Report I n t e r n a t i o n a l

Report 2010 2011 I n t e r n a t i o n a l

Conditions change challenges grow As painful as it may be for those directly affected, in the larger scheme of things, a crisis always brings a cleansing force from which something new and better can grow. The ancient Greeks already knew this important function, which occurs when events reach a critical point they called it catharsis. Also today s financial and economic crisis has had the effect of exposing those institutions in the financial sector that were out of date or lacking a sustainable business model and those whose behavior was questionable, at times even criminal. Despite all the welfare losses the financial and economic crisis has caused and will continue to cause in the future, it should also provide an important stimulus, initiating learning processes, which will help to stabilise and future-proof not only financial institutions, but also national economies. In this regard, our task is to systematically take on board these painful insights as an opportunity to reassess strategies and business models and to set a new course focusing on the future. Conditions in the banking and financial sector are undergoing considerable change. Whether it is the problem of solvency, the increasing globalisation of banking markets, the challenge of developing and extending sustainable business models, the threat from new and old competitors with innovative sales and product ideas or, not least, the impact of regulation with mounting pressure to be profitable and the need for increasingly sophisticated risk-return management of business portfolios all this means that finan - cial institutions are constantly having to reinvent themselves and actively initiate changes so as to survive and be successful in the long term. As a partner of change drivers zeb/ has been successfully helping its cus tomers along this route for many years and is highly valued for its professionalism and broad spectrum of expertise. This was clearly demonstrated last year when, in contrast to its competitors, zeb/ enjoyed above average growth. For this, we would like to acknowledge and give special thanks to our customers. They have placed their trust in us and we see it as our duty to work with commitment to ensure their success and the success of the projects entrusted to us. At the same time we would like to thank all of the people at zeb/, including 46 partners and over 700 colleagues, for 3

Prof. Dr. Dres. h. c. Henner Schierenbeck Prof. Dr. Bernd Rolfes

their outstanding achievements and their professionalism during the past year. First and foremost, our success is due to their abilities and commitment. In the tradition of our annual reports, in this zeb/report 2010 2011 International we present, together with our customers, a few selected projects which represent a small cross-section of the total spectrum of our consulting activities. Sincere thanks are given to all the contributors. We wish our customers every success in their joint efforts to deal with the tasks and challenges ahead of us. Prof. Dr. Bernd Rolfes Prof. Dr. Dres. h. c. Henner Schierenbeck 5

Contents zeb/ 10 zeb/ Implementing change for the financial services industry Topics Controlling, Accounting, Risk and Performance Management 26 Deutsche Bank AG Global implementation of value-based management (VBM) and value driver logic 30 Deutsche Postbank AG One Bank Controlling 34 BayernLB Corporate monitoring and management of liquidity risks 37 UniCredit Bank AG Global MIS based on an integrated CFO Data Warehouse 41 KfW Entwicklungsbank Feasibility of a foreign currency fund 45 Eastern and Southern African Trade and Development Bank Scope and design of a Credit Risk Assessment System (CRAS) 48 BRE Bank Design and implementation of new KPI logic and top management reporting Information Technology 52 Cedacri S.p.A. Development of a controlling platform in an Italian data center based on zeb// control 7

Contents Retail/Corporate Sales 57 Rheinischer Sparkassen- und Giroverband Price management for business clients 61 Stadtsparkasse München Improving returns from retail banking 65 Banca dello Stato del Cantone Ticino Implementing the sales strategy FocusVendita 2014 Vincere insieme! Operations and Restructuring 68 Sparkasse KölnBonn Programme Target 2014 Strategic reorientation Strategy 72 BayernLB Integrated Corporate Finance Bank zeb/studies 78 zeb/studies Markets in focus 85 Contact 86 Imprint 8

Stefan Geipel Werner Konezny Dieter Kipp Dr. Carsten Wittrock Heinz Rubin Carola Ernst Dr. Markus Thiesmeyer Dr. Alexander Henk Dr. Andreas Rinker Stefan Kaufmann Dr. Matthias Uebing

Axel Oliver Sarnitz Dr. Christian Heitmann Lars Gehner Dr. Katrin Lumma Prof. Dr. Stefan Kirmße Horst Andreas Kleinlein Ulrich Hoyer Dr. Ralph zur Brügge Not in the picture: Dr. Jens Eickbusch, Simon Grimm, Dr. Klaus Strenge, Dr. Markus Wilpert Heinz-Gerd Stickling

Christoph Bundschu Johannes Stengl Jürgen Hofner Dr. Rüdiger Frischmuth Thomas Engeln Dr. Olaf Scheer Dr. Jens Sträter Dr. Michaela Schneider Dr. Wilhelm Menninghaus

Dr. Sven Jansen Dr. Thomas Hartschuh Dr. Stefan Trost Martin Danne Dr. André Ehlerding Dr. Patrick Tegeder Dr. Thomas Abel Andreas Schick Elke Benning-Rohnke Dr. Thomas Bannert Dr. Dirk Holländer

zeb/ Implementing change for the financial services industry Challenges faced by the financial services industry When taking a look at developments in the German financial industry in 2010, it can be seen that most banking institutions have largely managed to achieve a positive result despite highly adverse circumstances. In 2008, the German banking industry posted a negative ROE before tax of -7.7%. In 2009, this figure rose to -0.8%, only slighty on the negative side. In the Western European, North American, Japanese and Australian banking markets in 2009, the return on equity actually increased overall to 3.6% (compared to 1.6% in 2008). This may be a very small improvement compared to the ROE before tax of 18.7% achieved in 2006 however, we have passed the lowest point in the crisis and a recovery, albeit a cautious one, is observable. We can assume that the positive trend will continue in 2010, also in Germany. This development can also be seen in market capitalisations: From the end of 2009 to the end of 2010 the world s 25 largest banks posted an average increase of 17%, with some showing an increase of up to 60% in market capitalisation. Although a downturn was still noticeable, most banks seem to have gradually recovered from the losses sustained since the beginning of the crisis. The 2009-2010 period also saw good news for insurance providers, with their market capitalisation basically increasing. The extreme widening of spreads on borrowings from European banks registered in 2009 has also fallen back again. While we are still far from reaching the same market capitalisation from before the crisis, develop ments in the world s fastest growing regions are impressive. Today, five out of the world s ten largest banks (measured by market capitalisation) are from China or Brazil. Additionally, Eastern European markets are further gaining in importance. Banks have plucked up courage again, concentrating on their core activities and seeking out business opportunities that suit their own circumstances best. Out-of-control business models, incommensurate risk assump tion, risky loans all the ballast they had been gathering prior to 2008 has been cast overboard with huge effort and the business has been restructured on a more solid foundation. At the same time, it is clear that many problems are still waiting to be solved and that the financial industry s conceptual re-orientation is only just beginning. What are these problems and how can we approach them? 10

/ The new regulations on capital adequacy requirements for risk assets (Basel III) require a considerable increase in hard core capital. This increase can only be achieved through external funding or by accumulating profit. If a bank s earning power is weak, it will scarcely be able to accumulate a sufficient amount of profit. In addition, a reduced capacity for dividend distribution will make the bank less attractive to external investors, which in turn impacts heavily on its potential for external funding. Therefore, the only practical solution to the new capital requirements is to achieve sufficient earning power. It should, however, be noted that some banks already meet the stringent new require ments. / Due to the new regulatory key indicators on leverage ratios and liquidity (LCR and NSFR), it will no longer be possible to continue with some of the exis ting business models. This affects investment banking activities in various ways, but it also has some impact on retail-focused models. In this context, relentlessly checking the initial situation and identifying necessary adjustments forms a starting point for forwardlooking activities. Given that parameters only in the medium term need to be strictly complied with (with suitable observation periods), the pressure to adjust may at first glance seem relatively mild. However, we need to take into account that in some areas the adjustment processes will take a considerable length of time. / A possible change to deposit guarantee regulations may also necessitate significant adjustments to existing business models. / Many banks have recognised the primary importance of retail banking. Nevertheless, it is precisely the retail sector, involving a broad spectrum of private customers, which often fails to generate the necessary profitability or even achieves a negative result. Often, banks make up for the lack of profitability in the retail business through maturity transformation. Even if there is absolutely no reason to object to well-balanced term transformation for customer deposits in retail banking, the basic principle still applies: It should be possible to achieve an adequate result in these segments without taking on risk through term transformation. This is where many banks are in need of detailed strategic approaches that go beyond optimisation. / Insurance providers will also be affected the Solvency II regulations will have a significant impact on some lines of business. Some areas of the life insurance business are already showing a comparably reduced profitability. Furthermore, it will be essential for insurance providers to focus their activities on their own core competence, i.e. 15

managing certain risk categories. In specific areas where there are no competitive advantages to product combinations, it will be difficult for such products to be sustain able in the competitive environment. / More consideration must be given to HR resources than in the past staff are an essential component of a company s value and should be managed accordingly. / To put it abstractly, all banks will need to clarify their own function as financial intermediaries in the market and then make this function profit able. Besides giving loans, possible functions include, providing a system for processing all types of payments and transactions, managing risk (and to some extent risk assumption) and managing information in an increasingly complex world. The developments outlined above show that, despite recent successes, in 2011 the financial industry will still be under a high level of pressure to face up to the challenges and implement solutions. This is the only way for financial service providers to survive and be successful in the market. With our extensive professional expertise and practical experience in implementation, at zeb/ we are working for and with our clients to develop future-oriented solutions to these problems. In doing this we are able to draw on a profound knowledge of the financial services industry, covering all topics and customer groups in both national and international markets. For us, the critical benchmark for measuring success is the question of whether each of our projects adds value to our client s business. This cannot only be achieved by delivering intellectually convincing solutions we also need to guarantee successful implementation in the long term. We are convinced that this can only be done by someone who has specific industry knowledge and is able to transform this knowledge into customised solutions and implementable concepts. The link between strategic expertise and outstanding craftsmanship in the implementation process is critical. In order to successfully transfer theory into practice, all of the success factors in the implementation process need to be met: excellent practical concepts, outstanding IT expertise and, above all, the ability to effect changes in employee behaviour by taking the employees along with us on the journey. 16

