TURNAROUND STRATEGYOn Case Study of: Bank DANAMON

CARL BENIDDO P ISABELLE IMELDA RFENA ENANDITA P

A Group Assignment By:

What is Turnaround Straregic

Danamon Time Line

The Pioneer (Arwin Rasyid)

Condition Before Turnaround

Transformation

DSP Product

Killer Triangle

Next Screen

Problem Box

Future Strategy Pillar

Bank Rank

Previous Screen

Definitions

“The process of evaluating an underperforming business to determine the cause of its problems.Further on, developing potential solutions to address the problems, selecting and implementing the appropriate strategies and course of action, and making corrections to the plan as circumstances warrant.” (www.advanced-development.com)

When turnaround strategy is needed

• a response to a crisis• a major change in the business• lack of operating controls• insufficient demand, technology, suppliers• not understanding costumers and marketplace• poor lender/sponsor relationship• ineffective management style

Objectives

The overall goal of turnaround strategy is to return an underperforming or distressed company to normal in terms of acceptable levels of profitability, solvency, liquidity and cash flow.

•balancing different viewpoints• creditors (potentially new owners)• shareholders (potentially former owners)• costumers (source of revenues)• employees (caught in the middle)

•fresh eye, knowledge and skills with complete objectivity•no political agenda or other obligations

Benefits of Turnaround Management

1956

Established by the name of Bank Kopra Indonesia

1976

Changed into PT. Bank Danamon Indonesia

1988 1989 1998 2000 2003 2004 2005 ... 2013

Become first Foreign Bank in Indonesia

Being a public company through a stock offering on the Jakarta Stock

Take over by government due to Asian Economic Crysis

Legal merger with 8 bank which taken over by government

Acquired majority stock by Asia Financial Pte. Ltd

Launching Danamon Simpan PinjamAcquired Adira Finance

Danamon Simpan Pinjam Expansionlaunching new corporate vision and mision

Name : Arwin RasyidReligion : IslamPOB : Roma, ItaliaDOB : Tuesday, January 22 1957Zodiac : AquariusHobby : Bowling | HuntingCitizenship : Indonesian

EDUCATIONAL BACKGROUND

• The Gandhi Memorial School, Jakarta (1973)• Jurusan Studi Pembangunan Fakultas Ekonomi Universitas Indonesia (S1; 1980)• University of Hawaii (MA International Economics), Amerika Serikat (1981)• University of Hawaii (MBA International Business), Amerika Serikat (1982)• World Banker Development Program, San Pransisco - USA, 1986• Strategic Management in Banking, INSEAD Paris - France, 1992• Advanced Management Program for Overseas bankers, Wharton• University of Pennsylvania, USA, 1993• Mobilizing People, International Institute of Management Development,Lausanne - Switzerland 1994• Achieving Outstanding Performance, INSEAD Paris - France, 1995• Consumer Finance Workshop, London - England, 2000• Emerging Markets in the New Financial System, IMF & World Bank Conference, Washington -USA, 2000• Competition and Strategy, Harvard University - Boston USA, 2003

CAREER BACKGROUND

• Dosen pada Fakultas Ekonomi Universitas Indonesia (1977-1999)• Staf peneliti pada Lembaga Penelitian Ekonomi dan Masyarakat (LPEM) Fakultas Ekonomi Universitas Indonesia (1977-1980)• Asisten Vice President, Bank of America, Jakarta (1980-1987)• Asisten Vice President, Kepala Divisi Marketing PT Bank Niaga Tbk Cabang Gajah Mada (1987-1989)• Vice President, Kepala Divisi Marketing dan Kredit Grup PT Bank Niaga Tbk. (1989-1990)• Managing Director PT Niaga Factoring Corporation (1990-1994)• Senior Vice President Grup Korporat Perbankan PT Bank Biaga Tbk. (1990-1994)• Komisaris PT Niaga BZW Securities (1991 - Maret 1999)• Komisaris PT Niaga Factoring Corporation (1994 - Maret 1999)• Direktur Niaga Finance Co. Ltd. Hong Kong (1994 - Maret 1999)• Direktur Korporat Perbankan PT Bank Niaga Tbk. (1994-1998)• Wakil Direktur Utama PT Bank Niaga Tbk. (1998 - Maret 1999)• Wakil Komisaris Utama Bank Universal (Juni 1999 - Desember 2000)• Staf Ahli Badan Penyehatan Perbankan Nasional (BPPN; Mei 1999 - Januari 2000)• Wakil Ketua BPPN (Januari 1999 - November 2000)• Direktur Utama Bank Danamon Indonesia (Oktober 2000-2003)• Wakil Direktur Utama PT. Bank BNI Tbk (2003-2005)• Direktur Utama PT. Telkom Indonesia, TBk (2005-2007)• Presiden Direktur / CEO PT. Bank CIMB Niaga, Tbk (2008-sekarang)

