Banks and other financial services businesses accounted for 48 percent* of all private sector interim management roles over the last twelve months as the whole sector grapples with dramatic change, says Interim Partners, a leading provider of interim management solutions.
Interim Partners says this is the financial services sector’s highest ever share of private sector interim managers, up from the sector’s 43 percent share of all interim roles in the previous year (see graph below). Interim managers are usually appointed at or just below board-level, to help with major restructuring or change programmes. However, some of the current boom is down to the use of contract resource to implement reviews or redress programmes relating to products such as PPI and interest rate swaps.
Charles Geoghegan, Head of Banking at Interim Partners, comments: “Virtually every part of the financial services sector has been impacted by regulatory pressure and the commercial fall-out from the credit crunch. Financial services organisations are having to make major changes to the way they are run and structured– from their business models through to reshaping their balance sheets right down to the minute details of their processes. Banking and finance interims have been a crucial part in this change.”
“You just need to look at vast amounts of resources that have had to be deployed to deal with the mis-selling of PPI to see how the need for short term executive skills can expand, almost overnight.” In 2009, following the collapse of Lehman Brothers, the overall use of interims in banking and financial services suddenly contracted to just 26 percent of all interims in the private sector. Banks continued to use very senior interims to deal with the fallout of the financial crisis but cut the number of more junior interim executives they used while they worked on their survival strategy.
Charles Geoghegan comments: “In the immediate wake of the financial crisis banks were grappling with their very existence and what shape that might take, once those plans became a little clearer interims were deployed to develop and deliver the strategy. The credit crunch hit financial services businesses before impacting on the wider economy, which is one of the reasons why the proportion of interims in banking and finance fell so suddenly.”
Regulatory reform that is transforming the sector ranges from Basle III and Solvency II through to AIFMD, which will impact on the vast majority of alternative fund managers. Basle III and Solvency II change the capital requirements of banks and insurers and mean that both banks and insurers are being forced to look at the business lines and product mix which they wish to promote because the capital they need reserve against different activities is changing. Interims who are subject matter experts in these areas are assisting bank executives in a number of ways from technical analysis right through to strategic decision making and execution of the new strategy. Another increasingly interesting development on the landscape is the possibility of some of the banks being broken up and partially sold off, this has the potential to cause significant activity in the interim market.
Says Charles Geoghegan: “The impact of the restructuring, the acquisitions and the demergers that are taking place or being planned for across the financial services sector will be valued in the billions. So it is sensible that the banks invest in the best and most relevant talent that they can to make sure that as much value is preserved in these transactions as possible.”
“The picture is not uniformly rosy for financial services interim executives, with parts of the market remaining tight.”