Our strategy and organisation In order to properly fulfill the requirements placed on consulting firms, we have established a specific positioning and set-up. On the one hand, with our matrix organisation we focus on providing our clients with holistic support through the relevant Client Unit. On the other hand, our Com pe tence Units provide expertise that is characterised by strategy competence and in-depth knowledge, including functional detail, combined with broad prac - tical experience in implementation. This approach differs stron g ly from that of our competitors, who generally organise themselves into industryrelated practice groups. Content-wise, we bundle our thematic competencies into six Competence Units: / Strategy / Retail/Corporate Sales / Operations and Restructuring / Controlling, Accounting, Risk and Performance Management / IT / Human Capital The Strategy Competence Unit supports our clients in formulating and adjusting approaches which affect the bank as a whole as well as specific business areas. This allows our clients to constantly adapt their bank s competitive profile to the changing market conditions to assure long-term sustainable growth. For all sales issues in both the private and corporate segments of the financial services industry we have a dedicated unit which is able to draw on broad experience, also from the international environment. Project assignments range from new, promising market positioning to increasing potential through pricing strategy and adjustments to sales processes, right through to multinational integration of sales channels. The Operations and Restructuring Competence Unit provides our clients with support in holistic restructuring, end-to-end optimisation and improving efficiency in operational processes, developing sourcing strategies, and enhancing the operational platforms (Target Operating Model) for transaction banking, loans and investment banking and in design and implementation of holistic quality management. We also provide support in strategic preparation, conceptualisation and implementation of postmerger-integration processes. The Controlling, Accounting, Risk and Performance Management Compe - tence Unit works on all issues of bank management from an economic, regulatory and financial accounting perspective, in close connection with IT issues. Assignments range from strategic issues related to enhancing 17

the corporate metrics of global banks following the financial crisis through to implementing the new regulatory framework. Besides the zeb//control product line, the IT Competence Unit provides IT consulting services relating in particular to bank management issues or to DWH architectures, general IT strategies and development plans. Through SAP banking and our subsidiary findic/, we also provide solutions for purely implementation-related challenges. Whether it is a matter of motivating to assure and improve productivity, empowering or inspiring with enthusiasm for a new approach, getting the staff constructively involved is essential for the success of any implementation process. In order to better meet this requirement, we have extended our competencies in change management and bundled them together with our expertise in training and HR management, so as to form the Human Capital Unit. In cooperation with the other units, we are now in a better position than ever to implement functional solutions effectively and sustainably. Our performance and results Having survived the crisis well thanks to a stable trading volume, in 2010 we achieved a turnover of EUR 124 million, representing a significant growth rate of 20%. This has enabled zeb/ to further expand and consolidate its position as a leading, highly specialised consulting firm to the financial services industry. As an innovative consulting partner zeb/ maintains its position among the Top-5 financial industry consulting firms in the German-speaking market and is also gaining increasing international recognition. Broken down by client groups, 43% of our turnover comes from large companies, 21% from medium-sized clients and 17% from specialised clients and insurance companies. Our international markets have also made a significant contribution to our turnover the proportion of turnover from foreign sales has risen from 16% to 19%. The last few months have revealed the significant potential of these markets for the financial services industry. For this reason, zeb/ considers the ongoing development of its international position to be of central importance. 18

Dr. Olaf Scheer Prof. Dr. Stefan Kirmße Dr. Patrick Tegeder Dr. Andreas Rinker

In terms of the different topics, the turnover gains have been spread across the entire spectrum of our consulting activities (see Fig. 1). This year we succeeded once again in positioning ourselves as the partner of change drivers across the entire range of topics. We gained 59% of our turnover from topic areas covered by the Controlling, Accounting, Risk and Performance Management Competence Unit, while 28% came from the Operations and Restructuring Unit. 13% was generated from sales-related topics, with the turnover from the IT, Strategy and Human Capital Units being attributed to the relevant functional topics. 28 % Retail/ Corporate Sales 13 % 59 % The vast majority of our customers have been with us for years. Thus, in the past year, we earned 92% of our turnover from clients who had already worked with us previously. 8% of last year s turnover came from clients who worked with us for the first time (see Fig. 2). These figures are extremely pleasing and also provide us with an incentive to earn this customer loyalty through ongoing first-class performance, thereby establishing a long-term cooperation based on mutual esteem. Operations and Restructuring Controlling, Accounting, Risk and Performance Management Fees earned in the fields of IT, Strategy and Human Capital are added to the relevant subject fields. Fig. 1: Distribution of fees earned in 2010 Our employees zeb/ sees itself as a home for talents, offering room for creative development and entrepreneurship to graduates and young professionals as well as experienced professionals. Our people make zeb/ what is it. Our development has only been possible thanks to our staff. Over the last few years we have appointed 130 new people, bringing our total current workforce to over 700. As in previous years the majority of our staff hold degrees in business administration and economics (57%), while the proportion of IT specialists, mathematicians and physicists represented 31% of our workforce (see Fig. 3). An outstanding academic education, however, is only one of the prerequisites for a good consultant. For this reason, with the exception of those staff with scientific backgrounds, we usually only employ people who have professional experience in banks or savings banks or who have gained other specific work experience in addition to their qualifications. This enables them to develop the required mindset with a focus on problems and solutions and to suggest quick and practical solutions. The consultant s personality is the critical factor in conveying a convincing plan for sustainable value enhancement. Compared to other consulting firms, the employee turnover at zeb/ remains very low. This is, in part, owed to our efforts in ensuring that our employees maintain a healthy work/life balance. Furthermore, our firm does not apply an up or out principle. Mathematics Others Computer science New clients Economics 7 % 12 % 92 % 3 % 5 % 21 % 8 % Physics Regular clients Fig. 2: Client structure 2010 (% of fees earned) 52 % Fig. 3: Consultant profile Business/ MBA 20

Outlook In 2011 our main task will be to continue in the strategic direction that we have taken to assure an ongoing level of innovation and to guarantee a continuously high level of project quality. We are confident that we will continue to achieve above-average growth, even in the increasingly competitive consulting market. We are expecting a significant turnover increase of 10% for 2011. Accordingly, we will continue to endeavour to increase our market share. We plan to expand our workforce by taking on over 100 new employees. Thanks in particular to our realignment in the insurance and HC areas as well as our other activities aimed at developing our international markets, zeb/ is able to approach 2011 with plenty of confidence. We will also continue to focus our activities on maintaining and expanding the market position that we have gained so far in the financial services industry. To provide further support for our growth plan, on 1 January 2011 we have appointed Dr. Jens Eickbusch, Simon Grimm, Dr. Klaus Strenge and Dr. Markus Wilpert partners. Thus, the team of partners now totals 46 colleagues. As the partner of changes drivers, we look forward to further support your change processes with our customised consulting services. Together with you, we will meet the challenges ahead. Many thanks for your trust in us! Prof. Dr. Stefan Kirmße Dr. Andreas Rinker Dr. Olaf Scheer Dr. Patrick Tegeder 21

Topics 26 Controlling, Accounting, Risk and Performance Management 52 Information Technology 57 Retail/Corporate Sales 68 Operations and Restructuring 72 Strategy 25

Controlling, Accounting, Risk and Performance Management Deutsche Bank Global implementation of value-based management (VBM) and value driver logic Background zeb/ has been supporting Deutsche Bank in the development of its value-based management (VBM) framework since 2009. The framework is primarily focused on total shareholder return (TSR). Based on a newly developed TSR model, which empirically identifies factors driving value creation in Deutsche Bank, central KPIs have been defined and tied to business-model-specific value drivers. Project content and approach While the main focus in 2009 was on conceptual work to improve Deutsche Bank s current VBM framework, its global implementation into management processes was the main project scope in 2010. Trans paren cy about business performance was substantially increased. As a positive byproduct, this also leads to stronger positioning of Finance vis-à-vis the respective Business Units. One of the challenges in terms of implementation was the global scale and the highly heterogeneous nature of Deutsche Bank s business portfolio. In addition to the mere rollout of the VBM framework, new methodological aspects were addressed as well. In particular, the definition and selection of business-model-specific drivers and their integration into the (reporting) processes of Deutsche Bank incl. its investment banking operations are to be highlighted. Implementation of VBM The global implementation of VBM focused on three central management processes: Firstly, monthly financial reporting and monitoring, secondly, quarterly review of business performance and thirdly, annual planning and target setting (see Fig. 1). The VBM financial reporting aims at a holistic performance measurement at all management levels. In this context, a comprehensive senior management reporting system was to be designed and implemented. Close alignement of these management reports with externally reported facts and figures was key to gaining broad acceptance of the new products. 26

Controlling, Accounting, Risk and Performance Management Along the way, a number of conceptual problems were solved and a suitable display format for the report contents was developed. Yearly planning & target setting TSR Market link Quarterly challenge & forecasting Set of core metrics (12 + 2) Monthly performance management & monitoring Set of specific business drivers Fig. 1: Elements and processes of the VBM framework In addition, the existing business performance reviews were redesigned to follow an inherent VBM logic. Thereby, the role of Finance as business challenger was further strengthened. Based on information provided by VBM, the Deutsche Bank Group s senior management is now better able to evaluate current business performance, to identify trends, to judge future developments and to discuss market- and competition-driven strategic implications at their quarterly meetings. Furthermore, in order to ensure comparability of actual vs. plan values in the monthly reporting and in the quarterly reviews, the VBM concept was integrated into the Group s planning processes at an early stage. Value driver logic From a conceptual point of view, the main focus of the project was the ongoing development and integration of value drivers for the bank s individual Business Units. Value drivers represent main internal and external factors of major significance for a Business Unit s current and future value creation. For example, these include information on volumes, margins and external indices. Value drivers were selected based on empirical analysis and based on in-depths discussions with subject matter experts of the respective businesses. 27

