Caja Navarra

Civic BankingCivic BankingSocial Innovation toBetter Compete

1 | LA INNOVACIÓN IMPLANTADA PARA COMPETIR MEJOR / PRESENTACIÓN CAN

1. Introduction: Spanish market/savings banks1. Introduction: Spanish market/savings banks

2. Previous considerations about innovation

3 Form lation of CAN’s strateg3. Formulation of CAN’s strategy

4. ‘You Choose: You Decide’ the creation of a right

5. The evolution of Civic Banking

6. Economic results, and beyond economics


Spanish banking market

• Highly developed.

• 290 banks serving 45 million people• 290 banks serving 45 million people.

– 45,000 branches.

• Highly profitable.

D it l b f b h– Despite large number of branches.

– $4.5 trillion in assets.


Savings banks

• Spanish savings banks historically have been based in local communities.– Typically, their boards are split among local political organizations,

l demployees and customers.• All savings banks dedicate a percentage of profits to social work.

– Ranging from 17% to 35%.g g 7 35– Caja Navarra returns 30%.

• Savings banks hold half of the overall $4.5 trillion in assets in the Spanishbanking sectorbanking sector.

• Savings Banks are non-profit-making financial institutions whose mainh t i ti i th t t f th i fit ll t d f i t ’characteristic is that part of their profits are allocated for society’sdevelopment and well-being.

• Spanish Savings Banks are full credit institutions, with freedom to act andl l i ll i h h f h i i i i hcompletely operationally on a par with the rest of the institutions in the

Spanish financial system. They are incorporated under the legal form ofprivate foundations with a social purpose… – Caja Navarra


• A savings bank based in Pamplona, Spain.

2007 figures:

R 406 3 illi ($62 illi )• Revenues: 406.3 million euros ($627 million)

– Up 26.0% from 2006.

• Profits: 175 0 million euros ($270 million)• Profits: 175.0 million euros ($270 million)

– Up 24.3% from 2006.

• Return on equity: 17 0%Return on equity: 17.0%

• Branches: 351

• Employees: 1,913p y ,9 3

• Market share: above 50% in its geographic area


i id i b i i2. Previous considerations about innovation…

>> Implemented >> It`s not just brainstorming >> Not the same as>> Implemented >> It s not just brainstorming >> Not the same asresearch >> Genetic >> It covers everything >> First and foremoststrategy…. Where we want to compete


An Innovation factory• Caja Navarra intentionally recruits people who don’t fit the standard profile• Caja Navarra intentionally recruits people who don t fit the standard profile

of bankers.

– Seeking innovators.

– Highly unusual for savings bank, which traditionally are sleepy andslow-moving.

– Employees are supposed to devote 20 minutes a day to innovative ideasEmployees are supposed to devote 20 minutes a day to innovative ideas.An employee Blog is focused on innovation.

• The bank’s innovation group is small and new.

– Only 3 people.

– The group both seeks ideas from inside the bank and scans for innovationexamples from around the world

Tying innovation to the business model:• Civic Banking bases its identity on social innovation and is expressed

examples from around the world.

in finance, organization, products, technology, etc., penetrating allareas of our bank. This innovation model gives us the answer ofevery step we want to do. Also, it makes our employees to be

i f hi h d d b l


protagonists of this process, as they are surrounded by a completeinnovation vision of the bank.


at CAN 1.913 people drive Civic Banking >> 88%have graduate degrees >> with an average age of 36>> 1 800 €/employee[+5% day in training] >>>> 1.800 €/employee[+5% day in training] >>Survey: 3,78 out of 5.


3. Formulation of CAN’s strategy

Civic Banking >> creating rights forclients/citizens >> by introducing duties for CANclients/citizens >> by introducing duties for CANto follow


3. Formulation of CAN’s strategy

01 Ch i 02 Being Informed01 Choosingand Deciding

02 Being Informed

04 Participating03 Beingreported

05 BecomingBankers

04 Participating

650 000 being empowered12 | LA INNOVACIÓN IMPLANTADA PARA COMPETIR MEJOR / PRESENTACIÓN CAN

650.000 being empowered


At the end of 2003, CAN created the right for its clients to choosethe destiny of its social work

1. It all began… with one problem:What can we do tomake the client feel a part of our social work?

2. It occurred to us…an idea: They should decidean idea: They should decide

2.We had to make a concession:Those who made the decisions would have


to give up the power



The clients chose where to allocate the profits earnedby CAN. They chose human needs over activities and things.

