Transformation Case Study

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YES BANK- Businessworld Transformation Series: 2010Seizing Opportunity in Adversity

Economies across the world are still emerging from unprecedented levels of stress and uncertainty

over the past 18 months. Indian economy in particular has shown great resilience, partly due to

prudent regulatory framework, proactive response by the regulators, and also because of the agility

& inbuilt entrepreneurship displayed by Indian corporate. The Indian economy is firmly on a

recovery path, albeit tempered due to lingering global uncertainties and domestic issues like

inflation, is all set for robust growth. The financial sector needs to keep pace with India’s emergence

as economic superpower, extending both, its reach and depth. We see an increasing role of the

financial sector to facilitate sustainable growth amidst growing competition.

This Transformation Series is conceived as a 3 part series, designed to provoke your thoughts with

specific business scenarios. The basic ethos of the Transformation Series is to infuse the concept of

Innovation Driven Growth in young minds. Seizing Opportunity in Adversity is the 1st case study

of the 3 part series.

Rules & Guidelines

A team should consist of minimum 2 members and maximum 3 students (bonafide

Management School Students only) from the same college, but can be from different

programs.

A student cannot be a member of more than one team.

Each team needs to submit a write-up of not more than 1500 words inclusive of all

exhibits and appendices, but exclusive of the cover page and executive summary (200

words max). In any case, the complete entry inclusive of all pages should not exceed 10

pages. Each team can submit a maximum of one entry.

Excessive use of templates, tools and frameworks in the cases study should be avoided.

Solution format: Font Size – 12, Font Type – Book Antiqua, 1.5 line spacing and the file

should be a Microsoft Word Document/PDF.

The front page should carry

o Institute Name,

o Institute Addresso Team Name,

o Details of the team members (Name, Course, Email IDs, Phone nos.)

o These details of the participants SHOULD NOT appear anywhere else in the entry

submitted.



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Entries should be mailed to [email protected] with the document name

as “_Team Name_ College Name” and subject line as “Case Study Challenge”

12 teams will be shortlisted for the next round. The decision of the organizers of the

contest and the panel of judges will be final and binding. DEADLINE for Submission:

22nd February 2010, 21:00 hrs

The short listed teams would be informed by mail. Teams need to send their

confirmation regarding participation within 2 days of receipt of the mail, failing which

the next best team in order of ranking of all submissions would be invited.

Shortlisted teams will be required to present their case analysis and solutions in person

in Mumbai. Details of the second round would be communicated to the shortlisted

participants separately. The decision of the organizing committee will be final. Any deviation from the contest

rules will make the team liable to be disqualified from the competition.

Important Dates:

22nd February : Submission of Case Studies in the prescribed Format

26th February : Announcement mails to short listed teams

1st March : Confirmation of participation in the final Round

10th March : Final Presentation to be sent to Organizing Committee

18th

March : Final Round of Transformation Series

Prizes Details:

First Prize : Rs 50,000 + Pre Placement Interview (PPI) for a position with YES BANK

Second Prize : Rs 25,000 + Pre Placement Interview (PPI) for a position with YES BANK

Third Prize : Rs 15,000 + Pre Placement Interview (PPI) for a position with YES BANK

All teams shortlisted for the final round will be provided with Certificates of Appreciation

For further queries, please contact:

Mr. Binoj Vasu

Chief Learning Officer

YES Bank Limited

022 66699123

[email protected]



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Seizing Opportunity in Adversity

Case study

Around February 2009, Mr. Kumar, the MD & CEO of The Professionals’ Bank of India Ltd.

(TPBoI Ltd), a new age private sector bank, called his top management for an emergency meeting

captioned – “TPBoI’s short, mid & long term strategic road map”. The top management

comprising of the various Business Unit Heads were partly taken aback with the meeting request as

in spite of an extremely challenging global and domestic macro-economic environment, TPBoI had

delivered extra-ordinary Q3 FY09 results – across both financial and overall business parameters.

Incidentally, Q2 and Q3 FY09 had been the most impressive quarters in the past 22 quarters since

the inception of the Bank. Infact, TPBoI had also very recently raised Upper Tier II & Tier II capital

from top Indian and marquee global FIs on back of a healthy balance sheet – a reinforcement of

confidence by the investor community!

When the going was so good, and the economy while recovering was still relatively uncertain –

why alter the road map? , the management team wondered.

A brief background about TPBoI Ltd.

In a relatively short span of 22 quarters, TPBoI has emerged as the #1 Mid Sized Bank in the country. In a

relatively commoditized and highly competitive market, TPBoI has created a unique differentiated positioning

through a Knowledge Banking driven relationship oriented strategy, focusing on the emerging sectors of

economy. As a full service bank, TPBoI combines the strengths of its Relationship teams, Product expertsacross Transaction Banking, Corporate Finance, Financial Markets, Investment Banking and Knowledge

Bankers to provide customized financial solutions to its clients. TPBoI has since inception invested in

innovative business processes, technology platforms and has many firsts to it credit. This competitive

advantage has enabled the Bank to provide consistent customer service and TATs, while continuing to grow

rapidly.

Mr. Kumar kicked off the meeting by congratulating the management team on the strong quarterly

performance and followed it up with a critical diagnostic of what had gone well during the

previous 2 quarters and which aspects needed improvements in light of the overall macro economic

environment.

He then followed it with deliberating on the agenda of the meeting covered briefly here with–“As you are aware, given the prudent regulatory environment and proactive actions by the

regulator, the Indian economy and the financial sector have been relatively insulated from the

global crisis. Apart from a few sectors, the economy has shown great agility and resilience. While

full recovery is not expected for at least the next 3-4 quarters, I believe we have seen the worst in

terms of the domestic financial crisis.



