1. Immediately reassess sector macros & micros and identify sectors that have become short-term unattractive (e.g. auto), those that are now positive (e.g. pharma), and map your clients and portfolio to the new reality.
2. Segment clients as per new sector matrix, and identify clients already troubled in risk sectors and those likely to be affected.
3. Allocate above group to an expanded & high quality work-out team to co-manage the clients with existing RM’s and provide short term business guidance. Don’t necessarily do a drawn-down. In fact provide additional short term capital if needed. Refocus corporate RM teams to account monitoring, rather than new account acquisition for next 30-60 days. I would not release corporate RM headcount at this time.
4. Do all of the above for SME/Commercial accounts at a higher level of aggression. Understand the supply chain impact on your SME/Commercial clients. Get transaction banking going for SME and also corporate clients.
5. Significantly strengthen your risk, especially credit risk teams, and immediately redo the credit scorecards and algorithms.
6. Protect your liability book. Strengthen size of the corporate liabilities unit. Relook at your retail liability products and make them more attractive. Pull wealth customers in as quickly as possible.
7. On the retail side, assume 15%-30% reduction of liability and asset book, and transform operating, business and resulting cost model.
8. Digital, Digital, Digital. Strengthen your banking technology & FinTech platform & offering, and use this opportunity to aggressively move many of your customers and their transactions to digital and acquire new ones. This black swan moment is now a once in a lifetime opportunity in this area.
9. Assume 20% of the branches will need to be temporarily shut-down. Redirect customer to the other open branches. Save on branch operating cost.
10. Based on the above, make careful cost calculations by business unit from a people, process and technology perspective. Get ready to drop 15%-20% of the headcount with generous exit packages. Also compensation alignment for the remaining may be necessary.
Good Luck. And let us know if we can help in anyway.
Chairman, IBS Intelligence
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