Controlling, Accounting, Risk and Performance Management Thanks to the early involvement of Divisional Finance and the coordination with the relevant business managers concerned, a broad acceptance of the basic concept and of the concrete selection of value drivers was achieved. Additionally, for individual Business Units, graphical value driver tree diagrams were created to explain the interrelationship between the fundamental value drivers, the central KPIs and value creation itself. This provided an opportunity for a wide range of ad hoc simulations and analyses. Project results and outlook In 2010 the global implementation of the individual elements of the VBM framework was successfully completed. A new department, VBM Ana - lytics & Methodology, reporting directly to Level 2 Group Management, was set up and furnished with the necessary resources. For 2011, the focus lies on the active application of the VBM framework with regard to all relevant decision-making processes. Furthermore, the existing concepts will be adapted to continuously taking into account the changing environmental and market conditions. Stefan Krause CFO, Member of the Board of Management and the Group Executive Committee Deutsche Bank Martin Edelmann CFO Group Reporting Deutsche Bank Dr. Olaf Scheer Managing Partner zeb/ Dr. Dirk Holländer Partner zeb/ For further information visit www.zeb.eu 28

Volker Abel

Controlling, Accounting, Risk and Performance Management Deutsche Postbank AG One Bank Controlling Background and project assignment With around 14 million private customers, Postbank is Germany s largest retail bank. It leads the market in the savings and chequing account product lines and, with its BHW and DSL brands, is one of the top three providers of construction financing and building society savings schemes. Postbank s declared goal is to consolidate this market position and continue to generate profitable growth. Against the backdrop of the financial market crisis as well as increasing demands placed on corporate controlling from both internal and external sources (see Fig. 1), enhancing its controlling approach is central to Post - bank achieving its stated goal. As a result of the increased requirements for capital reserves from regulatory measures and the capital markets, in future the results from individual business segments or activities will need to be measured and evaluated more rigorously and with greater sophistication with regard to their respective capital commitments. In any shortfall situation, economic and regulatory capital commitments must be taken into account in strategic thinking about the alignment of the business model. External demands Regulatory changes Capital market and shareholder demands Corporate controlling Internal demands Organisational demands Fig: 1: Demands on corporate controlling Based on these preliminary considerations and as part of the Post - bank4future program, Postbank and zeb/ jointly launched the project One Bank Controlling in order to comprehensively re-focus the current business segment cost accounting and enhance the controlling approach at corporate level. The aims of the project were to create the highest pos- 30

Controlling, Accounting, Risk and Performance Management sible level of transparency in business structures and presentation of results and to align the controlling system more strongly with risk/return perspectives. Project approach In order to tackle the assignment, we divided the project into three core modules: / In the Controlling module, we focused on establishing the relevant control levels and defining and identifying suitable key performance indicators from a risk/return perspective. / In the Functional segment module, we aimed to ensure significantly improved transparency at the business model value driver level by allocating results to the primary business segments according to the input involved and by introducing a full cost perspective. / The Tool/Reporting module comprised the development of a suitable tool for performing the required calculations and for generating manage ment reports. The first step in the project was to formulate the desired target scenario. This involved firming up the segment definitions, establishing the granularity of the relevant controlling dimension and defining the key balance sheet, profit and loss, risk and performance indicators to be quantified. Using this target scenario, we identified potential gaps in the data and conceptual design and derived solution strategies to close these gaps. Based on the above results, during the second phase we worked together to develop pragmatic solutions for unresolved conceptual issues. At the same time, we created a suitable IT application for collecting the necessary input data and calculating the key data as defined in the target scenario. During this phase zeb/ also worked with Postbank to develop suitable management reports for presenting the resulting data in a format appropriate for decision-making. To conclude this phase, the tool was then successively populated with data and underwent quality assurance testing. In the third and final phase of the project we were able to validate and interpret the results and verify them in consultation with the relevant people at Postbank. Finally, we presented the results in a managementoriented format for further discussion at Postbank (see Fig. 2). 31

Günther Blaha Wolfgang Schlaffer

Controlling, Accounting, Risk and Performance Management RORAC Portfolio 3 Portfolio 5 Portfolio 2 Portfolio 7 Portfolio 1 Portfolio 4 Portfolio 6 RORAC, ROREC in % Circle size = Earnings before tax ---- Minimum value ROREC Fig. 2: A portfolio perspective focused on risk/return Outlook The results from the One Bank Controlling project, carried out jointly with zeb/, form the basis for a transparent presentation of results achieved in the business fields of Postbank Group, with a focus on risk/return. In combination with the strategic discussion process initiated at the same time as part of the overall Postbank4Future program, the results from the project provide an important impetus for value-focused enhancement of the business model and its operational controlling. Now that the rele vant concepts and tools have been created, the task of transferring the results obtained into a standard procedure, making them useable in the long term and constructively enhancing them. As a first step, we have launched the project One Bank Controlling Phase II. Dr. Christian Schramm Manager Controlling Division Deutsche Postbank AG André Ehlerding Partner zeb/ Dr. Marcus Schuster Head of Bank Management Deutsche Postbank AG Wolfgang Schlaffer Senior Manager zeb/ For further information visit www.zeb.eu 33

Controlling, Accounting, Risk and Performance Management BayernLB Corporate monitoring and management of liquidity risks Background and project assignment With over 10,000 employees and total assets of 332 billion Euros, BayernLB is the leading Bavarian bank for large and medium-sized enterprises in Germany and Europe as well as private customers (figures as at 30th September, 2010). BayernLB is a member of the Sparkassen Finance Group in Bavaria and sees itself as a high-performing regional bank with an European focus and international expertise. The LICHT project (liquidity risk, controlling, trade, treasury), supported by zeb/, aimed to systematically expand the BayernLB system for corporate monitoring and management of liquidity risks, taking into account supervision requirements and anchor it sustainably within the corporate group. The primary focus was on developing and implementing a standardised system and standardised processes, based on consistent methods, data and parameters, to support BayernLB in daily group-wide monitoring and management of liquidity risk positions. The technical implementation of LICHT took place in the new MERLIN (liquidity risk measurement and reporting) system environment, developed as part of the project. With the advent of MERLIN, BayernLB was able to progressively phase out its existing systems for managing and monitoring liquidity risks. Project approach and results The large-scale project assignment was structured into three modules, with clearly defined responsibilities: / Module 1: Management concept for functional development / Module 2: Data and systems for technical implementation / Module 3: Roles and interfaces for process integration As well as providing particular support to the project teams for the Management concept and Roles and interfaces modules, zeb/ experts also assisted with the management of the project as a whole, playing a coordinating role. In terms of content, BayernLB s restructured liquidity risk management system, resulting from the project, is focused on the daily management 34

Controlling, Accounting, Risk and Performance Management cycle for operational monitoring and management of liquidity risk limits. The objective of this daily process is to assure the bank s ongoing financial solvency and refinancing capacity (see Fig. 1). Management measures via liquidity risk-bearing units (money market, ALM) Consistent drill down of the limit utilisation by timeframe and currency to the level of the liquidity risk bearing units Risk management Risk reporting Risk identification and measurement Operational monitoring and management Risk analysis and assessment Risk identification by gap analysis between LGA and LCC Risk assessment by allocating limit utilisation to predefined escalation steps Abb. 1: Operational management cycle Liquidity risk management At the start of the process, risks are identified and measured by comparing possible liquidity gaps from the liquidity gap analysis (LGA) with the liqui dity counterbalancing capacity (LCC). In the gap analysis, all future incoming and outgoing payments that have an impact on liquidity are dis played on a time axis showing a cumulative net perspective. The LCC is used to quantify the earliest possible point at which the bank can economically obtain liquid assets, specifying times and amounts, and thereby defining the limit for liquidity mismatches. In order to assess the risk situation, how much of the liqui dity counterbalancing capacity is needed to cover liquidity gaps is shown as limit utilisation across varying timeframes. Additionally, these limits are consistently drilled down to the level of the units and currencies carrying the liquidity risk. The results from the risk assessment are reported daily to the board of management as part of a newly designed management reporting sys tem. This reporting system forms the basis for both operational and strategic liquidity risk management at the Bayern LB Group. Besides the outstanding cooperation between the professional experts from both BayernLB and zeb/, the consistent involvement of BayernLB s liquidity risk carrying market segments (in particular, currency trading and asset/liability management) from an early stage was also a major factor for the project s success. BayernLB s subsidiaries, Deutsche Kreditbank AG (DKB), MKB Bank ZRT and Banque LBLux S.A. were also closely involved in the development process, as were its legally dependent enti - ties, BayernLabo and LBS Bayern. 35

Controlling, Accounting, Risk and Performance Management Outlook During the final phase of the project, which runs until mid-2011, our focus will be on anchoring the project results operationally in the line management and on expanding functionality to cover other scenarios relevant to the monitoring and management of liquidity risks (in particular, different stress scenarios) within the BayernLB corporate group. Furthermore, Bayern LB faces the challenge of integrating new supervision requirements, such as the introduction of the new Basel III liquidity risk key data and the requirements of the impending MaRisk amendment, into the restructured liquidity risk management system. Marcus Kramer Board of Management Member BayernLB Dr. Klaus Uelses Divisional Manager Group Risk Control BayernLB Dr. Olaf Scheer Managing Partner zeb/ Stefan Schweizer Senior Manager zeb/ For further information visit www.zeb.eu 36

