discuss the strategy of Discover?

We are focused on being [the] leading direct bank and payments partner. You have mentioned that a lot of the banks that did well in the ratings are focused. We are arguably the most focused larger bank in this country, with credit cards, student loans, personal loans, direct consumer deposits and home equity. So most of the core offers are consumers’ products, but we have a single branch that allows us to really focus on everything moving to direct, and it allows us to focus on being the best in that, having the best apps on both the iOS and Android platforms, and having 100 percent onshore in-house customer ser-vice –we’re the only one of the top six that can make that claim. So, being focused and being vertically integrated with our own brand and point of sale network and having a closed loop network benefits our cards business and makes us much more of a household name than we would otherwise be.

What kind of challenge do you think a lot of the new fintech businesses have to face? Would you consider yourself a fintech business?

Maybe we’re a little bit in between, as we always talk about ourselves as a technology and marketing company, but certainly if you look at a lot of the in-novations in recent years, they continue to come out of Discover.

We put on an on/off switch called Freeze It this year. We are the first people to operate free FICO credit scores to customers. So if you think of fintech as being innovative and introducing new things, we certainly feel like we belong in that league. I think the difference is that we are a bank and there are extra responsibilities that we have: things like Anti-Money Laundering, Know Your Customer, compliance. While on the one hand these are more of a burden for us as a highly regulated bank, I think the sustainability of our business model may be greater

as the regulators eventually catch up to some of the new players who may not be doing all the things that may be required.

Also, most of the fintechs don’t balance their own loans and a question is what happens in a down cy-cle to people who purely originate and don’t have an ongoing customer relationship, and don’t have funding that is sustainable if the market dries up for securitisations.

We feel that we have a proven sustainable model and that we make money. The biggest fintech compa-nies in the US are personal loans businesses and ours is very profitable: we think we are the leading prime personal loan business. Our [business] is very prof-itable and really none of the fintech businesses are profitable, even though they are an originate model and generate all their fees up front – as opposed to over time the way we do.

Maybe that’s a new defintion of fintech? If it makes money, it’s not fintech?

That kind of explanation disqualifies us!

Can we briefly discuss Discover’s culture?

We have a set of values, the first of which is to do the right thing, and others include collaboration and in-novation, and it’s something we actually live by and reinforce. Between myself and my president, we are in front of every one of our 15,000 employees at least once a year talking about our strategy, values, what we are going to be pursuing within the year – and thanking them for the service they deliver.

We also have done a number of employee opinion surveys every year that suggest we are in the very top, not only as a bank but also among companies of all types. Although the results are good there’s always something to be discussed, so we go with detailed action plans as [a] company to even improve our culture. We also have some nice facilities, good benefits, competitive pay, but I think the thing we most hear about us when new employees join

WHILE ON THE ONE HAND [REGULATIONS] ARE MORE OF A BURDEN FOR US AS A HIGHLY REGULATED BANK, I THINK THE SUSTAINABILITY

OF OUR BUSINESS MODEL MAY BE GREATER AS THE REGULATORS EVENTUALLY CATCH UP TO SOME OF THE NEW PLAYERS WHO MAY

NOT BE DOING ALL THE THINGS THAT MAY BE REQUIRED

“ “



Discover from other places is: “this culture feels really different”.

What interests are Discover’s staff expected to serve – in the order of 1, 2, 3 – with the choice being between shareholders, customers and management? Or is there a kind of balance between the three?

I’d say number one, two and three is the customer. We feel if we serve the customers well, then shareholders will benefit, especially because “management” are big shareholders, so we can almost lump them in the same category. We don’t think about management versus shareholders. We think that if we do the best job to serve customers, all shareholders, including ourselves, will benefit.

What importance do you attach to banking education?

We do a lot of in-house training and, from an external training perspective, there are specific requirements or specific parts of the company like our accounting or legal department that require pretty much custom training. I’d say we supplement that with outside fo-cus. You mentioned Lafferty conferences: we certain-ly have our people, given the importance of technol-ogy, out and about to learn from vendors, partners, industry seminars, that sort of thing. I would say we put a lot of emphasis on the job-specific, just-in-time training as opposed to general banking education.

