Group Management and Productivity Enhancement by Shinsei Bank Group February, 2018 Akira Hirasawa Chief Officer of Group Organizational Strategy Group Headquarters Shinsei Bank, Limited
Direction of Group Management Establish unique and effective group governance framework with strong sense of integrated management within Shinsei Bank Group, considering the current environment and advantages of the Group [Current environment] Medium Change in social structure and lower -to-long • margins in traditional finance business term vision Change in needs, focus, and (See p12) • expectations of customers Emergence of new players and [Direction of Group management] • innovation of financial and information × Group integrated management technologies • (governance enhancement) Platforms for business development • Simpler organization and quick • [Advantages of Shinsei Bank Group] decision-making A group consisting of extensive • sectors 【 Group Governance Framework 】 Group companies under almost full • 1 2 3 ownership of the Bank Consolidated Group EC 1 & Cross-Group Quick decision-making by the corporate • Important organizations functions management team Committee (Units) (Group HQ) 1 Executive Committee 2
Group Governance Framework I) Integration of Group Support Functions (Group Headquarters) This governance framework is completely different from that of all-too-common business holding company or pure holding company. Group support functions (Corporate Function) are integrated into the Group Headquarters as a virtual company, and all businesses including the Bank will be reorganized into equal business units. Company Group under business holding company Parent company BoD Board of Directors Business A Business B Corporate Function 1 business unit Group Executive Committee (Group EC), Business C Group Important Committees BoD BoD Corporate function Back Back Biz Biz (Group HQ) Subsidiary b Subsidiary a Company Group under pure holding company Holding company BoD BoD BoD Corporate Function Strategy Mgmt. 1 business unit Business A Business B Business C BoD BoD BoD Back Back Biz Biz Back Biz Subsidiary a Subsidiary b BoD BoD Subsidiary c Back Back Biz Biz Sub-sub a Sub-sub b Source: P14, 2nd meeting(January 16, 2018) secretariat presentation material by CGS(Corporate Governance System) Research Group, METI 3
Group Governance Framework I) Integration of Group Support Functions (Group Headquarters) The integrated group support functions (authority, operations, and human resources) are managed across the Group mainly by Chief Officers, to realize efficient and enhanced functions. Objectives of Group Headquarters Chief Officers Ｇ = Group Banking business by function (Shinsei Bank) G Human Convert functions into business units • Convert each business into equal business units Resources • through the integration of group support functions into Group Headquarters as a virtual Shopping credit & G Corporate function* Support company card businesses Planning (APLUS Financial) & Finance Consolidate overlapping functions • Remove overlapping functions and reduce Group Headquarters • workload G Risk Personal loan function * Management Support Expand room for better efficiency business • Realize room for much better efficiency by • (Shinsei Financial) sharing best practices and jointly implementing G General new methods Services function * Enhance functions across the Group ・・ ・・・・・・ Leasing business Support • (Showa Leasing) G Legal & Further enhance Group functions using extra • management resources realized through better Compliance efficiency Decision-making level function * • G IT* Support Other businesses Enable quick and consistent decision-making • *Apr. 2018 - without establishing a holding company and by simplifying reporting lines * Each company will only maintain the functions necessary for internal control and meeting regulatory requirements. 4
Group Governance Framework II) Group Executive Committee, Group Important Committees Important matters under Group strategy are resolved at Group Executive Committee and Group Important Committees attended by CEOs of Group companies as members of Group management team. Committee Major purpose, etc. Presidents of Group Support member function Group companies* Executive Committee ◎ Group Executive President’s resolution body for daily Businesses Committee business execution related to consolidated management Delegate Report ◎ Group Management Discusses, coordinates, and decides on authority & Development the Group’s HR system and initiatives Committee Group Support ◎ Group Compliance Shares, coordinates, and decides on the Important function Committee Group’s compliance system and matters Committees ○ Group Risk Policy Discusses the Group’s portfolio risk Committee management policy, management framework, and policy for key portfolios, etc. Group member companies ○ Group ALM Discusses, decides policy for, and (including the Bank) Committee resolves medium-to-long term matters relating to ALM operation. * ◎ : Attend regularly; ○ : Attend depending on the agenda 5
Group Governance Framework III) Cross-Group Organization: Unit In order to respond to diversified and borderless customer needs, establish dedicated organization that creates synergies in business and management and fundamentally reforms Group businesses Shinsei APLUS Shinsei Showa Bank Financial Financial Leasing Established in Apr. 2016 (Mission) Group Review business operation systems on a group-wide basis, develop Business Strategy the Group’s new businesses, and consider and implement strategic Division partnerships in order to develop the new businesses (Mission) Group Build the specific Group organizations needed for executing Group Organization Strategy business strategies and promote projects for enhancing the Division productivity of the entire Group 6
Group Governance Framework III) Cross-Group Organization: Unit Establish “Cross-company Business Unit” consisting of cross-company members working across multiple companies in order to facilitate businesses to fully demonstrate Group functions based on customer needs and to promote initiatives between Group member companies Established in Cross-company Business Unit Apr. 2017 Institutional Institution Structured Individual Analytics Products Business Business Financial Business 7
Initiatives for Enhancing Productivity Enhance productivity in a sustainable manner through initiatives including excluding redundancies, applying best practices, and optimizing resource allocation under consolidated Group management. This is a different approach from simple cost reduction. Phase 2 Fully review businesses Add Value • Optimize office network to Phase 1 Reduce redundant costs • Review products & services Customers • Utilize AI, RPA, etc. • Move to a Group HQ system • Reduce non-personnel Enhance expenses productivity • Reform operations • Reorganize / consolidate businesses Increase ＜ Expected effects ＞ Corporate Value Smaller workload Expanded top line • • (generate extra personnel) (re-allocate resources) Reduce non-personnel Improve servicing • • expenses efficiency 8
Reference 9
[Reference] Specific Initiatives for Enhancing Productivity (1) Retail & Group - June in Institutional member 2018 progress Optimize branch network Improve call center efficiency businesses companies • Planning to close Shinsei Bank’s retail and • Promoting a project aimed at improving call institutional branches in Takamatsu and center operations and enhancing customer Kanazawa by June 30, 2018. Three retail satisfaction of Group member companies branches (Kawaguchi, Sakaihigashi, and Takatsuki) will be closed by February 28, 2018 • Improving operational efficiency eyeing the (The number of Bank branches as of February usage of RPA and AI, as well as reviewing 28, 2018: 32) customer support processes (printing materials, FAQ, talk scripts, etc.) and reducing the number • The Lake business will close 30 unprofitable of inbound calls by using the Internet and branches by February 28, 2018 applications • Implement initiatives eyeing stronger customer • Bank call center reduced its service hours for needs for non-face-to-face channels and deposits, etc. from February 2018 by improving services by strengthening the enhancing functions relating to transactions and coordination between face-to-face and non- administrative applications via the internet face-to-face channels including smart phone • Focus management resources including human • APLUS’ customer support reduced the number resources on fields that have higher added of inbound calls by about 25% YoY by sharing value for our customers best practices of other Group member companies 10
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