ACHIEVEMENT• President of India Trophy, 1973• Beasiswa "Supersemar", 1978• East West Center Award, USA, 1981• Beta Sigma Award, USA, 1983

•Bank Indonesia enacted a package of major banking reforms known as the ‘October 1988 Package’ or PAKTO 88

•As a result of this, Bank Danamon became among the first foreign exchange banks in Indonesia, and became apublic company listed on the Jakarta Stock Exchange.

•Danamon has emerged as one of the largest and strongest financial institutions in the region.

•In the end of 1996, Danamon ranked as the third largest private bank by asset.

•In 1996, there was a boom in business for property and Danamon funded big projects but there was global crisis in1997-1998 which made Danamon had non-performing loan for the big projects.

•As a result, the credibility of Danamon decreased sharply and there was a big rush by the customers

•1998,Badan Penyehatan Perbankan Nasipnal (BPPN) took over the management of Danamon to recover it.

•In 2000, 8 banks merged with Danamon. Liquidity problem happened and othe cases from the banks put Danamonin the problematic situation. Moreover, Danamon still depended on the government’s obligation (recapbond)

•The high cost of fund and high rate of time deposit put Danamon on the risky state.

•In 2000, Arwin Rasyid, the chief director of Danamon did turnaround strategy and the big crisis bottomed out

•Danamon currently ranks as the sixth largest bank by asset size in Indonesia, and operates anetwork of around 2,450 as of June 2014, including among others convenitonal branches, DanamonSimpan Pinjam (DSP) outlets and subsidiary units.

Menjadi bank nasional terbaik

Mewujudkan visi dengan menjalankantiga nilai utama; integriras yang tinggi, transparansi dan professional

Menjadi bank yang Memberikankepuasan kepada pelanggan.

Menjadi bank nasional pilihannasabah di sektor Konsumendan UKM

Percaya Pada Keyakinan AndaKami Maju karena Kepercayaan AndaMOTTO

MISI

VISI

DANAMON BARUDANAMON LAMA

Tabungan SI PINTER Tabungan SI PINTER adalah produk tabungan Danamon Simpan Pinjam yang memberikan manfaat perlindunganasuransi serta memiliki keunggulan-keunggulan: gratis biaya administrasi bulanan, gratis asuransi jiwa (meninggalakibat kecelakaan) dengan uang pertanggungan sebesar 15x saldo minimum tabungan dalam satu bulan ataumaksimal Rp 200 juta.

Simpanan

Deposito DSPDeposito DSP adalah produk simpanan berjangka Danamon Simpan Pinjam yang memberikan keuntungan bungalebih besar dari tabungan dengan minimum penempatan Rp 1 juta.

Pinjaman

Dana Pinjam 50 (DP 50)Pinjaman angsuran berjangka yang dapat digunakan untuk tujuan modal kerja dan investasi dengan: Jangka waktu pinjaman : 6 - 60 bulan. Besar pinjaman : Maksimum 50 juta. Waktu pencairan : 3 hari kerja sejak dokumen diterima lengkap.

Dana Pinjam 200 (DP 200)Pinjaman angsuran berjangka yang dapat digunakan untuk tujuan modal kerja dan investasi dengan: Jangka waktu pinjaman : 6 - 60 bulan. Besar pinjaman : 50 - 500 juta. Waktu pencairan : 3 hari kerja sejak dokumen diterima lengkap.

Dana TalanganPinjaman jangka pendek tanpa jaminan untuk modal usaha atau keperluan lainnya dengan: Jangka waktu pinjaman : 6 - 36 bulan. Besar pinjaman : 2.5 - 50 juta. Waktu pencairan : 2 hari kerja sejak dokumen diterima lengkap.

