Case Study - 2012 How to improve the Banco Santander Brasil business model by analyzing opportunities of Cross Sell Is it possible to increase client relationship efficiency and revenue by collect, analyze and act on data? The Santander Group Banco Santander is a retail bank based in Spain and present in ten major markets. It is the eurozone s leading bank and is among the top 15 financial institutions worldwide in terms of market capitalisation, with more than 50 billion at the close of 2011. Founded in 1857, Banco Santander manages 1.383 billion in funds for more than 102 million clients through its network of 15,000 offices. With 3.3 million shareholders and 193,000 employees, the bank is the leading financial institution in Spain and Latin America, and holds important positions in the United Kingdom, Portugal, Germany, Poland, and the northeastern United States. In addition, its Consumer Finance division operates through Scandinavia and other European countries. Its shares are listed on the stock markets of Spain, New York, London, Lisbon, Mexico, Sao Paulo, Buenos Aires, and Milan, and are featured on 62 different indices. This data reflects Santander s unique position in international banking: by combining recurring retail business and a high degree of geographical diversification, year after year, the company demonstrates its capacity to consistently increase revenues and generate value for its shareholders, clients, and the business. In 2011, the Bank strengthened its balance sheet, both in terms of capital and credit quality, in order to meet the new capital requirements imposed by national and international regulatory bodies months ahead of schedule. Santander distinguishes itself within the global financial sector to the extent that, in the last five years, remuneration to Santander s shareholders has exceeded 24 billion. The Santander Group has expanded its footprint worldwide through a number of acquisitions and the successful integration of the acquired businesses to achieve synergies. 1
Picture 1.1 Map of Core Markets The Santander Bank Brasil Banco Santander (Brasil) S.A. is a leading full-service bank in Brazil, which it believes to be one of the most attractive markets in the world given its growth potential and low penetration rate of banking products and services. Banco Santander s operations are located across the country and strategically concentrated in the South and Southeast, an area that accounted for approximately 73% of Brazil s GDP, where the Bank has one of the largest branch networks of any Brazilian bank. In August 2008, Banco Santander acquired Banco Real which at the time was the fourth largest non government-owned Brazilian bank as measured by assets. At the time of the acquisition, the Bank was the fifth largest non government-owned bank in Brazil as measured by assets. Banco Real s operations are highly complementary to the Bank s pre-acquisition operations. Banco Santander believes that the acquisition offers significant opportunities for the creation of operating, commercial and technological synergies by preserving the best practices of each bank. Banco Real s strong presence in the states of Rio de Janeiro and Minas Gerais has further strengthened the Bank s position in the South and Southeast, complementing its strong footprint in the region, particularly in the state of São Paulo. The acquisition of Banco Real has further consolidated Banco Santander s position as a full-service bank with nationwide coverage and scale to compete effectively in its target markets. The Bank is a member of the Santander Group, one of the largest financial groups in the world as measured by market capitalization. The Brazilian branch of Santander Group is the largest division in Latin America and one of the world's most important, accounting for 28% of the total profit of the group. 2
Picture 1.2 Profit Diversification Financial Data - Santander Bank Brasil (Sept. 12) Santander Brasil has been elected by the magazine Bloomberg Markets as the 11th most solid bank in the world and the first among Brazilian banks. This fact can be demonstrated by the bank s BIS² ratio, which in this quarter was 22.1%, in accordance with the Brazilian Central Bank s. Net profit totaled R$4,731 million in 9M12, a decrease of 5.7% (or R$287 million) in comparison to R$5,018 million recorded in the same period of 2011. Total Assets of R$ 442,788 million, an increase of 1.6% in the last 12 months. Loan portfolio of R$ 207,334 million, up 10.1% compared to September 2011. Expanded Credit portfolio increased 9.9% in the same period, reaching R$ 220,686 million. Total Average Equity of R$ 51,944 million (excluding average goodwill of R$ 13,847 million) 1. Picture 1.3 Credit Porfolio & Net Income Var. 1 Goodwill on acquisition of subsidiaries which is amortized over 10 years, based on expected future earnings. 3