Controlling, Accounting, Risk and Performance Management UniCredit Bank AG Global MIS based on an integrated CFO Data Warehouse Background and project objectives UniCredit Bank AG is one of the largest private banks in Germany with about 20,000 employees, 898 branches and total assets of EUR 411.7 billion in 2009. UniCredit Bank AG is a member of UniCredit Group, which is one of Europe s largest retail banks with over 161,000 employees and total assets of EUR 968.8 billion in 2009. UniCredit Bank AG is divided into three divisions: Retail, Wealth Management and Corporate & Invest - ment Banking and is the centre of competence for all of the UniCredit Group s capital market business. To ensure a unified management approach for the whole bank covering all global subsidiaries, UniCredit Group developed a central bank management framework and a custom software running on the group s standardised IT platform. UniCredit Global Information Services (UGIS), the UniCredit Group s multinational infrastructure provider, is responsible for UniCredit s Global Enterprise Services Strategy. UGIS handles architecture, delivery and production. To introduce a new, efficient, unified approach to bank management, UniCredit Bank AG used the central Data Governance function under the CFO to prepare their global CFO transformation program. The function Data Governance is responsible for group-wide methodologies and CFO data standardisation. Data Governance decided to implement a Group CFO Data Warehouse (GCD) for bank management within the UniCredit Bank AG legal entity. A preliminary study of the GCD implementation was conducted at UniCredit Bank AG with zeb/. The project scope was to gather all functional, technical and procedural requirements from the accounting and controlling departments which would need to be met during the data warehouse implementation. Additionally, the project team was charged with ensuring that the multinational, normative group standards set by Data Gover nance were achieved. This is important because the component of the GCD that will be delivered in UniCredit Bank AG is going to be part of the global blueprint; hence it will be reused for the implementation of other local CFO Data Warehouse functionalities throughout the group. This will allow state-of-the-art bank management in all subsidiaries, consistent with global standards, enabling highly efficient, unified bank management. 37

Oliver Schoch Schoch

Controlling, Accounting, Risk and Performance Management Project approach Results from the preliminary study were gathered in the following five phases: 1. Analysis and assessment of functional requirements at a local level and of their consistency with Group Profitability Golden Rules and with the Group MIS Blueprint 2. Setting up a process framework addressing data processing and data quality, while at the same time minimising manual workload 3. Developing a technical target scenario connecting the local and the global data universes in all dimensions 4. Developing a methodology blueprint to be reused in other locations 5. Setting up a master plan for the implementation phase Reporting and further 1 2 business requirements Source Systems Risk and Regulatory Reporting Organisation and Processes LAYER 3 Systems/Data Warehouse 5 4 Engines and Methodology ETL Staging ETL CFO-DWH Methods Services ETL CFO DWH Platform Cross-Layer Services Target Picture and Master Plan Data Mart + Reporting Risk/Regulatory Reporting CFO Marts Banking Support MIB Collection Staging DB Mapping/ Normalisation Historicisation CFO- DWH Accounting Accounting/ Controlling Controlling Reconciliation Data Maintenance Annotation Adjustment Rules Data Quality Rules Business Scoping Denormalisation Controlling Accounting ALM Retail/ Corporate/ FBs Data Quality Services General Ledger Reconciliation Base Group Consolidation Miscellaneous Subscribers Fig. 1: Project approach and technical target scenario Project results and outlook The requirements gathered during the preliminary study for the GCD implementation, the architecture blueprint and the detailed master plan, describing the implementation and migration strategies, form the basis for the implementation phase. The preliminary study established the following core success factors regarding unified bank management in a multinational banking group: / Global definition and monitoring of well-defined and understandable rules 39

Controlling, Accounting, Risk and Performance Management / Definition of CFO Data Governance for CFO-certified data, defined according to global standards, followed by local implementation / Synergies by unifying and simplifying global and local data as well as data management / Setting up new analysis capabilities to support the users, enabling them to successfully steer UniCredit Group The preliminary study and the intended implementation of GCD will enable a unified bank management solution, a large step forward in establishing the first, real European banking network. Peter Hofbauer Chief Financial Officer UniCredit Bank AG Roberto Monachino Head of Data Governance UniCredit Group Domenico Ambrisi Head of Global Enterprise Services UniCredit Global Information Services Stefan Traulsen Head of Data Governance UniCredit Bank AG Dr. Thomas Hartschuh Partner zeb/ Oliver Schoch Senior Manager zeb/ For further information visit www.zeb.eu Dietmar Genßler Manager zeb/ Lars Meyer Manager zeb/ 40

Controlling, Accounting, Risk and Performance Management KfW Entwicklungsbank Feasibility of a foreign currency fund Background and project objectives A major obstacle to growth in developing countries is the companies lack of access to medium- and long-term finance in local currencies. Foreign currency loans impose most of the foreign currency risk on the borrowers that often do not have income in foreign currency. As emerging market currencies tend to depreciate, the borrowers debt increases and their credit ratings worsen. As a result, there is a lack of investments which impacts negatively on growth and employment. The insufficient supply of credit in local currencies is mainly due to the lack of refinancing in local currencies with matching maturities. The Local Currency Fund The Currency Exchange (TCX) was initiated in response to the G8 summit held in Germany in 2007. It is tasked with taking on and managing the long-term risks that lenders face once they provide local currency loans. Some of the interest and currency risks are passively hedged by diversification at fund level. Additionally, risk exposures are also actively managed. This is in line with another objective of develop - ment policy, i.e. to contribute to building up markets for interest and currency derivatives and expertise in the currencies of developing countries. The business plan for TCX was prepared by a specialist risk manager and sent to potential investors as a basis on which to decide to offer capital. They included international development banks such as KfW, AfDB, EBRD, FMO and IADB as well as private investors such as the Royal Bank of Scotland and Oikocredit. zeb/ was asked by KfW Entwicklungsbank to review the business plan for TCX, including the risk model, to validate the assumptions on which it was based and to highlight areas for improvement. Project approach In the first phase, zeb/developed a dedicated risk assessment model, with which to reproduce the results from the model supplied by the initiators and to show the effects of different scenarios, agreed on with KfW, on the fund's yield and risks. It was for example necessary to deve lop special time series modelling techniques in order to balance the poor 41

Controlling, Accounting, Risk and Performance Management quality of the data in developing countries and the unavailability of longterm interest rates, with which to model fixed rate transactions. In the second phase of the project, the entire TCX business model and the corresponding business plan were challenged and validated. This involved, among others, the question of a suitable waterfall structure. In this structure, the capital supplied by the German and the Dutch governments serve as a first-loss tranche, providing a risk buffer for other private investors. This buffer is needed because the risk is, by way of being a pilot exercise and because of the uncertainties for investors in markets that have scarcely developed, significantly higher than with other investments. Project results The TCX risk model rests on a number of basic assumptions. For example, it is assumed that TCX will always share fully in the monthly market yields and is able to execute transactions at any time, even in extreme market situations. Risks from fixed interest rate agreements are not recorded explicitly although a long-term loan based on fixed interest agreements is an important motive for giving credit to companies in developing countries. During the analysis, these and other less complex assumptions were modified in order to reflect market conditions more realistically. The zeb/ risk model was used as the basis on which to rework the whole business case. The results showed that compared to a basic scenario, which was considered realistic, the expected internal yield of the fund was reduced from 7.95% to 5.05% and the corresponding RORAC figures produced only 1.86% compared to the business plan value of 8.78%. Overall it was shown that the probability of losses is extremely sensitive to the assumed risk premiums, which would make an investment in the capital of the fund extremely risky. The aim was therefore to gain an indication of the minimum amount required for the risk buffer that would be sufficient to protect commercial investors from losses in a wide range of scenarios, timeframes and at different levels of probability. For example, a first loss capital of around USD 72 million of a final target total volume of USD 350 million (compared to only USD 52 million estimated in the business plan) would be required to prevent losses with a probability of around 1% over the first five years of the fund. 42

Controlling, Accounting, Risk and Performance Management Although the zeb/ analyses were based on more conservative assumptions than those of the initiators, zeb/ came to the conclusion that provided the Dutch and the German government made sufficient funds available for the risk buffer, these public funds should mobilise sufficient additional capital that would make the whole business case stand up and look promising. The zeb/ analyses were presented to a range of international finance institutions. They formed an important element of the decision making processes for the participation of several institutions, including KfW, in TCX. Since 2007, TCX has been growing. The fund has successfully attracted investments from public and private long-term investors that are interested to improve the access to long-term local currency finance in developing countries. Despite the international financial crisis, the business model has so far proven successful and robust. In 2009 and 2010, TCX reported profits of USD 73 million and USD 22.8 million respectively. The fund now offers currency and interest derivatives in more than 50 developing country currencies. At the end of 2010 TCX s portfolio in currency derivatives amounted to USD 728 million in 43 developing country currencies. Doris Köhn Senior Vice President Africa and the Near East KfW Hanns Martin Hagen Chief Financial Sector Economist LIId KfW Dr. Carsten Wittrock Partner zeb/ Axel Oliver Sarnitz Partner zeb/ For further information visit www.zeb.eu 43

Alexander Nefedov

Controlling, Accounting, Risk and Performance Management Eastern and Southern African Trade and Development Bank Scope and design of a Credit Risk Assessment System (CRAS) Background and project objectives The Eastern and Southern African Trade and Development Bank (commonly known as PTA Bank) was established in 1985 as a regional development financial institution to promote trade and development in the COMSEA region by financing viable transactions in both trade and project finance. It is based in Bujumbura and Nairobi and is owned by the 17 member states of COMESA, the African Development Bank and the People s Republic of China. The 2008-2012 strategic plan envisions the implementation of a bank - wide integrated risk management framework to address credit, market and operational risks. A key component of this framework is a Credit Risk Management System (CRAS), which would assist the bank in managing its core risk. PTA Bank s main objective is to implement a sophisticated risk-based scoring, grading and pricing system for its loan products, in order to match the risks assumed by the bank with its risk bearing capacity and the commensurate expected returns. More specifically, PTA Bank strives for the following objectives: / Upgrading the bank's core credit risk and loan portfolio management processes and systems / Upgrading the bank's internal processes and systems for data warehousing, mining and retrieval as well as information and knowledge management / Implementing external data and information sharing capabilities with external rating organisations so as to provide accurate data and information by country, industry and sector for the objective risk rating of loan products / Designing an implementation strategy for the risk-based loan scoring, grading and pricing system / Implementing a credit risk assessment software package zeb/ was assigned to assist the bank to determine the scope and design of an appropriate and practical CRAS system, taking into account best practice, and to employ a software evaluation process to identify a suitable IT solution. 45