Dana SiagaPinjaman jangka pendek tanpa jaminan untuk modal usaha atau keperluan lainnya. Dana siaga diberikan kepadaAnda yang memiliki track-record yang baik di bank maupun di lembaga keuangan. Jangka waktu pinjaman : 6 - 36 bulan. Besar pinjaman : 2.5 - 50 juta. Waktu pencairan : 2 hari kerja sejak dokumen diterima lengkap.

PRK DSPPRK DSP adalah pinjaman rekening Koran Danamon Simpan Pinjam yang dapat ditarik kapan saja sesuai dengankebutuhan Anda. Jangka waktu pinjaman : 1 tahun (dapat di perpanjang). Besar pinjaman : 50 - 500 juta.

Solusi ModalPinjaman jangka pendek tanpa jaminan untuk modal usaha atau keperluan lainnyaJangka waktu pinjaman : 6 - 36 bulan. Besar pinjaman : 2.5 - 50 juta. Waktu pencairan : 2 hari kerja sejak dokumen diterima lengkap.

Solusi Modal KhususPinjaman jangka pendek tanpa jaminan bagi Nasabah Solusi Modal yang mempunyai track record baik di bank Maupun lembaga keuangan. Jangka waktu pinjaman : 6 - 36 bulan. Besar pinjaman : 2.5 - 50 juta. Waktu pencairan : 2 hari kerja sejak dokumen diterima lengkap.

• Low deposit/total liabilities

• High proportion of time deposit

• Expensive non deposit liabilities

Low Asset Yield

1

32

LOW

And

VULNERABLE

MARGIN

High Interest Rate Risk

• Heavy reliance on recap bond (76%)

• Small loan base (LID 19%)

• 70% of recap bonds are fixed-rate (12%)

• Low fee-basedincome (5%)

-

High Cost of Fund

- -- - - - - -

UnproductiveAssets and

High OperatingCosts

21

6

5

3

4

Scale Network

Staff and Risk Management

Brand

IT Systemand Processes

Fee -based

Income

• - Sub- scale to compete againstlarge universal banks

- Low productivity- Non- differentiated- Mismatch location- Unreliable, costly ATMs

• - Fat-organization• - Low productivity• - Misallocation of staff• - Poor skills• - Lack of risk management

• - Rollout of new IT currently underway

• - Cumbersome processes in branch

• - Weak corporate identity

• - Outdated logo• - Poor communication/

advertising strategy

• Weak

presence in trade finance

Situasi ini harus diselesaikan dalam waktu 6 bulan hingga 1 (satu) tahun …

VISIONTo be the bank of choice in the consumer and SME

sectors

CORE VALUES: Transparency – Responsiveness – Integrity – Professionalism

Financial- Improve funding composition

- retail lending focus- increase fee- based

income

MISSION – To delight the customers

Delivery Channel- integrated payment system

- optimize branch network- improve brand image

HR & Organization- Increase productivity- build sales and service culture- ensure Risk Mgmt., Compliance & Audit

Liquidity NPL NOPCost to

Income

Visi ke depan Bank Danamon kemudian diterjemahkan ke dalam Misi dan Pilar-Pilar Strategi yang akanmenopang masa depan Danamon yang baru…

16

27.9

42 41,4

0

5

10

15

20

25

30

35

40

45

2001 2002 2003

CASA

43

55

62

69

57

45

38

31

2000 2001 2002 2003

%

Tahun

Prosentase Loans thd Segmen

UKMK+Consumer Korporat

Prosentase Pinjaman per-Sektor..Prosentase CASA thd Dana

Pihak Ketiga (DPK)

%

CASA = Current Account + Saving Account

Laba bersih terus meningkat..

NET PROFIT AFTER TAX

339

723

948

1530

2000 2001 2002 2003Tahun

Rp M

ilyar

Nama Bank

2001 2002 2003

Bank Danamon 12 2 1

Bank Niaga 1 1 2

Bank Mega 3 4 3

HSBC 2 3 4

Citibank 4 5 5

Bank NISP 11 7 6

Bank Permata 6 11 7

BCA 10 10 8

ABN-AMRO 5 8 9

Bank Bukopin 10 6 10

Sumber: M RI, diolah kembali oleh Infobank, edisi April 2004.

PERINGKAT

Peringkat “Service of Excellence” Danamon mengalahkan pesaingnya…