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A few of the difficult and counter cyclical decisions which our Bank took during the peak of growth

cycle like – Capital management through conservation -spend and waste management and capital

raising , stringent review of all our processes, systems and controls and further strengthening our

risk management processes has clearly stood us in very good stead during the crisis. As we speak

today, we are extremely well positioned for growth. We are very well capitalized at 17% (9% Tier I)

and have sufficient bandwidth to grow unhindered for the next 18 months at our current pace, even

if the markets are not conducive for further capital raising in the near term. We have re-balanced

our portfolio well and have been able to prevent any major NPA. The few stressed cases which we

have in our portfolio are also fully provisioned for. Our Cost to Income Ratio is amongst the best in

the industry at 37%.

The foregoing, combined with the fact that the competitive environment is relatively favorable,gives us a “limited window of Opportunity”. I strongly believe we need to change gears and re-

draft our short term, mid term and long term strategic road map to “Seize this Opportunity”. “

After getting views and inputs from the management team and discussing the various futuristic

scenarios, a detailed strategic plan was formalized and adopted by the team. A brief road map is

summarized as under:

• Short term: Upto March 2010: Consolidate the Bank’s position of strength, and position the

Bank for the expected upturn in the economy.

This would be a period of re-aligning all parts of the Bank, both culturally and structurally

and gearing up to capitalize when the markets would fully recover (expected by around

March ’10). Most importantly, in the short term, the Bank would invest ahead of the curvetowards a) building a world class human capital b) acquiring and institutionalizing new

client relationships (relationship capital) across all customer segments of the Bank. This was

clearly in line with Mr. Kumar’s and the management team’s panache of executing counter

cyclical strategies.

• Mid – Long term: Over the next 3 (mid term) to 5 years, would be the phase of accelerated

growth for the Bank. The Bank, currently at around USD 4 Bn was targeted to grow to

~USD 30 Bn by 20015. While “Banking” would clearly remain the “core” business of the

Bank, the Bank would evaluate entering adjacent-synergistic businesses like AMC, MF,

Retail Broking, Insurance, PE/Venture Fund etc. in order to further synergies the corebanking proposition. In this period, the Bank would also significantly ramp up its SME &

Retail businesses both from assets and liabilities perspective.

Mr. Kumar concluded the meeting re-emphasizing the need for “Seamless Execution”. The team

would reconvene after a fortnight, when the business heads in charge of specific aspects of the

foregoing plans would present detailed business plan and specific action steps. Let’s fast forward to



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February 2010. TPBoI has assiduously executed their Short term strategy and has achieved most

parts of what was planned.

As part of the Mid & Long term strategies, TPBoI is clearly faced with the following 3 crucial

aspects which are core to the overall business strategy of TPBoI up to 2015.

A. Building World Class Human Capital:

To support the growth plans, TPBoI would require ~10,000 executives across various levels

and with varied skill sets across 750+ branches by 2015. Currently TPBoI’s employee base is

~ 2700. While the structure of the organization will undergo a sea change, and is relatively

simpler to manage, the major hurdles given the tremendous growth would be:

o How should TPBoI retain and cultivate the distinct cultural identity and ethos of

being a professionally entrepreneurial organization, which is also embodied in itsname?

o How should TPBoI attract, motivate, groom and retain the human capital?

B. Building a Strong Consumer Brand:

o TPBoI has largely been a wholesale segment driven Bank till date, while it has also

made sizable investments in its branches driven retail businesses. Given the critical

size that the Bank has now achieved, next phase of growth would be balanced

between wholesale & retail. How should TPBoI create a Consumer-Retail Brand?

TPBoI has always believed in innovative and low cost (inherently high RoI) channels

of Brand Building.

C. Allied Businesses:

Given the broad understanding of TPBoI’s past track record, its future plans and the overall

regulatory environment, which allied business or businesses should TPBoI venture into. At

this stage the management would like to know:

o The rationale – is it synergistic, does it make business sense, would the business be

profitable as a stand alone business in future

o Top level financial and business projections - size that the business would achieve in

the next 3-5 years

You are required to work on either “A” or “B”. “C” is compulsory. (i.e. either A and C OR B and C)

Annexure I: Key top line financials

Annexure II: TPBoI - One Bank view



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Annexure I: Key top line financials

Q3 FY09 and Q3 FY 10

Rs. Million Q3FY10 Q3FY09y-o-y

growth

Net Interest Income(*) 2,109 1,245 69.5%

Non Interest Income(*) 1,278 1,894 (32.5%)

Total Net Income 3,387 3,139 7.9%

% Non Interest Income to Total Net

Income

38%60%

Operating Expense 1,226 1,295 (5.4%)

Operating Profit 2,162 1,844 17.3%

Net Profit 1,259 1,058 19.0%

Cost to Income ratio 36% 41%

NIM 3.1% 2.8%

RoA (Annualized) 1.80% 2.16%

RoE (Annualized) 26.3% 28.4%

Rs. MillionDec 31

2009

Dec 31

2008

y-o-y

growth

Assets 295,875 197,466 49.8%

Advances 187,104 109,349 71.1%

Investments 82,820 69,528 19.1%

Liabilities 295,875 197,466 49.8%

Shareholders’ Funds 19,813 15,441 28.3%

Total Capital Funds 37,517 28,478 31.7%

Deposits 220,386 135,391 62.8%



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Annexure II: TPBoI - One Bank view

Transformation Case Study

Documents

Transcript of Transformation Case Study