CASE STUDY| Argentaria: Re-inventing the banking business model leading to a successful privatisation
Using the four areas of our Corporate Vision® System mode, we explain how we worked with ARGENTARIA to implement a federated banking model and achieve a successful privatisation that changed the Spanish and European financial landscape.
ARGENTARIA: A Federated Banking Corporation
Corporación Bancaria de España (Spanish Banking Corporation), renamed Argentaria by De Santis®, was the Spanish financial holding incorporating Spain’s biggest state owned financial banks and institutions. Argentaria, included many famous retail financial brands such as Caja Postal de Ahorros, Banco Exterior de España, Banco Hipotecario and BEX Directo, Europe’s first bank without retail branches. As a group, Argentaria included 6 million clients, 1,500 branches and 20,000 employees operating in over 100 countries. The case study details the political, strategic, financial, regulatory and economic background to one of the most successful privatisation projects in public state asset disposal history (1993-1998). Led by Francisco Luzón, its CEO, the initial Argentaria offering raised Ptas 154 billion (some $1.3 billion). Argentaria, (already fully privatised by four IPOs), later merged with BBV Bank (1999) to create the banking giant BBVA. BBVA is now the 15th largest financial institution in the Western world with a market capitalisation of over €50 billion.
Corporate Vision System model:
1. Strategic Vision
The Argentaria case study explains the European and global scenario of state owned privatisations in the 1990s. We also discuss the key challenges faced, the making of a strategic vision that led to the creation of the most dynamic, best managed Spanish financial group in the 1990s. The strategy, focused on key areas including: -how to become a market leader in a crowded financial marketplace -increasing group profitability and efficiencies -focus on increasing earnings and -how to make Argentaria into a valuable contributor to the community at large.
2. Branding & Communications
One of the key assets that is crucial to all the members of a federated banking structure is a strong brand. Here, we explain the creation of the Argentaria brand to reflect the new vision and the novel federated banking model, including how we managed the brand portfolio strategy of over 100 brands. Finally we explain the meaning and importance of the new innovative ‘Argentaria’ brand name we created to innovate the internal culture focused on friendly customer service and investing in the community.
3. Business Model Innovation
In a federated bank, the various units that produce and distribute banking and financial services are centrally coordinated from a head office (Argentaria). Drawing strength from size and economies of scale, the federated bank model was preferred over other alternative models (partial aggregation, vertical or horizontal integration, generalised mergers, etc). With this model, Argentaria could continue to benefit from the specialisation of each unit and design innovative marketing and commercial policies aimed at specific segments of the population. We explain the new and successful federated banking business model as an innovation in global financial services.
4. Organisational Transformation
How we helped to transform the organisation using a powerful vision and brand. Creating a ‘one team’ service culture company focused on the community. How to make employees feel part of the organisation by making them participants in the future success of the company as future shareholders via the IPOs.