Controlling, Accounting, Risk and Performance Management The project approach and results During an initial phase the bank's risk management policies, processes, reporting, IT architecture as well as the data availability and management were reviewed. Structured interviews and workshops were held with representatives of all relevant departments in order to gain insights into the daily operations and the associated business requirements that CRAS would have to meet. It was concluded that PTA Bank faces three mayor challen ges that should be addressed with high priority to improve the credit risk management process: 1. Design and implementation of a rating system 2. Implementation of uniformly applied risk-adjusted pricing 3. Management reporting/monitoring and data warehousing These key issues were addressed in the next phase, together with additional topics such as the standardisation and automation requirements for financial analyses (balance sheet/income statement analyses, cash flow simulation for assessing projects to be financed) and appropriate workflow support. In this phase the key elements of CRAS were discussed and described in more detail and their impact on the corresponding functional requirements for the software solution was elaborated. In addition, initial thoughts regarding the best potential way of integrating CRAS into the current IT landscape were discussed. During this process zeb/ supported PTA Bank with its experience and expertise to ensure that all major functional requirements were addressed and the final functional profile would fit international best practice. The functional and non-functional requirements were prioritised by representatives from the bank s different departments. Their prioritisation served as the basis for zeb/'s approved software evaluation model, which ensured an objective and transparent software evaluation process. zeb/ performed a comprehensive market screening to identify the most suitable potential vendors the resulting long list consisted of 13 international vendors, who were invited to participate in the evaluation process. After several queries, the vendors feedback served as input for the evaluation model, resulting in a preliminary ranking of the different systems. Additionally, more qualitative considerations were taken into account, as well as the bank's budget restrictions, in order to draw up a shortlist of vendors. As the bank decided to stay anonymous at this stage, all questions and communication with the vendors were handled by zeb/. 46

Controlling, Accounting, Risk and Performance Management The four most promising vendors were invited to present their software packages in workshops. All vendors had to illustrate how their systems would handle more or less complex use cases reflecting the core creditrelated business operations within PTA Bank, which were defined prior to the workshops. This allowed for better comparability of the different sys - tems and meant that the vendor presentations were less marketingoriented. The impressions gained in these workshops were assessed by means of a standardised evaluation sheet. An overall profile of each of the shortlisted vendors was then drafted, summarising the results of the evaluation model, the vendors detailed financial proposals and the impressions they made in the work shops. Based on these comprehensive evaluation results and system comparisons, the final decision on the system now rests with PTA Bank. Project approach and results Regardless of which specific vendor PTA Bank chooses, it will benefit from a well-founded credit risk management system that allows for a sound and uniformly applied assessment, differentiated risk-adjusted pricing and ongoing portfolio management of its credit engagements as well as a higher degree of automation and data quality in a broadly decentralised organisation, which offers its products and services across the entire COMESA region. Once the software has been implemented, zeb/ will carry out a Post Software Implementation Review to check the quality of the implementation and the stability of the associated creditrelated processes. Dr. Michael Gondwe President/CEO Eastern and Southern African Trade and Development Bank Kingsley Muwowo Principal Risk Management Officer Eastern and Southern African Trade and Development Bank Dr. Carsten Wittrock Partner zeb/ Dr. Holger Müller Manager zeb/ 47

Controlling, Accounting, Risk and Performance Management BRE Bank Design and implementation of new KPI logic and top management reporting Background and project objectives Measured by its assets, BRE Bank, a subsidiary of Commerzbank, is the third largest bank in Poland. For years BRE Bank has been perceived in Polish banking as a market and innovation leader. For the past few years before the financial crisis, the Polish banking market had been developing along a stable, upward growth path. As a consequence, banks focused primarily on facilitating their growth. However, the 2008 year completely reversed this perspective. Ensuring liquidity and an adequate capital base, minimising risk provisions and optimising costs to match the decreasing revenues were assigned the highest priority throughout the Polish banking industry. BRE Bank recognised the need to adjust to the new environment and executive reporting was one of the change areas that needed to be addressed. The objective was to implement an executive reporting system that would provide a comprehensive and structured overview of the bank s performance in order to ensure sustainable value creation. Project results In order to meet the objectives as defined by BRE Bank the project team delivered the following: / Reporting structure / Logic and set of Key Performance Indicators (KPIs) / Executive reporting book The first project module was aimed at ensuring consistency of the reporting structure as the key prerequisite for subsequent modules. Firstly, the components of the results for particular business lines Corporates & Institutions, Trading & Investments, Retail Banking were defined at a total group level. Special attention was paid to proper assignment of res - ponsibilities for the investment banking operations of corporate clients, which was identified as the key overlap between the Corporates & Institutions and Trading & Investments business lines. The concept of the new reporting structure was eventually documented and approved by all parties concerned at the bank. 48

Maciej Klein

Controlling, Accounting, Risk and Performance Management The main conceptual result of the project was a set of Key Performance Indicators (KPIs) based on a value-oriented steering logic. In the first step, the project team defined the key dimensions of the value-oriented steering system and the objectives within these dimensions and assigned responsibility within the bank for these objectives (see Fig. 1). In the second step, a set of KPIs was defined for the whole bank based on the logic developed. In the final stage of the project, each of the business lines and supporting divisions within the bank was assigned a specific set of KPIs. In all cases there were three levels of indicators provided: bank-wide KPIs (selection from the indicators for the whole bank), business-specific KPIs (indicators specific for a particular area) and business drivers (value drivers allowing for cause and effect analysis for businessspecific indicators). Dimension Profitability Business size ƒ Business size Risk Productivity Objective Generating maximum profit out of the given business Maximising business volume Ensuring proper assessment of risk and efficiency of risk processes Ensuring high quality of internal services at minimum cost of running the bank Responsibilty Corporate Banking Investment Banking Retail Banking Risk Division Operations Division Fig. 1: Key dimensions for the set of KPIs The executive reporting book was the final result of the project. The objec tive of this deliverable was to provide the top executives of BRE Bank with an efficient solution enabling the comprehensive and thorough assessment of the bank s situation on a regular basis. The first step was to define the management-oriented structure of the reporting book (see Fig. 2). Following that, the project team designed specific reports within the book including the defined KPIs. During this step, particular attention was paid to designing a proper layout for the reports in order to maximise the transparency and explanatory power of the information provided. The executive reporting book was developed within the reporting prototype in order to support the pilot phase of the new reporting solution before the final implementation. Finally, in order to ensure feasibility of the developed solution, zeb/ supported BRE Bank in mapping the data to the reporting prototype. 50

Controlling, Accounting, Risk and Performance Management MANAGEMENT COCKPITS: What is the problem area? / Overview of Key Performance Indicators (KPIs) / Starting point of analysis VALUE DRIVER TREES: What is the reason for this problem? TIMELINES AND DYNAMICS: When has the problem occurred? / Decomposition of KPIs into business drivers / Focus of analysis / Monthly values for KPIs and business drivers / Supplementary to analysis of cockpits and value driver trees Fig. 2: Structure of the executive reporting book Outlook As the result of the project BRE Bank has obtained a comprehensive framework for decision-making and overall bank steering as well as a powerful tool for analysing management information. The new KPI logic embedded in the management reporting solution contributed to the smooth and precise identification of value creation drivers or areas requiring special management attention within the bank, ensuring fast and efficient management. Karin Katerbau Zdzisław Wojtera Przemysław Kłobut Deputy President of the Managing Director for Director of Controlling Department Management Board, CFO Accounting and Controlling BRE Bank BRE Bank BRE Bank Axel Oliver Sarnitz Maciej Meder Agnieszka Malec-Wasilewska Partner Managing Director Manager zeb/ zeb/ zeb/ For further information visit www.zeb.eu 51

Information Technology Cedacri S.p.A. Development of a controlling platform in an Italian data center based on zeb//control Background and project environment Cedacri S.p.A., based in Collecchio near Parma, is the largest independent data center for the financial services industry in Italy and currently supports more than 70 banks with its service portfolio. In 2009, Cedacri S.p.A. decided to expand its service offering to its customers in the area of financial con trolling by involving a third party standard software. The goal was to provide customers with a web-based platform offering a state-of-the-art controlling solution. On account of zeb/'s contacts in Italy and via the internet page www.zebcontrol.com, Cedacri S.p.A. became aware of the range of services offered by zeb/. In the autumn of 2009, a project was set up with zeb/ with the objective of implementing a controlling platform at Cedacri S.p.A. by the end of 2010 based on zeb//control and to gradually roll out this solution to cus tomers of Cedacri S.p.A. Specifically, the following modules from the zeb//control family were implemented (see Fig. 1): / Profit control with zeb//control profit / Top management cockpit with zeb//control compass / Financial data warehouse with zeb//control warehouse / Funds transfer pricing with zeb/egk / Cost allocation with zeb/cost.allocation / Bank budget planning with zeb/integrated.bank-planner (zeb/ibp) zeb// control: Datawarehouse and applications zeb// control data integration zeb// control compass zeb// control profit zeb/ cost.allocation zeb/ egk zeb/ ibp zeb// control warehouse Cedacri Storage Area zeb/ data.quality-manager Fig. 1: Architectural sketch of the implemented zeb//control solution 52

