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FINANCIAL
1 April, 2013 | finchannel.com
Bank Republic Changes Its DNA By Eugene Walters
W
hen Christian Carmagnolle became CEO of Bank Republic/ Societe Generale Group, he announced the Group aimed to be the best bank in its strategic market by seeking excellence in customer care. But the bank needed to implement more structural changes to streamline business processes and upgrade the quality of customer services to retain its ranking among the most reliable and dynamic financial institutions in Georgia. Carmagnolle and his team have made exhaustive improvements and plan to make even more in its efforts to make Bank Republic, Georgia’s most “socially responsible bank.” “We inherited a non-performing bank, at a loss for 3 years. There was no motivation. It was stagnating,” says Chief Commercial Officer, Ramaz Kukuladze, who joined the bank in September, 2011. The results of the bank’s new changes are evident in the positive performance of 2012, which was a good year in terms of quantitative and qualitative aspects. Among the chief changes was a move towards a performance based culture. By providing clients with real solutions, the Bank will gain the market share they are looking for. So far, the plan is paying off. Bank Republic ended up with a $15 million net profit at the end of 2012. “We are changing the organizational structure, the profitability, the DNA of the bank,” Mr. Kukuladze asserts. “We are rebranding ourselves to “relationship banking” and introducing new strategies.” He explains that typically, banks judge a client only by their assets and ignore the client’s real ability to pay a loan back. “That’s not the case with us. Our first point is to assess whether a client has enough cash flow to pay back the loan. Collateral is secondary.” Relationship banking involves actively working with the client to ascertain what size loan
Ramaz Kukuladze, Chief Commercial Officer is best for the client. The goal is to have a client that can meet his or her obligations. The attitude of relationship banking is reflected in Bank Republic’s new slogan, “Each of Us Matters,” a buzzword that means each stakeholder is as equally important as the next, whether they are a client or one of the Bank’s tellers. “It’s a team spirit philosophy we’re trying to build on,” Kukuladze says. With 2012, as a benchmark, 2013 looks to be a good year for Bank Republic. Right now, according to the NBG standards, of the top 5 leading banks in the country, Bank Republic has the largest return on equity so far. While it has always had a strong retail market, the Bank is re-engineering its branches to im-
prove it. The number of customers has grown by 28%, so that there are currently 210,000 retail clients. One of the Bank’s main challenges this year is to increase the number of active clients into its total portfolio of clients. The corporate market, however, has moved slower. One reason is that the Bank was more oriented towards large ticket deals. This year, SME is the bank’s major focus. Now, corporate clients will have the benefit of having the best prices on the market, however, the Bank team aims to be more diligent in assessing its corporate clients. “We are very picky about corporate loans,” Kukuladze admits. “We want the best companies to become our clients.” To improve its efficiency, the
Bank has redesigned its process for corporate loans by signing service level agreements with risks so that the number of days the client has to repay is in line with the market. It is not just about being in a better position with price, it’s also about being in line with the market and being flexible. Being in line with the market isn’t just about offering customized images on debit and credit cards; its about offering products suited to the ever changing demands of society and staying a step ahead of competition. Over the past year, Bank Republic has offered 20 new products from mortgages to customer loans. It was the first bank in Georgia to introduce the lowest interest rate customer loan - 13.95%. As
for internet banking, an interim solution has been launched for corporate internet banking, while retail banking will soon be introduced. A state of the art solution is slated for implementation in 2014/2015. Kukuladze states the Bank has been slow in internet banking because the starting position was behind when he and Mr. Carmagnolle joined the bank. This year, they will offer mobile banking to meet the needs of a new generation of clients who have new habits. In 2011, the Bank’s major product in its retail loan book was mortgages, which have a less divergent interest rate. In its portfolio the target was over 50%. The Bank’s aim is to reduce the mortgage weight and increase the weight of other retail markets it has a better margin on. Kukuladze says they are quite successful too. The rate of our customer loans increased, while mortgages are at 39%. “We are offering a much better product than before,” Kukuladze says. While it is mostly known for its mortgages, Bank Republic’s most popular products are customer loans. It has recently redesigned the loan process to radically improve its response time to clients. Now, 90% of its customers applying for loans need only wait 2 to 3 days maximum for the entire process, including disbursement. For larger scale tickets, the wait is 7 days maximum. “That’s much better than what the market is offering,” Kukuladze maintains. Moreover, in terms of loans, the Bank has the lowest interest rates in the country. It endeavors to stay 100 basis points (1%) below the competition on every product. It offers mortgages starting from 11% fixed rate and a variable rate starting from 9.8%. Consumer loans are at 13.95%. Bank Republic’s innovations include offering travel loans, installment loans and bundle automobile loans that offer gifts like insurance and petrol. The Bank maintains around a 15% market share in mortgages. Its overall shares in loans is 6.6%. Becoming a socially responsible bank is a process that requires vision, fortitude and discipline. It requires a thorough analysis of risks and a sincere relationship to clients. Ramaz Kukuladze calls it “advisory banking” and insists that such an approach is good for everybody and educates the client to achieve a better life. “At the end of the day, if we manage to be successful in providing the best advice, the client will be able to distinguish the difference between our bank and the competition,” he says.