What’s your view on the separation of the roles of the chairman and CEO in a bank or in an organisation such as Discover?

I think people get a little hung up on the title and I know that things tend to be a little different between Europe and the US in this regard. My view is that [it] is very important to have both a strong CEO and a strong representative on the board of directors who is independent. Over in the US, we tend to combine the two titles, chair and CEO, but we have a lead director who in Europe would probably be called a chairman. I think that a more important thing than titles is how effective that person is in helping set the agendas for the bank, for the board meetings, having an ability to push back on the CEO if appropriate, and having a lot of independent sessions with a lot of the board, one-on-one with other independent board members.

How would you describe yourself in terms of your background – banking, retail banking and cards – before Discover?

I have been running Discover for nearly 18 years now. I was with MBNA before Discover and so had a good amount of credit card experience. Originally, I have an Engineering degree and a Harvard MBA and spent some time in General Electric. I guess I am probably considered a veteran credit card/bank-ing person, which I think is important these days because the business has become pretty specialised, dealing with the regulators and the regulations, and the business itself has become more complicated and specialised. My background has been somewhat of a problem solver – which is kind of what you are as an engineer – and I’ve always been interested in tech-nology and that is a huge and growing part of how we deliver all of our products and services.

Speaking of regulations, I don’t know if you heard but in the UK in the past days, regulators are talking about bringing fintech companies into the regulation loop, to be regulated more closely, and another thing we’ve heard lately is that the regulators in the US are looking at possibly identifying MasterCard and Visa as G-SIBs. What is your take on that?

I certainly am a supporter of an even playing field and today, ironically, because we are valued at over $50 billion and we have our own network – our network is actually in a systemically important institution with extra examinations and Visa and MasterCard are not under that. It’s kind of an unusual situation, where Discover and American Express networks – because we are both part of a bank holding company – have a greater degree of regulatory scrutiny than Visa or MasterCard, even though their volumes are obviously much higher just in the network business.

So I wouldn’t comment on what might or might not happen to them, but in general I am supportive, as I said, of an even playing field. If there are rules that apply to banks that fintechs are able to take advantage of and do things, causing things just to move outside the core banking system to the ‘shad-ow banking’ system, I don’t think that’s healthy: that is just a loophole. On the other hand, there may be restrictions that the banks have that maybe aren’t necessary, and so I’m not sure I would advocate that the fintechs need to follow all the same rules as the banks. But, maybe, in some cases, the fintechs should follow what the banks have to do and, in other cases, maybe the banks are having to overdo certain things,



and some of the regulations do make it harder to do business with banking, and may increase pricing and reduce availability. So there are some things the fintechs are doing that maybe the banks should be able to do also.

As an example, some of the fintechs are using non-credit bureau information in decision-making, and I think the banks tend to be leery of some of the potential regulatory criticism if they pursued some of the newer sources of data that may be less proven.

Can you tell me who prepares Discover’s Annual Report? Is it internally or externally written and who takes charge of that process?

It is purely internally written. I personally have ownership of the annual letter to shareholders and spend time with our internal team putting together the layout. We try to be straightforward about what happened, what our accomplishments or short-comings were last year and a little bit about what we are going to do in the upcoming year – to put things in perspective – and then we try to very sim-ply lay out the key metrics over time. Obviously there is a lot of required information in the “10K”, but we try to distil the most important things that are happening up front, or for investors to un-derstand the big picture. The final thing is that we talk mostly about and responsibility (that we take very seriously) to give back in our communities. We have, for instance, 52,000 hours of volunteer time that our employees donated this past year. We did a lot of things with financial literacy with a thousand schools and districts as a company last year, which has been a particular focus. We talked about our values and our vision mission, which all together we call the Discover Way, but you will see that in every Annual Report we’ve published.

Our mission is to try to help people to have a brighter financial future, and so having some of the lowest loan losses in the industry is suggestive that we are delivering on that very important mission.