Marc Räkers Bastian Sommer

Information Technology Beyond the specific project, Cedacri S.p.A. and zeb/ formed a partnership to develop and distribute zeb//control in the Italian market with the objective to tailor zeb//control to the specific requirements of the Italian banking market and win more customers. Project approach and results With the start of the project in September 2009, a specification phase with Cedacri S.p.A., zeb/ and two pilot banks (the Südtiroler Sparkasse AG in Bozen and the banking group Banco di Desio e della Brianza in Milan) was performed. In this phase the functional content of the solution to be implemented was clarified. In particular, the project team checked the existing controlling solution at Cedacri S.p.A. and the specific require - ments of the Italian banks for a controlling solution. As a result, the project deliverables were expanded to include further individual custom functionalities tailored to the Italian market, e.g., individual standard reporting, Italian language in all applications, reconciliation between controlling and accounting, IFRS segment reporting, implementation of a corporate perspective. Based on these results, a joint project team of Cedacri and zeb/ employees conceptualised, implemented and tested the specified controlling solution on the basis of zeb//control according to the client s precise re quire ments. In parallel, the development department of zeb/ in Münster upgraded zeb//control to support the new functionalities. Particular care was needed to manage the complex data landscape at Cedacri S.p.A. with its 43 different delivery systems and to develop a qua - lity-assured database for the new controlling solution. With zeb//control, a comprehensive data-management process to ensure data quality and to support continuous improve ment in data quality was installed. As a provider of IT services, it is important for Cedacri S.p.A. to operate and develop the controlling solution independently after completing the project. Therefore, a know-how transfer to Cedacri S.p.A. staff was set up. This consisted on the one hand of trainings for Cedracri S.p.A staff on the functional and technical zeb//control architecture and on the other hand of the practice of con tinuous cooperation between Cedacri S.p.A. and zeb/ during the project. On this basis, Cedacri S.p.A. already began independently developing additional applications for daily branch management and marketing support on the zeb//control platform within 54

Information Technology the current project. These functionalities were fully integrated with the zeb//control standard modules on the web. In January 2011, the new controlling solution from Cedacri S.p.A. went live with the first pilot bank. This success was only possible due to the intensive collaboration of Cedacri S.p.A., zeb/ and the pilot banks during the implementation phase. A gradual rollout to other customers of Cedacri S.p.A. is planned for 2011 and the following years. Outlook With the successful project implementation, achieved by combining the controlling and solution-based expertise of zeb/ with the country-specific know-how of Cedacri S.p.A. and the pilot banks, the partners could realise a high-performance bank controlling platform for Italian banks. Given the flexibility of zeb//control, further requirements can be integrated into the solution and the controlling application landscape can be developed dynamically. The project participants are convinced that the implemented solution is of interest to other Italian banks and represents a successful launch of the joint partnership in the Italian market. Salvatore Stefanelli Roberto Lagomarsini Veronica Biagi Managing Director Project Manager Project Manager Cedacri S.p.A Cedacri S.p.A Cedacri S.p.A Dr. Thomas Abel Frank Kathage Marc Räkers Partner Senior Manager Senior Manager zeb/ zeb/ zeb/ For further information visit www.zeb.eu 55

Jens Lindstrot Christian Wilhelm

Retail/Corporate Sales Rheinischer Sparkassen- und Giroverband Price management for business clients Background The price of the products and services they offer forms one of the central profit drivers for the German savings bank Sparkasse. Even relatively small fluctuations in conditions offered to clients can have a significant impact on a bank s profit. Nevertheless, the effect that pricing has on sales in the busi ness client segment has so far been underestimated, with prices being considered primarily from a cost/risk point of view, rather than from a sales perspective. For this reason, the regional savings banks association of the Rhineland, Rheinischer Sparkassen- und Giroverband (RSGV), undertook a project with zeb/ to develop holistic, systematic price management for business clients, with the savings banks Stadtsparkasse Düsseldorf, Kreissparkasse Köln, Sparkasse KölnBonn and Stadt spar kasse Oberhausen participating as pilot branches and with involvement from Finanz Informatik. The project objective was to formulate a technical concept for price management and the technical concept for a price information system for the Sparkasse banks, based on which ideas and instruments for optimising price management could be developed. Project approach and results zeb/ worked with the Sparkasse branches to identify and work through major fields of action regarding price strategy, setting, enforcement, controlling and information systems. Price strategy / Strategic pricing target system / Price positioning against competitors / Pricing guidelines Price setting / Price calculation (cost) / Price sensitivities (customer) / Competition analysis (competitors) / Price setting process and sample conditions committee Price enforcement / Guidelines for special conditions / Process for special conditions / Support instruments for price negotiations / Implications of tactical pricing for contract drafting Price information system Price controlling / Transparency of special conditions / Margin transparency / Product calculation support Fig. 1: Price management dimensions 57

Retail/Corporate Sales A core success factor for effective business client price management, and hence a core element of the project, is linking the managementfocused perspective of the Treasury and Controlling departments with the market-focused perspective of the Sales department to form an integrated price management approach throughout the entire bank. As a higher-level framework, successful price management forms a pricing strategy, linked in with the overall bank strategy and sales concept for business clients, which provides concrete pricing guidelines so as to assure a common understanding of pricing objectives in the business field as well as a concrete guidance framework to support customer support in their daily work. Other major components of price management include clear structuring and dissemination of information during the price-setting process. In many bank branches this process was too one-sided, driven primarily by controlling and based predominantly on cost calculations. For this reason, in the project we laid the foundation for giving greater consideration in the future to competitor information and individual price sensitivity analy ses. In this way, the competitor and customer dimensions are used to sys - tematically supplement the price setting process. Building on the prices established through the basic approach described above, our task in the next phase was to actively enforce these prices in price negotiations with the customer. For this purpose, we developed an in-house training programme. At the same time we developed guidelines for offering special conditions, a practice which at the time was often based simply on transaction volumes and the hierarchical rank of the employee. In future, the bank will be able to give greater consideration to the specificities of each customer, hence also the value of each customer and the available potential (see Fig. 2). 1 Identifying customers meriting 2 special conditions (example) Defining guidelines for an unified standard for special conditions (example) Customer with potential Customer value (e.g. business clients) Offer special conditions? High B A No No Low Potential in EUR D C < EUR 5,000 Yes No?? EUR 5,000 Negative Customer value in EUR Low High Fig. 2: Special conditions offered based on customer value and potential Yes Yes 58

Kai Böringschulte

Retail/Corporate Sales During the project we also worked out concrete starting points for defining efficient application and approval processes for special conditions. Another major theme handled in the project was developing a concept for improving the price information system, so as to create greater transparency in future around price management issues. Representatives from Finanz Informatik were actively involved in this aspect of the project right from the outset. On the one hand, the pricing system ought to enable business client consultants to prepare for customer consultations and price negotiations in a more target manner, so as to identify sales issues driven by price management. On the other hand, sales management and reporting should be extended to include price as a dimension, in order to monitor and manage price assertiveness, special conditions and how they are structured better in future across different product lines, among individual customer groups or consultant portfolios. Overall, the project created a basis for Sparkasse to make more systematic and constructive use of pricing issues as a profit lever in the business client segment. Many of these approaches can also be applied to price management for private customers. Viktoria Roleff Marketing/Sales Consultant Rheinischer Sparkassen- und Giroverband Jürgen Linneweber Head of Marketing/Sales Rheinischer Sparkassenund Giroverband Dr. Jens Sträter Partner zeb/ Kai Böringschulte Senior Manager zeb/ For further information visit www.zeb.eu 60

Retail/Corporate Sales Stadtsparkasse München Improving returns from retail banking Background and project objectives Stadtsparkasse München (SSKM) has been enjoying sustainable posi tive growth for years. Based on an ongoing increase in returns, in particular from interest surpluses, SSKM has been able to increase its year-end result by an average of 7% per annum since 2007. Compared to developments in the S-Finanzgruppe (Sparkasse finance group), this is an outstanding starting point. To ensure that the cost/income ratio target continues to be met in the long term, SSKM has undertaken a project with zeb/ to optimise price management. Based on a holistic project approach, i.e. for both the business and retail banking sectors, we tested and analysed the various aspects of price management from price calculation to instruments and customer price negotiations, right through to strategic pricing guidelines. Project content and procedure In order to structure this broad topic, we organised the project work according to four target scenarios so as to be sure to address the key results drivers: 1. Setting prices calculation methodology and inputs necessary to establishing customer conditions 2. Price enforcement instruments and room to manoeuvre when enforcing customer conditions in the market 3. Product portfolio pricing for profit driver products and pricing for specific sales channels, with a focus on online sales 4. Pricing strategy integrating price management in the catalogue of strategic measures At regular project review meetings we consulted intensively with SSKM level one management regarding the (interim) results, so as to ensure broad acceptance right from the start for the changes arising from the project. 61

Ilmhart-Wolfram Kühn Marcus Hampel

Retail/Corporate Sales Key project results The illustration below gives an overview of the results. The different levels of implementation readiness indicate the scope of price management questions to be addressed ranging from issues that can be solved at a more operational level, such as special conditions, through to calculation issues with far-reaching metho dological and IT implications. Price setting Price enforcement Product portfolio Price strategy Ready for implementation Dynamic replication portfolio Net margin management Bonus/malus management, including process Pricing for implicit options Pricing process Special conditions, competences Special conditions, approval process Special conditions, reporting and management Price arguments for pricing negotiations Analysis of profit-driver products Draft model for retail cash-accounts Optimising chequing-account models Pricing for online sales Regular product-testing process Pricing guidelines, cross-section strategy Pricing guidelines, specific customer segments (customer interest calculation parameter) (products) Rough draft Recommendation Profit impact high low (price setting) Fig. 1: Overview of project results As an example, we have outlined two key results that have a high impact on profit: 1. Price setting We optimised the calculation methodology used for pricing and adjusted it to evolving market conditions. We focused on introducing the dynamic replication portfolio and enhancing net margin management. Goals to be achieved in the future are: / Ensuring a match between calculated and actual impact on results / Increasing transparency right through to customer consultant level of impact on results attractiveness of each individual transaction / Making it easier to sell more profitable product accounts, so as to increase sales efficiency 63

