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Transcript of Westpac
Recent changes in the banking industry Economic Environment
The onset of the Global Financial Crisis
Households experienced financial stress
Consumer confidence declined
Rivalry intensified among banks
Benefits of the Westpac – St George Merger
Created a larger, stronger entity
For customers: enhanced product range, expanded distribution and financial strength
Easier and cheaper access to wholesale financial markets and market-leading risk management systems
Economies of scale
Strong AA credit-rating
Larger balance sheet
Greater access to funding
This would lower risk and costs for St George
Other changes in the banking industry Socio- cultural environment Customer demand for low cost, convenient services from banks
Banking industry has responded to this with electronic transactions
carried out through ATMs, EFTPOS, telephone and online banking
Why merger and acquisitions are popular strategies to co-create value: They reduce the amount of competition banks face
Expand product range and distribution networks
Increase their profit margins
Expand their presence in new markets
Reduce costs through economies of scale
Smaller banks gain financial strength and capital to compete with the big four banks
Core competencies of Westpac 1. CEO’s Gail Kelly’s industry knowledge
- With her inside knowledge of the industry, nobody is better placed to do the job.
2. Focus on innovative products and services
- The ability to continuously improve its products and services for customers’ benefit.
Core competencies of Westpac 3 Commitment of its employees
Ability to yield high retention rate in order to reduce training and recruitment costs as well as improving long-term efficiency.
4. Wide distribution network
- Westpac has a vast and creditable distribution network as well as a wider customer base. This enables them to benefit of economies of scales and also to introduce niche products
Westpac’s strategies to establish a good corporate image Establishing long-term, multi- product relationship
Broaden its franchise operations and customer services in order to build a customer-focused entity to its culture
Re-organising brand set-up
Acquisition of RAMS Home loans, Rothschild, BT Financial Services and Hastings.
Able to increase access points for customers- More efficient range of services and distributional channels.
Acquisition of St. George- More synergistic advantages- increase market capitalization Developing partnerships with The Salvation Army and Surf Live Saving.
First bank to join the Australian Government’s Greenhouse Challenge in reducing greenhouse gas emissions.
Establishment of supply management policy in its business portfolios.
Conclusion Westpac's core competencies, strategies and merger with St George helped it negotiate the effects of the GFC
Nevertheless, it became apparent that Westpac's customer focus was difficult to sustain
However, whilst some of its core competencies and resource capabilities were challenged, Westpac has been able to withstand the pressure of the GFC
Kate Reardon . Kenrick Chan . Thapakorn Ekkittibutr
Recent changes in the banking industry
Westpac core competencies
Westpac strategies to establish a good corporate image
Discussion of whether or not Westpac has sustainable competencies and resource capabilities to withstand the financial crisis Outline 1. Focusing on customers 3. Mergers and acquisition strategy 2. Corporate Social Responsibility Strategy Does westpac have sustainable competencies and resource capabilities to withstand the financial crisis? Westpac's market share has risen from 19% to 22%
Posted record first-half net cash earnings of $2.98 billion so far this year
But the effects of the GFC will haunt the world for years to come
CEO Gail Kelly's industry-savvy knowledge came into question in late 2009
Westpac raised interest rates across its variable mortgages by 45 basis points, nearly double the Reserve Bank's 25-basis-point increase
Some believe this compromised their capability for customer focus Westpac banking corporation Competes in the National and Regional Commercial Banks Industry in Australia
Is one of the four major banks - the other three main competitors are Commonwealth Bank of Australia, National Australia Bank Limited, and Australia and New Zealand Banking Group Limited (ANZ)