Mobile Logo

Login Signup
Blogger Marketplace Gamer Search Play Gamer
Login to join live streaming events.

Please login to use video chat.

BighamConsulting's blog: Bank-Financial-Analysis-Analysing-the-Performance-of-the-Major-Corporate-and-Investment-Banks - Views ( 159690 ) -article by: BighamConsulting

BighamConsultings' BLOG ( 18 articles!)

Bank-Financial-Analysis-Analysing-the-Performance-of-the-Major-Corporate-and-Investment-Banks - Views ( 615 )


Author: BighamConsulting , Last Modified, 2021-01-19 03:27:58

Category: finance Keywords: Bank-Financial-Analysis-Analysing-the-Performance-of-the-Major-Corporate-and-Investment-Banks

615 views 45


Page Title


We use a combination of approaches to assess the performance of under performing businesses. Doing so we are able to provide reasoned fact based recommendations

My Client - CFO - Large UK bank

My client was serving as Group Finance Director for a large UK bank with approximately £850 Million in Balance Sheet Assets operating with 20 times leverage and making a loss with negative ROE of 2%. I was asked to review the position and implement a change programme.

Key Problem Summary

My analysis of the business revealed it was earning just over 3.5% on assets. This is more than most of the larger UK challenger banks. The cost of debt ratio was slightly above 1.7%. To put this in context it is above that of the smaller challenger banks and more than double the funding costs of the bulge bracket banks. The prime cause was primarily the leverage ratio of more than 20 times shareholders equity. This put the bank in the category of the bulge bracket banks without their scale advantages.

How We Helped

We deployed a small but dedicated team of analysts to map out the current state of finances, processes and operating model. Lacklustre operations and excessive use of expensive debt was costing the bank margin. The cost of funds being near the top end of their peer group. My recommendation was to recapitalise, reduce excessive leverage and focus activities on a narrower more economically profitable portfolio..

Results Delivered - £1.983Bn of new value created

ROE improved from negative (2%) to a positive 3%. The bank thus went from being a net destroyer of value to a net creator of value. The Operational Expense ratio went from 1.82% to 1.62% within one year. This took just over 6% off the operational expenses saving just over ฃ1.4M. Leverage was brought under control dropping to a more respectable 16% which was still as high as some of the larger challenger banks but a vast improvement nonetheless. The asset position expanded slightly by just over 1.4%. Improved liquidity and less reckless investing reduced the earnings ratio to 2.8% which is more in line with peers of a similar scale and a good result overall.

Cautionary Note

This case study is based on a real business and its real numbers as assessed by us. We do of course alter some details to protect the guilty... Capability Maturity Analysis was used as one tool in assessing and supporting this project. Obviously performance in any organisation can be attributed to many people and factors and consultants are just one part of that effort. We do not claim that applying any one tool will yield the same results on your project. So whilst we do believe in the value adding capability of our products we advise you to read the cautionary note on the use of these management consulting tools before you attempt to apply them. As with all consultants we provide opinion based on our situational assessment. Management may or may not act on our advice. They may also be in receipt of advice that we are not privy to. Many external factors influence business performance, including markets, regulators and the economy. We make our recommendations in the light of the prevailing economic and regulatory climate. To this extent we cannot be held liable for any reliance on information and case material which is provided for educational purposes only.



Sign Up or Log in to leave comments.

Capability Maturity Analysis Case Study By Bigham Consulting


Blog title: Bank-Financial-Analysis-Analysing-the-Performance-of-the-Major-Corporate-and-Investment-Banks

BighamConsultings' BLOG

( 18 articles!)

BighamConsulting's TOP BLOGs

More blog posts by BighamConsulting

Product - Bank-Financial-Analysis-Analysing-the-Performance-of-the-Major-Corporate-and-Investment-Banks

Flowers in Chania If you have enjoyed reading this article, and wish to support the writer you can make a payment from as little as £1. All contributions welcome.View Product


Sponsored Links





Epic 64-Player Multiplayer Battles - Squad up with your friends and join in the most epic multiplayer battles in FPS history with up to 64 players. Fight as infantry, lead horse charges or take control of amazing vehicles on land, air and sea, from tanks and biplanes to the gigantic Behemoths.




Dynamic Tags