It is critical both from a cybersecurity defensive perspective (because crooks all over the world are trying to go where the money is – which is the bank) and we have a lot of data and partners, like merchants and others that share some of their data; so it is really tough to fully defend some of the paths into financial institutions. So we work very hard at that; but we also view IT as a competitive advantage if we do it well, because [communication]used to be direct mails and telephone calls, whereas now it is multiple mobile applications, lots of platforms, new partners, lots of new features and functions that we’ve got: two-way communication with our customers in real time and geocoding and big data. One of the things that makes this business so fun is that these new technologies and new partners all can help us deliver more value to our customers. So, if you are going to be the lead-ing direct bank, which is our goal, you have got to be leading on technology.

THERE’S THE LONG-TERM TREND THOUGH OF PAYMENTS MOVING ELECTRONIC AND NEW FEATURES FUNCTIONALITY BEING

ADDED [THAT] WOULD CAUSE PEOPLE TO SHIFT SPENDING MORE AND MORE ONTO CARDS, AND SO OUR INDUSTRY CONTINUES

TO BENEFIT FROM THE LONG-TERM TRENDS.

“ “



ESTABLISHED IN 1981 by the company founder and executive chairman, Michael Lafferty, Lafferty Group is a leading provider of knowledge, thought leadership and advisory services to the banking and financial services industries worldwide – and has been for over three decades.

Lafferty Group has particular specialisations in the fields of banking quality, retail banking, cards and payments, e-commerce, m-commerce and mobile financial services. The group’s comprehensive services include senior management councils, benchmarking research, thought leadership reports, bank quality ratings, news insights, advisory services and live events such as conferences and masterclasses.

CouncilsNow in their third decade, the International Retail Banking Council and the International Cards and Payments Council are neutral forums where industry leaders meet their peers in a confidential environ-ment and work together to share best practices and brainstorm the future of the industry. Current Coun-cils include: Global Merchant Services Council, Fintech Forum, Retail Banking Councils for Africa and corresponding Councils for the Gulf region. The Councils continue to support members to enhance customer service, improve profitability and increase long-term shareholder value.

Live EventsOver the last 30 years, Lafferty conferences, workshops, masterclasses and other live events have provid-ed a unique and highly interactive format to create an engaging experience through our keynote speakers, interview panels and debates. Supported by Lafferty industry expertise and thought leadership, our live events address the real challenges and opportunities in retail banking, cards and payments, mobile financial services and the latest innovations in consumer banking.

Lafferty Global ResearchWorld Cards Intelligence is an online resource providing critical market and competitor intelligence on payment cards, e-money, acquiring/processing, retail banking and consumer lending. Covering over 70 countries, Lafferty Global Research provides clients with access to in-depth country reports and interac-tive databases with the information they need to undertake comparative benchmarking and make informed decisions.

The Lafferty E-commerce Payments Databank offers unique insight and competitor intelligencebased on 100+ granular e-commerce metrics, from transactional data by top merchants to iPSP relationships with acquirers. This product offers clients a unique view of merchants’ volume of sales by channels and methods of payments (cards, bank transfers, direct debits, e-wallets, mobile, COD and more) and cross border activity. This is also extended to volume of sales by schemes/networks, mobile payments via apps and mobile browser.

Lafferty AdvisoryLafferty Advisory is a leading provider of bespoke research and advisory services in the fields of retail banking, cards and payments and mobile financial services. Whether it is benchmarking research, compar-ative analysis, key market development or strategic advisory services, Lafferty Group can provide a tailored, client-focused solution.

LAFFERTY GROUPDriving excellence in banking worldwide



Lafferty Bank Quality RatingsLafferty Bank Quality Ratings is a unique service that rates banks for their quality - as presented by banks themselves to shareholders, investors, and the public at large in their own annual reports.

Lafferty Bank Quality Ratings uses a heuristic methodology to interpret the signals that banks are sending out in their annual reports – intentionally or otherwise – about strategy, culture, customer care, brand promise and financial performance – and brings all these together to rate the total bank quality. LBQR uses the annual report because of its unique status as the primary vehicle for management of a bank to communicate and account to shareholders and other stakeholders.