4. ‘You Choose: You Decide’, the creation of aright

Evolution of CAN’sallocation of socialspending in millions of 42,00

50,25

spending in millions ofeuros

24 00 26,40

4 ,

16,5021,50

24,00


2003 2004 2005 2006 2007

‘You Choose: You Decide’

2002

3. Evolución a la banca cívica5. The evolution of Civic Banking

This is an expression of Civic Banking [Civic Account]650.000 letters to the clients>> 10.000 client reactions collected >>90% positive reactions >> the clients highlighted transparency, braveryand and they valued their decisions more >> CAN grows andcompetes better.



• The “Volcan” program allows Caja Navarra customers to dovolunteer work for the social projects and institutions thatthey choose to support through “You Choose: You Decide.”

– “Volcan” puts customers in touch with nonprofits.

– Also provides training.

• “We are heading towards a new society and we are buildingthe future together.”

Volunteers inZZaragoza



[Meeting points and Accountability]

In 2007 > 6.000 volunteer opportunitiesoffered by projects > 2.750 volunteers in372 Projects > 22.000 volunteer hours>200 accountability sessions >More than7.500 have attended accountability sessions

In 2008* > 16.878 volunteeropportunities offered by projects > 5.857volunteers in 697 Projects > 37.318volunteer hours >209 AccountabilitySession >More than 9.500 people haveattended accountability sessions

20 | LA INNOVACIÓN IMPLANTADA PARA COMPETIR MEJOR / PRESENTACIÓN CAN* June 08


The newest customer right: “Know and DecideWhere Your Savings are Invested”Where Your Savings are Invested

• Customers can choose in between 6 specific purposes fortheir savings accounts to be invested into.

– “You Choose: You Decide” concerns only how the bank’sll fi d h i h ioverall profits are returned to the community, not what it

does with assets of specific customers.

• All this transparency in investing is causing nonprofitorganizations to send their patrons to Caja Navarraorganizations to send their patrons to Caja Navarra.

– For example, a priest in Navarre encourages parishionersto vote for his church so that it can be rebuilt


to vote for his church so that it can be rebuilt.



This is an expression of Civic Banking [Canchas]

The physical space of civic banking…


• These branches are called“Canchas” because in Spanish “darcancha” is to give an opportunityg pp yand to give exposure. A “Cancha” isa place where people share, andthis branch is as much ours as it is

’our customers’.

• Canchas are places where, besides • Currently 175 Canchasmaking financial transactions, ourcustomers and non-customers canhave a coffee, read books ornewspapers connect to the

Currently 175 Canchas.– Half of the bank’s branches,including all new ones.“In the future all our branchesnewspapers, connect to the

Internet, enjoy shows, talks andconcerts.

For children: magic shows

– In the future, all our brancheswill be like this. Without barriersbetween our financial advisersand our customers. In line with– For children: magic shows,

clowns and puppets.– Book groups are encouraged.All C h i d ith

and ou custome s. n line withour strategy.”

– 40-50 Canchas opening each year.• Operating costs for Canchas are 12 5%


– All Canchas are equipped withwifi and webcams.

Operating costs for Canchas are 12.5%higher than for standard branches.


This is anexpressionexpression

of Civic Banking[C h ffi ][Cancha offices]

In 2007, 65.000 people entered>> they surfed the internet for

h h j d18.000 hours >> they enjoyed12.000 hours of lectures >> they

developedmore than 1581activities >> 300 concerts >>activities >> 300 concerts >>More than 47.000 hours of

children’s games >> they freed morethan 1.000 books through thethan 1.000 books through the

movement Bookcrossing.In 2008*, they have passed,more

than 71.000, …..


than 71.000, …..