Retail/Corporate Sales 2. Optimising price enforcement We then worked on a concrete proposal for adjusting competencies for special conditions. We focused on giving the sales team room to manoeuvre, while at the same time taking into account the duties of the management staff. In addition to implementing the new allocation of competencies, we will also introduce a better, standardised special conditions approval process as well as comprehensive special conditions reporting. We also developed arguments to support more professional price negotiations. The project work resulted in three central benefits: / Increased basic competence amongst sales staff in offering special conditions and making the special conditions approval process more efficient. / Greater awareness of the impact on results among the staff responsible for special conditions management as a result of decisionfocused reporting for special conditions management staff. / More transparent presentation of price concessions to customers, which can be used as leverage for additional business. Based on the draft project results, implementation is currently planned for 2011. We will prioritise the fields of action based on the highest expected impact on results. At the same time, we plan to communicate the project results transparently to the sales team as they are obtained, outlining the attendant benefits. Georg Martinschitz Head of Sales Management Stadtsparkasse München Dr. Katrin Lumma Partner zeb/ For further information visit www.zeb.eu 64

Retail/Corporate Sales Banca dello Stato del Cantone Ticino Implementing the sales strategy FocusVendita 2014 Vincere insieme! Background and project assignment In 2009 zeb/ supported Banca dello Stato del Cantone Ticino (BancaStato), the state bank of the Canton of Ticino, with total assets of CHF 8.4 billion and around 455 employees, in developing its new corporate strategy Focus 2014. This included the sales strategy FocusVendita 2014, with which BancaStato has clearly positioned its elf as a retail bank, focused on both private customers and small and mediumsized enterprised (SMEs). The sales strategy also covered expansion in the private banking segment in order to diversify income sources. To implement this sales strategy BancaStato set up the FocusVendita 2014 Sales Efficiency project and commissioned zeb/ to support it. The project was launched in 2010 and was conducted entirely in Italian. Project approach The project FocusVendita 2014, aimed at increasing sales efficiency, was divided into nine modules: FocusVendita 2014 Retail banking Private banking Corporate banking 9 8 7 Training and coaching Management approach Sales management 4 Advisory and 5 Products and prices 6 service approaches Sales channels 3 2 1 Capacity sizing Sales network Customer segmentation Fig. 1: Project modules for FocusVendita 2014 65

Retail/Corporate Sales The project scope included all strategic business areas (retail banking, private banking and corporate banking). In the initial project phase, we focused on working out a new customer segmentation based on potential. In this process we fundamentally revised the number of segments as well as the segmentation criteria and boundaries. Building on the new segmentation, we defined customer/client advisor and assistant ratios and quantified the target capacities based on the activities required. As part of analysing the existing sales network, zeb/ investigated the market potential in the Canton of Ticino based on the zeb/ study of private customers in Switzer land. This was to identify potential in the region and to derive measures to access this potential. In future, this market potential will be an important instrument which the bank will use for sales target planning based on available potential. In the second project phase, we defined segment-specific advisory and customer service approaches. We held workshops to define contact motives and to determine a structured advisory approach for each segment. An important aim was to identify customer needs and to provide a 360 degree approach to customer advice. This will enable BancaStato to systematically appeal to and develop their customers. In future, achievement of this goal will be supported by the use of structured advisory documents. We also defined a segment-specific range of products and developed an instrument enabling the structured selection of savings and investment products. Our aims were to significantly reduce complexity by limiting the number of products available to the advisors and to focus on high margin products. In addition, zeb/ assisted in setting up the call centre. In future BancaStato will be able to provide efficient customer service via the call centre, especially for customers in the mass retail segment. Once implementation is completed, in the first half of 2011, BancaStato will be able to determine the potential of the customers handled by the call centre and pass them on to advisors for higher segments as appropriate. In the third project phase we focused on revising the management approach. A clear management approach and consistent implementation are basic prerequisites for the success of measures to increase sales efficiency. For this reason we worked with management staff to formulate management guidelines and to enhance the existing management instruments. An important management instrument in this context is the Performance Report. In future, all managers will be able to verify the performance of their staff using a clearly designed report. This report will set 66

Retail/Corporate Sales out the basis for regular management meetings and for coaching by managers and client advisors. To ensure a successful rollout of the new advisory and management approaches, zeb/ also drafted an extensive, customised training and coaching programme for BancaStato. From autumn 2010 to mid-2011, all managers and client advisors will attend a training course over several days and receive intensive coaching. For this purpose, zeb/ has drawn on its network of trainers to put together an Italian-speaking training team. Project results and outlook After concluding the conceptual phase, we are now focused on employee training and coaching. After the training courses and coaching for managers and retail advisors held in autumn 2010 we had extremely positive feedback, both in the trainer evaluations and in terms of the methodology and procedure. In 2011 zeb/ will extend the training programme to include corporate and private banking advisors. To support sustainable implementation, zeb/ will also work with the management team to analyse the implementation status in quarterly management assessments and develop measures to support the success of the implementation. BancaStato and zeb/ are convinced that, with this project, we have laid an important foundation for the bank s future growth. Fabrizio Cieslakiewicz Membro della Direzione Generale Retail Banking and Corporate Clients BancaStato Claudio Genasci Membro della Direzione Generale Trade and Private Banking BancaStato Heinz Rubin Managing Partner zeb/suisse Tobias Müller Manager zeb/ For further information visit www.zeb.eu 67

Operations and Restructuring Sparkasse KölnBonn Programme Target 2014 Strategic reorientation Background and project objectives Due to strategic considerations and external expectations, at the end of 2009 Sparkasse KölnBonn faced the challenge of consolidating its position by fine-tuning its business model and introducing measures to sustainably increase profitability. This was motivated in part by the bank s unsatisfactory performance in previous years as well as by the State Aid Proceeding offered by the European Commission dependant on various measures affecting the capital account. In this context the bank commissioned zeb/ to work with it to develop a set of objectives for the business model and to identify the actions required for its implementation: Sparkasse KölnBonn needs to align its business model more closely with those of other large savings banks. Project approach and results As part of the programme Target 2014 Strategic reorientation, we spent the first two and a half months formulating a description of the new set of objectives and getting it approved by the managers and board of management. For this purpose we intentionally chose a case-based, topdown approach, which enabled us to dispense with a comprehensive detailed analysis. We came up with a focused set of objectives for Sparkasse KölnBonn (see Fig. 1), based on the underlying conditions for the bank s business activity: / Concentrate on business areas that bring a sustainable return / Align approaches with those of similar, large savings banks / Enhance and adhere consistently to a regional focus / Increase use of offerings from associated companies and standards provided by Finanz Informatik and the DSGV's model set-up; giving preference to integrated solutions provided they are economically viable Based on this, the bank aims to strategically reposition itself as a sales savings bank by: / Focusing sales activities on regional retail banking / Focusing segmentation on better defined groups, e.g. by adjusting the segment boundaries and offering special support services to freelancers and health professionals / Implementing consulting processes based on the DSGV standards, but with the addition of new support relationships and sales standards 68

Operations and Restructuring / Optimising business processes from the customer s perspective, while taking into account the overall efficiency across different divisions / Enhancing sales management, e.g. by expanding sales and activity controlling so as to better manage the segments / Redistributing resources by partially reassigning service and assistance staff to customer service. Basic principles of business activity Processes/structures Management Strategic business areas Sales savings bank Money market business Private clients / Private banking / Individual clients / Consulting clients / Service clients / Commercial clients / Business clients PC sales management Corporate clients / Large business clients / Medium-sized business clients / Institutions/foundations / Freelancers and health professionals CC sales management / Treasury / Asset liability management / Trade / Loan portfolio management Fig. 1: Sparkasse KölnBonn Set of objectives Achieving the new positioning involves implementing actions that impact the entire bank. zeb/ performed a qualitative assessment of the required actions as well as a quantitative assessment based on an analysis of the cost/return potential: / New sales approach in private and corporate client segments / HR and materials cost optimisation as well as strengthening on-going cost management / New approach for money market business / Reduction of complexity in the business model / New approach for bank-wide risk management / Optimisation of business processes and IT systems As part of a benchmarking exercise zeb/ was able to demonstrate that the measures needed to make the business model more profitable, i.e. increasing returns while at the same time reducing costs and maintaining the bank s risk-bearing ability, are ambitious but possible. 69

Operations and Restructuring Following on from the initial project phase, at the beginning of 2010 we set up a comprehensive programme, comprising seven modules, in order to achieve the objectives set and implement the medium-term planning. As project initiators, the relevant divisional managers took responsibility for the project implementation and results. Each project had two members of the board of management acting as a sponsor. This enabled us to raise the level of commitment and to have better capacity for escalation thanks to a shorter decision-making process. In addition, standardised programme rules and instruments ensured strict implementation. In 2010 zeb/ provided operational support for the programme Target 2014 in the projects for optimising HR costs and refocusing the bank management. As part of the overall management programme, zeb/ also shared responsibility for cross-project integration, for upper-level programme planning and quality assurance and for performing functional reviews of individual issues from all projects. Outlook The programme Target 2014 is scheduled to run until 2014. However, the conceptual phase was largely completed in 2010. The European Commission s State Aid Proceeding has also been concluded, endorsing the internal restructuring measures undertaken. This means that in 2011 we will be focusing on implementing the programme and realising its potential. zeb/ will continue to support the programme during this phase. Artur Grzesiek Chair of the Board of Management Sparkasse KölnBonn Dr. Joachim Schmalzl Member of the Board of Management Sparkasse KölnBonn For further information visit www.zeb.eu Dr. Markus Thiesmeyer Partner zeb/ Frank Schäfer Senior Manager zeb/ 70

Tim Hoyer Frank Schäfer

Strategy BayernLB Integrated Corporate Finance Bank Background and project assignment With a market share of over 40%, Sparkasse banks and state banks are the main financers of the German economy. Recently state banks have placed stronger emphasis on larger medium-sized business clients. In its new business model, BayernLB has repositioned its medium-sized business client segment as a key growth area. In this segment BayernLB acts as a partner to the Bavarian Sparkasse banks and also employs its consulting and product expertise in direct business with larger mediumsized enterprises. The member of the board of management for business clients at BayernLB has now decided to address the strategic positioning of the business segment responsible for medium-sized businesses. The original objective of the project with zeb/ was to work out a suitable competitive profile for BayernLB, enabling the bank to meet its ambitious growth targets. Project approach and results To develop an understanding of BayernLB s strengths and weaknesses, in the first project phase zeb/ performed an analysis of the existing customer base as well as the range of business activities. With this input and with knowledge of the competitive environment, we formulated a new direction for the medium-sized business segment: / Industry sector focus of the sales team / Integrated corporate finance offering (CF, derivatives, trade finance and the anchor product loans) / Enhanced structuring competencies (focused on balance sheet and cashflow) / Roll out sectoral and product expertise across Bavaria and North Rhine- Westphalia We implemented this last point by strengthening the Nuremberg branch and opening a new branch in Düsseldorf to enter the North Rhine-West - phalian market. 72