ReportsLafferty Thought Leadership Reports provide our worldwide audience with the latest thinking in retail banking, cards and payments and merchant services. Some are forward-looking publications; others offer blueprints, strategies and best practices.

Lafferty NewsFor the past 30 years, Lafferty Group has made its name providing impartial and unique insights into the banking industry. Lafferty Retail Banking Intelligence, Lafferty Cards, Payments & Mobile Intelligence and Lafferty Merchant Services Intelligence are compiled by our team of specialist editors, researchers and writers and are read by senior retail banking and cards and payments executives globally. Each newsletter offers a unique and compelling blend of news, commentary, interviews, analysis, country reports, statistics and more. Our newsletter portfolio also includes Digital Banking Intelligence.

Retail Banking AcademyThe Retail Banking Academy provides the only professional education and high-level accreditations for retail bankers and cards and payments executives worldwide, through the Certified Retail Banker (CRB), Certified Cards and Payments Professional (CCPP) and Certified Islamic Retail Banker (CIRB) qualifications. The Academy’s motto is Empowering Bankers, Serving People.



Lafferty Bank Quality Ratings is a new research and intelligence service for those who manage, direct, advise, regulate and use the services of banks worldwide. Our aim is to promote excellence in banking – for customers, staff, communities, society at large and not least for bank shareholders and investors.

An annual subscription includes:• The quarterly Lafferty Bank Quality Ratings Journal (one hardcopy and one country-wide site licence

PDF), offering independent quality rankings and assessments of the world’s best banks as well as insights, analysis, commentary and interviews with CEOs of leading banks.

• News bulletins every two weeks via email, containing news, opinions and commentary on bank quality issues plus new bank quality ratings.

• A personal consulation with a Lafferty Bank Quality Analyst, to help you gain the most from your subscription.

Our star-ratings are an independent measure of bank quality – with the very best banks receiving five stars and those at the other end of the scale receiving one star.

Each issue of Lafferty Bank Quality Ratings will publish our latest ratings of bank quality across the various regions and countries of the world. These ratings come from our own proprietary balanced scorecard. We rely on bank annual reports and use a combination of financial and non-financial disclosures in the process.

Our watchwords are quality, integrity, credibility and trust – and we are unashamedly biased towards banks that are built on sustainable business models.

Also availableYou can also purchase a detailed profile of any bank, with the full breakdown of scores in various quality criteria. This includes analysis and commentary illustrating and highlighting why the bank scored as it did and explaining its rank and performance relative to its peers.

LAFFERTY BANK QUALITY RATINGSMonitoring the world’s best banks


To order an individual bank profile or for more information, please contact:

Michael Lafferty Tel: +44 (0) 77 3919 4662 Email: [email protected]

Jayne ParamorTel: +44 (0) 1264 730 774 Mob: +44 (0) 7780 537 389Email: [email protected]

Subscription Pricing

1 x LBQR: Annual subscription: 4 issues/year (PDF & hardcopy) $5,000.00

1 x LBQR: Spring 2016 issue (PDF) $2,500.00

mailto:steven.cowan%40lafferty.com?subject=


Lafferty Group, 61 Shalimar Gardens, London, W3 9JG

www.lafferty.com | www.laffertyresearch.com | www.laffertyevents.com | www.laffertynews.com | www.laffertyreports.com

www.laffertyworldseries.com | www.bankqualityratings.lafferty.com

LAFFERTY

Subscription Pricing

1 x LBQR: Annual subscription: 4 issues/year (PDF & hardcopy) $5,000.00

1 x LBQR: Spring 2016 issue (PDF) $2,500.00

http://www.lafferty.com

http://www.laffertyresearch.com

http://www.laffertyevents.com

http://www.laffertynews.com

http://www.laffertyreports.com

http://www.laffertyworldseries.com

http://www.bankqualityratings.lafferty.com

lafferty bank quality ratings · take comfort from the fact that there is a strong correlation...

Documents