* June 08

What civic banking means for Caja Navarra customers

•They choose and decide 100% of the social works andpresent projects. [You choose: you decide]

•They know how much we earn with them and how much theycontribute to social projects they choose. [Civic account]

•They receive information from the association, NGO orbody, which indicates what they do with the money allocated tothem for social projects. [Social profit and loss account]

•They participate as volunteers in projects of their choice.[Volcan]

•They share our spaces, enjoy them, use them. [Canchas]

•They understand us because we talk to them in theirlanguage and gender, with clarity and transparency.[Contracts]



2007 Results

CAN 2001 / 2007 2001 2007

MM € MM € Multiplier

2007 Results

MM € MM € Multiplier

CREDIT INVESTMENTRESOURCES MANAGED

4.5006.467

12.50011.860

x 2,8x 1,8

CONSOLIDATED PBT 64 182 x 2,8

NO OF EMPLOYEES 1 413 1 913 x 1 4

P fit d L A t dic07 dic06 VARIACIÓN

NO. OF EMPLOYEES 1.413 1.913 x 1,4

NO. OF OFFICES 231 351 x 1,5

EFFICIENCY 64% 50% x 0,78

Profit and Loss Account dic07 dic06 VARIACIÓN

Importe %

CONSOLIDATED TURNOVER 406.281 322.427 83.854 26,01

Operating expenses 202.810 158.587 44.223 27,89

MARGEN EXPLOTACIÓN 203.471 163.840 39.631 24,19

Other net results -21.218 -11.976 -9.242 77,17

RESULTS BEFORE TAX 182.253 151.864 30.389 20,01

Income taxes and others 6.643 10.917 -4.274 -39,15


RESULTS AFTER TAX 175.610 140.947 34.663 24,59

GROUP RESULTS 175.037 140.848 34.189 24,27


1st semester 2008 Results

Importe %

MARGEN INTERMEDIACION 167.686 130.187 37.499 28,80

MARGEN INTERMEDIACION AGREGADO 177 588 145 528 32 061 22 03

C O N C E P T O SVariaciónJunio-08

Miles €Junio-07Miles €

MARGEN INTERMEDIACION AGREGADO 177.588 145.528 32.061 22,03

MARGEN BASICO 203.111 171.315 31.796 18,56Gastos de explotacion 108.372 91.134 17.238 18,91MARGEN EXPLOTACION RECURRENTE 94.739 80.181 14.558 18,16Resultado operaciones financieras -5.025 2.601 -7.626 -293,17

MARGEN EXPLOTACION 89.714 82.782 6.932 8,37Dotación y provisiones 29.313 24.176 5.136 21,25Operaciones y extraordinarios 44.878 39.993 4.885 12,21

RESULTADO ANTES IMPUESTOS 105.280 98.599 6.680 6,78Impuesto sobre beneficios y otros 4.942 8.561 -3.620 -42,28RESULTADO DESPUES IMPUESTOS 100.338 90.038 10.300 11,44


Pioneers in Civic BankingPioneers in Civic Banking

If you are interested on developing a similar strategy, contact :[email protected]: +34948208505


Tel: +34948208505


% increase incustomers

% increase incustomersthrough CivicB kiBanking

15,2%

7 4%8,7%41%7,4%

59%

Navarra

Outside ofNavarra


2006 2007


B. Financial proselytism>> The Pride is extended to the customer ‘In Can morethan just banking happens >> “Bring your money to CAN,that way you can finance what you want most” >> 15% ofnew clients come to CAN for Civic Banking

C. Value of the brand>> 2006: Best European initiative of CSR, award sponsoredp , pby the EU >> + 7,4% increase in clients in 2006>>2007: Best CSR initiative in Spain, recognition promotedby Forética >> 100 best companies in Spain to work for,y p pMerco, “Top para trabajar” (CRF) >> Financial entity withthe best reputation (Merco Marca) >> Empresa y SociedadPrize 2008 >>100 Companies with the best reputation Merco

i h lEmpresas 2008 >>Marca Esade Prize >>Best Spanish AnnualReport of Sustainability , …



A. Applied Social Innovation> 2007: 530.362 clients decided among7 g2.707 projects > in 2010, 700.000 clients deciding and4.000 projects in the community

Projectsj

Clients32 | LA INNOVACIÓN IMPLANTADA PARA COMPETIR MEJOR / PRESENTACIÓN CAN

Clients

www.can.es


Caja Navarra

Economy & Finance

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