Reduction of the pace of allowance for loan losses; increase in gross allowance from loan losses of 31% Strict cost control The Wholesale Bank Brasil The Santander business unit is structured to provide financial services to clients in the follow segment: Picture 1.4 Business Segmentation Corporate Segment Team of professionals specialized in serving large economic groups (with the exception of global corporate clients) that have annual revenue of more than R$80 million and demand customized and high value-added financial products and services; In line with its business strategy, the Santander business unit has sales representatives dedicated to providing clients with unique services in the areas of foreign trade, cash management, structured assets, farm credit and construction. Global Banking & Markets Approximately 700 large Brazilian companies and multinational conglomerates, including the largest companies in Brazil. The Bank also serves multinational subsidiaries of its global clients. Banco Santander s clients in this business span a range of industries, including energy and resources, telecommunications, financial, construction, infrastructure, agriculture, retail, industrial (including automobile manufacturers) and service sectors. Coverage of these clients is allocated by industry. Banco Santander s wholesale banking customers benefit from the global structure of 4
services provided by the Santander Group with its worldwide integrated wholesale banking network, global services solutions and local market expertise. This structure allows services to be provided in an integrated fashion. The Bank s wholesale business provides its customers with a wide range of domestic and international services, and seeks to provide solutions specifically tailored to the needs of each customer. Sustainable Growth Project 3.1 In Three years, we are going to be the 1º bank of our customers In order to maintain a sustainable growth in a strategic country as Brasil, The Santander Bank create the 3.1 Project, which consists in a series of strategic actions within the business and operations departments of the bank in a unique goal: being the 1º bank of our customers in three years. Table 1.1 Project Business Plan Strategic Priorities 1. Consolidation of the Bank Operational Procedures 2. Take the advantage of being a bank with all products and services for all segments Projects 1.a. "Meios"* General Plan 1.b. Structure Simplification 1.c. Operational Risk Plan 1.d. Custumer Satisfaction 2.a. Cross sell products between areas 3. Strategic positioning in underdeveloped markets with an "aggressive" attitude 4. Improve the strategic positioning and relationship with customers 3.a. SME's Plan (small-to-medium sized enterprises) 3.b. Acquiring Solutions (Card Holders) 3.c. Emissions 3.d. Real State Business 3.e. Santander Financing 3.f. Formula One 4.a. Binding / Loyalty / Customer Retention 5. Brand Valuing 5.a. Brand Management Plan *operational area of the bank Cross Sell Project CRM (a) Project Objectives In line with the 3.1 Project, the Corporate Segment along with Rates has the objective to promote the cross sell within the different financial products offered by Santander to its clients. The main objective of the project is to increase our product s market share and consequently revenues for treasury and loan products (Derivatives, Investments and FX) through a better understanding of our clients needs. It is important to have in mind that our business model has as its main objective the suitability of each product. 5
(b) Project Details The students are going to conduct a study capable of promoting the cross sell and market share increasing, mainly based on the three activities that follows: 1. Gather the database from the different sales departments 2. Cross analyze the databases, looking for synergies between products 3. Propose action plan for Sales forces Assumptions The sales departments are responsible for the distribution of Derivatives, Investments, FX and Local/Offshore Loans. Currently these departments are focused its own products. It is very important to transmit the idea of a unique institution with different kind of products to the sales forces and clients, promoting a greater interaction between them all. Market Share Data Santander Brasil holds the 4 th position on the FX Ranking published monthly by the Brazilian Central Bank (BACEN) with a market share of 9%. (Oct. 12) In the OTC Derivatives Market, Santander Brasil has a market share of 10%, holding the 5 th position on the CETIP 2 Ranking (Oct. 12) Santander Brasil stands in the 5 th position on the Deposits (Demand Deposits, Time Deposits and Savings Account) with a total volume of BRL 118 billions. (Aug. 12) Project Coach Pedro Eugenio de Vasconcelos Product/CRM Specialist Address: Av. Juscelino Kubitschek, 2235, 6º andar Tel: +55 11 3012-6561 FAX: +55 11 3553-3700 Web: http://www.santander.com.br 2 CETIP is Latin America's largest central depository for OTC and private securities and derivatives and has more than 15,000 customers in Brazil's financial services industry plus 1,502.9 billion (in Brazilian Reais) in assets under custody. 6