Micro-Structure of Corporate Banking Division

M HRM

3.4 Basic Models for the Structure at Head Office Level

3.4.2 Micro-Structure of Corporate Banking Division

The examined sample shows that the internal functions of the Division ap- pear to be more or less numerous and subdivided according to the degree of divisionalization.

In theory, as seen in models 1-3 (Table 3.3), the corporate banking divi- sion manages the following functions:

• Loans;

• Marketing/Planning;

• Personnel;

• Overseas;

• Organization;

• Control;

• Secretary's Office;

• Specialized branch network;

• Product units (internal or external).

The product units based in other companies within the banking group are managed by the corporate division director not through direct supervi- sion based on hierarchical relations but through functional relationships and informal contact mechanisms allowing products coordination in rela- tion to segment policies.

However, there are important differences between the banks in our panel (Table 3.5).

The corporate banking division often lacks of operational autonomy, since it has no complete control over the competitive drivers of its own market or segment strategy (products, branches, etc.).

Some divisional units (Bank Y, Bank Z) have a prevailing commercial vocation.⁴

4 The Corporate Division is in charge of creating new products, delivery of prod- ucts and services, customer relations development and management, compliance with other countries' local regulations.

Table 3.5. Corporate banking Bank

A B C D E F W X Y Z

Loan

X X X X X X

X

Marketing

X X X^a X X

x

^d

X X

x

^d

x

^d

a And planning.

b Management control

c And Lawyer's office

d Strategic planning.

Pi

X X

X X

X

division internal functions

Overseas

X X

X

Bank functions

Organiza- tion

X

X

1 and risk control.

Control

X X^b X X

X Secre- tary's

X

x

^c

X

X

Office Branches

X

X X X

X X

Products

X X X X

X^e

X X^f

Key Clients

X

X X X

e As the business unit produces everything internally without resorting to product companies, it is subdivided into the following departments: corporate finance, eq- uities, fixed income, structured financing, international trade finance, commodities financing, corporate lending.

f Only in marketing. In Bank Z, the corporate division employs 37 people, out of which: around one third are employed in strategic planning, one third in supply packages construction, one third in the "development" function (called "sales animation"). Sales staff design back-up instruments for selling new products or for the management of new processes/procedures regarding the branch network (e.g.

cash management service supply). These instruments are made available to re- gional banks and sometimes to final customers as well. The launch of new prod- ucts is organized on these grounds with internal conventions and development ac- tions. There still remains the fact that channel banks are free to choose and also distribute non-group products. Internal products are not characterized by channel incentive schemes (that is, the regional bank is not "rewarded" for distribution).

According to the operational autonomy principle, the internal organiza- tion should include at least the following roles/functions (Baravelli 2003):

a) product unit (specialists for the products supplied to segment custom- ers, also located in external companies, but managed in a functional way by the division's manager);

b) relationship managers (segment managers), coordinators of customer managers (corporate bankers); the latter have competencies correlated to the interlocutor's level and dimensions as well as to industry/regional specialization;

c) function managers (marketing, personnel, EDP, etc.) responsible for the connection with Corporate Center units as well as for differentiating processes and activities according to segment's requirements.

The Division's human resources (at head office level) are sized accord- ing to the functions and the autonomies attributed to the unit. The staff may range from 50 (Bank E, Bank Z) to 15,000 people (Bank Y).^s

It is not always possible to detect a direct correlation between the bank's dimensions and the number of its Division's employees (for example, the structure of Bank F counts 250 units, Bank E around 50, Bank A and Bank W 500, excluding corporate bankers and network product specialists).

The professional roles currently envisaged, within the corporate division and distributed in head offices, regional offices and branches are shown in table 3.6.

When the bank does not have a real Corporate Division, the corporate market commercial roles are shown in table 3.7.

Bank Z stands as an exception. Besides the division manager, its branch network is controlled by regional banks that have full autonomy in choos- ing their own models and the nature of their customer relationship roles.

Moreover, almost all the banks have (private and corporate) market man- agers working in close contact with the division managers of Bank Z.

In the banks that adopt semi-divisional models, segment strategies are controlled both by the corporate center and the branch network (Fig. 3.5).

5 The Corporate Division (that is, SBU WCS) employs 15,000 people, including the regional network personnel. They are distributed as follows: 10% in strategic planning; 20% in strategic and operational marketing; 40% in products manage- ment; 10% in relationship management; 5% in products and services R&D; 15%

in staff units.

Table 3.6. Specialized roles in corporate banking divisional structures

Today Next three years Corporate division director

Corporate area managers in regional offices¹¹ Corporate Banker

Corporate banker assistants Credit officers

Product managers

Others (external consultants)

X X X

x

^b

x

^b

x

^b

x

^c

X X X

x

^b

X X

x

^c

Bank A, Bank Y, Bank B before January 2003.

Not in all cases.

c Bank A, Bank Y.

Table 3.7. Typical corporate banking specialized roles in non-divisional structures Divisional structures roles Substitute roles Corporate division director Commercial director Area managers in regional offices Area manager

Corporate Banker Sometimes relationship man- ager with client portfolio within the branch; credit offi- cer or branch manager in func- tional structures

Corporate banker assistants Credit officer Credit officers Credit officer

Product managers Sometimes in regional office

Loan Department 1

Corporate Centre (section CB) 1

Deputy GM Business Manager Corporate Banking

Manager Retail Banking Manger Planning —

Marketing (9 persons)

Distribution channels (5 persons)

Products (7 persons) Banks

(4 banks)

Regional Offices (20 units) Commercial Function

Corporate Banking

Credit Department

Retail Banking

Corporate Commercial

Banking Function f Supervisors [ Branch Network management Segmet Manager

Small Business

Segment Manager SME

Fig. 3.5. Organizational structure of the corporate banking units in a non-fully di- visional bank: the case of Bank E

3.5 The Structure Of Regional Offices And Branch