Strategy Based on the business client study conducted by zeb/, we calculated the realistic potential for this strategy and formulated an ambitious business case for the BayernLB medium-sized business segment. Three major buil - ding blocks contributed to the operational implementation of this strategy: Sectoral know-how: A unit anchored in the medium-sized business segment supports the sales team on their way to becoming an industry sector sales team. Besides specialists from various focus sectors, in future BayernLB will also use methodology specialists to prepare current topics from specific focus sectors for use by the sales department. Financial Engineering: An in-house group of financial engineers is working on identifying customer needs in addition to the core task of loan and balance sheet structuring and offers the sales team additional sales angles which add value for the customer. Customer conferences: Customer conferences will be held at least once a year, with the participation of relevant product, sector and risk specialists, to form a common understanding of the needs of those customers with significant potential. This results, among other things, in a sales target which has an influence on goals agreed with individual members of the sales team. In the second and third phases of the project zeb/ assisted in refining this strategy and kicking-off its implementation. Essentially, these phases were characterised by deep cooperation with the sales and specialist staff at BayernLB. By the middle of the year we had set up the new, sector-focused departments, providing a sector-specific service offering. We also piloted the customer conference process and established the necessary customer connections. 73

Burkhard E. Käser Dr. Florian Müller

Strategy Outlook The medium-sized business segment at BayernLB has a new strategic focus and actions influencing the organisational structure have been successfully implemented. The path we have taken has been endorsed by a high level of internal acceptance, by the enthusiasm for change that was generated and by positive customer feedback. Furthermore, positive results can already be seen in the segment s figures. The growth path defined and the target of achieving excellence as a sector-focused and integrated corporate finance bank is fully supported by BayernLB s medium-sized business segment. Based on the solid groundwork and practical experience, everyone involved is confident that BayernLB will reach its ambitious goals in this sector. Jan-Christian Dreesen Board Member BayernLB Karlheinz Müller Bank Manager Head of Medium-sized Business Segment BayernLB Heinz-Gerd Stickling Partner zeb/ Dr. Jens Sträter Partner zeb/ For further information visit www.zeb.eu 75

zeb/studies zeb/studies Markets in focus For nearly 15 years, our zeb/studies have formed an important addition to our project work. They deal extensively with important issues in the national and international credit services sector, linking data-based analyses and well-grounded research with concrete possibilities in practice. International M&A Study 2010 Over the last 20 years there has been a significant increase in both national and, more particularly, international mergers and acquisitions among banks. Bank corporations can only maintain and enhance their position among the world s top banks in the long term by means of targeted M&A transactions. Based on data from 2,400 mergers and acquisitions of globally quoted banks between 1987 and 2007, zeb/ has shown that only around 42-43% of M&A transactions can be classified as successful from an economic perspective, as opposed to 50% from a money market perspective. Despite the low success rate, M&A activities are still worthwhile. Acquiring banks over-perform by an average of 4-5 percentage points with regard to return on equity or total shareholder return. The study has also shown that the success of M&A strategies depends on conditions surrounding individual transactions such as the business model, the size of the bank and its transaction volume. Study on Regional Banks 2010 Increasing supervisory, regulatory requirements, changes in customer behaviour and the impact of the financial and economic crisis constitute major challenges for regional banks in Germany. The Study on Regional Banks 2010 covers these developments. It shows that, amidst the crisis, savings banks and cooperative banks in Germany can not only maintain, but even improve their market positions. At the same time, however, over the last few years these banks have experienced a significant increase in pressure in their retail and business customer segments. The study identifies important issues and trends in the regional banking sector for the coming years and derives strategies for the future. Our analysis is based on a zeb/ survey of 185 banks in the German savings and cooperative banking sector as well as approved external data from these banks. 78

zeb/studies Private Customer Study 2010 Since the first publication in 2003, our annual analyses of German retail banking with private customers are an essential part of our zeb/studies. The focus is on determining and evaluating revenues and revenue potentials in retail banking with private customers throughout Germany not only nation-wide but also in a regional approach down to the level of individual cities and postcode regions. The study gives a detailed illustration of differences in product use among customers from different income segments and age groups and the achievable re turns from these cus tomer groups. This makes it possible to individually determine the potential revenues from the customer groups of an individual bank and to analyse why these have changed since 2000. By comparing the total potential with current revenues, it becomes clear that there is a considerable amount of potential still available. In addition, the study clearly indicates fields of action and operational preconditions needed to realise full potential in retail banking with private customers in Germany. Private Wealth Banking Study 2010 Despite the crisis in financial markets, over the past years the private wealth banking segment has become significantly more important. Because of its high number of high net worth and ultra high net worth individuals, Germany continues to be one of the most attractive markets in Europe. In this study zeb/ investigates the private wealth banking market, addres sing this highly interesting customer segment in detail. Based on research into the factors influencing the development of the market from both a client and competitive perspective, the study forecasts future market developments. It also addressed the question of how profitable this customer segment is in Germany. Results from the study show that potential for returns has increased continuously despite losses due to the crisis in financial markets and that positive development can also be expected in the future. On this basis the study derives concrete requirements for a successful private wealth banking business model and recommends important actions for positioning in individual areas of the business model. 79

zeb/studies European Transaction Banking Study (ETBS) 2010 For a few years now, transaction banking has grown in importance due to the increasing tendency towards a splitting of the value chain in banking. As part of the European Transaction Banking Study, based on Europe s eight largest financial markets, zeb/ researched which trends and challenges the European transaction banking market is currently facing and which strategies banks should employ in response. The study also identified the success factors for transaction banking, taking into account the different business models used in the market. The research is based on an extensive database as well as detailed market analyses and a survey of selected transaction banking providers carried out by zeb/. Consequently, this is one of the most detailed and up-to-date analyses in this field. zeb/ value compass 2010 The zeb/ value compass, first published in 2010, is a comprehensive empirical study of value creation in 100 of the world s largest banks. The study provides empirical evidence of which banks achieved an aboveaverage total shareholder return throughout an entire economic cycle (2004 to 2009) and uses this to identify success factors. The study shows, by means of a model created by zeb/, that focusing exclusively on profitability (e.g. measured against RoE) does not lead to success. Instead, banks only succeed in value creation if their management is based on a broad set of parameters (including constraints) and is according to peer comparisons in line with a well-balanced business model. The results were verified and management implications were derived in interviews with top managers of international banks. The study offers a well-founded view of the current state of value-based management in the international banking industry and also identifies the most important trends for the coming years. Please contact us for further information on zeb/studies. zeb/research Oliver Rosenthal Head of zeb/research Phone +49.251.97128.300 E-mail research@zeb.de 80

Anne Sapich Dr. Ekkehardt Bauer

Contact Berlin FriedrichstadtPassagen Quartier 205 Friedrichstraße 70 D-10117 Berlin Phone +49.30.2094.5600 Fax +49.30.2094.5601 E-mail berlin@zeb.de www.zeb.de Budapest Zsigmond tér 10 H-1023 Budapest Phone +36.1.235070.2 Fax +36.1.235070.3 E-mail budapest@zeb.hu www.zeb.hu Frankfurt Taunusanlage 19 D-60325 Frankfurt a. M. Phone +49.69.719153.0 Fax +49.69.719153.410 E-mail frankfurt@zeb.de www.zeb.de Hamburg Kurze Mühren 20 D-20095 Hamburg Phone +49.40.303740.0 Fax +49.40.303740.10 E-mail hamburg@zeb.de www.zeb.de Kiev 42-44 Shovkovychna Str. UA-01601 Kiev Phone +38.044.490.1216 Fax +38.044.490.1200 E-mail kiew@zeb.com.ua www.zeb.com.ua Munich Bavariaring 26 D-80336 Munich Phone +49.89.543433.0 Fax +49.89.543433.99 E-mail muenchen@zeb.de www.zeb.de Münster Hammer Straße 165 D-48153 Münster Phone +49.251.97128.0 Fax +49.251.97128.101 E-mail muenster@zeb.de www.zeb.de Prague Římská 20 Fitzwilliam Business Center CZ-120 00 Prague Phone +420.2228660.70 Fax +420.2228660.99 E-mail prag@zeb.cz www.zeb.cz Ulm Einsteinstraße 55 D-89077 Ulm Phone +49.731.93291.0 Fax +49.731.93291.600 E-mail info@ite-computence.com www.ite-computence.de Warsaw Saski Point ul. Marszałkowska 111 PL-00-102 Warsaw Phone +48.22.52853.50 Fax +48.22.52853.60 E-mail info@zeb.pl www.zeb.pl Vienna Mariahilfer Straße 20 A-1070 Vienna Phone +43.1.5226370.15 Fax +43.1.5226370.30 E-mail wien@zeb.at www.zeb.at Zurich Bellerivestrasse 5 CH-8008 Zurich Phone +41.44.56067.67 Fax +41.44.56067.69 E-mail zuerich@zeb.ch www.zeb.ch www.zeb.eu 85

Imprint Special thanks to all employees at zeb/ for their friendly support. Published by zeb/rolfes.schierenbeck.associates gmbh Hammer Straße 165 D- 48153 Münster Phone +49.251.97128.0 Fax +49.251.97128.118 Internet www.zeb.de E-mail muenster@zeb.de Editor Judith Altenau Design and Realisation Kerstin Reer Photographs André C. Stephan and Daniel Morsey, Delicious Photography Printing House Druckhaus Cramer GmbH & Co. KG Hansaring 118 D-48268 Greven 86