Hands-on experience and practical insights about strategic options, operating models and how to energize people in/for the "growing" business model of bad banks / winding-down non-performing assets during 12. Back Office Conference in Amsterdam in April 2015
2. 2Wind-Down-Entities | Amsterdam 17th April 2015
Introduction HETA Asset Resolution
HAA founded in 1896; expansion into the Alps-Adriatic region started in 1995; further
expansion towards Bosnia and Herzegovina, Serbia and Montenegro, and Germany 2000 onwards
Nationalization in 2009 (from Bayerische Landesbank) to avert insolvency and prevent a regional
banking crisis from happening; carve-out of good bank in 2014, resolution of bad bank in 2015
HAA present in 11 countries in SEE region with focus on loans and leasing (less securities);
‘bad bank’ (HETA) taken over by the Republic of Austria, ‘good bank’ (SEE-network) about to be
sold to Advent/EBRD
Introduction Julius Grote
Chief Executive Officer (CEO) at HETA Asset Resolution Bulgaria and Macedonia; overall
responsibility for the professional wind-down in these countries
Banking & Consulting, strategic and operative know-how. Wide experience in the management of
wind-down entities, corporate development, organisational development and process optimisation
Headed several strategic transformation initiatives as e.g. execute spin-off, implement carve-
out, draft operating models, set up new legal entities, design wind-down portfolio sales process
Published several articles in area of bank transformation and bank restructuring; doctorate in
banking and Master in Business Administration
HETA Asset Resolution is the wind-down part of the
former Austrian bank Hypo Alpe Adria (HAA)
3. 3Wind-Down-Entities | Amsterdam 17th April 2015
Focus of today’s presentation is operational excellence
of setting up Target Operating Model (TOM) for Wind-Down entities
Main considerations
set-up wind-down structures
Wind-Down Strategy
Legal Structure
Asset Scope
Target Operating Model
Today’s
focus
When setting up wind-down structres,
four main aspects have to be considered
4. 4Wind-Down-Entities | Amsterdam 17th April 2015
I. Wind-Down Strategy
II. Target Operating Model and Processes
III. People and Incentives/Steering
IV. Questions and Answers
5. 5Wind-Down-Entities | Amsterdam 17th April 2015
Aggregated volume of assets in European Wind-Down units
(in EUR bn)
0
500
1000
1500
2000
Source: internal analyses
Wind-Down business is a growing business
6. 6Wind-Down-Entities | Amsterdam 17th April 2015
Bad banks keep bad assets from con-
taminating good ones, thus increase
trustworthiness
Trust
(Re-)Building trust
towards externals
3
skill-sets needed for asset resolution
strongly differ from conventional
bankers‘ capabilities
Skills
Focused and dedicated
asset resolution
1
Reduced capital requirements as bad
banks are not subject to standard
regulation
Capital
Reduced
capital requirements
2
Segregating assets in Wind-Down entities
can be derived from three main reasons
7. 7Wind-Down-Entities | Amsterdam 17th April 2015
Overall goal
„Where to go?“
Strategy
„How to compete?“
Processes
„How to operate?“
Structure
„How to manage?“
Aspiration level
Value creation
and delivery
Operational
Excellence
Steering and
Leadership
Wind-Down-
sales approach
Steering/IT systemsOrganization
Vision,
mission,
values
Core processes
Support processes
Set-up of wind-down entities in Bulgaria and Macedo-
nia covers strategic and operational drivers
StrategyOperations
Dimension Focus
8. 8Wind-Down-Entities | Amsterdam 17th April 2015
I. Wind-Down Strategy
II. Target Operating Model and Processes
III. People and Incentives/Steering
IV. Questions and Answers
9. 9Wind-Down-Entities | Amsterdam 17th April 2015
Ongoing optimization of the corporate culture
Processes
Organization
IT/systems
Management Key Employees
Steering / Key Performance Indicators
Definition
as-is situation
Definition
to-be situation
Execution
implementation
Definition imple-
mentation planning
1 2 3 4
The design of an effective Target Operating Model
(TOM) followed a highly-structured approach
10. 10Wind-Down-Entities | Amsterdam 17th April 2015
The value chain of a wind-down entity with focus loans1
is the foundation for the procedural landscape
Supportive functions
(Accounting & Reporting, Orga/IT, Procurement, etc.)
Restructuring Collection Repossession RemarketingPhasing out
Movable assets (loans, leasing)
Real estates (loans, leasing)
Performing
portfolio
Non-Performing
portfolio
Portfolio transactions (portfolio sales)
Processes
NB: (Toxic) securities out of scope
11. 11Wind-Down-Entities | Amsterdam 17th April 2015
Legal &
Compliance/AML
CEOCOOCROCFO
HR &
Communications
Audit
Collection &
Repossession
Remarketing
(Movables, RE)
Organization/IT
Support
(Procurement, etc.)
Credit
Processing
Restructuring Work-out Risk Controlling
Accounting
Financial
Controlling
Treasury &
BS Mgmt.
The organisational structure is to be tailored to
particular needs of the wind-down value chain
Organization
12. 12Wind-Down-Entities | Amsterdam 17th April 2015
As an outcome, additional modules have been integrated into
an optimized core system
Core system optimized,
additional modules integrated
Set-up of new solution ensured within
a period of 9 months
Core system with several ‚silos‘, partly
improper databases/data quality
approach didn‘t facilitate state-of-the-art
steering and reporting
Cost-benefit analysis executed to
ensure defined goals
Implementation accompanied by standard
project management
Establishment of advanced IT-systems to
steer both our portfolio and performance
Use of systems that are well proven,
allow for swift implementation though
overall goals initial situation
outcomeinitiated actions
IT/systems
As for IT, a compromise between proper steering
basis and a pragmatic approach is to be defined
IT/systems
13. 13Wind-Down-Entities | Amsterdam 17th April 2015
I. Wind-Down Strategy
II. Target Operating Model and Processes
III. People and Incentives/Steering
IV. Questions and Answers
14. 14Wind-Down-Entities | Amsterdam 17th April 2015
Three pillars corporate culture
Communication
Distinct communication where we are
heading for and what we expect
Besides contents, also the way of
communication is crucial (“how”)
1
Monitoring
Strict monitoring re degree of target
achievement
Clear rules for performance stan-
dards, rewards and sanctions
2
Support
High-performance is requested, no one
is “left out in the rain” though
Additionally, key employees have to be
identified and developed
3
The implementation of struc-
tured efforts helps to…
…activate and retain (key) em-
ployees and optimize results
Activation and loyalty of (key) employees requires
strict emphasis on the corporate culture
People
15. 15Wind-Down-Entities | Amsterdam 17th April 2015
The cockpit structures are accompanied by structured feedback sessions
that consider ‘soft facts’ as well
In addition, structured feedback
sessions consider ‚soft facts‘
Therefore, both the quantitative and
qualitative view are being steered
Defined Key Performance Indicators
reflect the respective key drivers
database within HAA established, case-
by-case approach applied
position:
description grading
functional know-how
features required functional know-how (e.g., strategy, processes,
organization)
industrial know-how features required industrial know-how (industry)
methodical know-how
features required methodical know-how and related tools (e.g., process
analyses)
governing IT-applications features required IT-skill-set (e.g., Internet, MS Office)
data collection
organizes both the selection and composition of (internal and external) data
efficiently and goal-oriented
analysis and evaluation data
develops (and executes) creative and critical analyses based on collected
data; is able to deal with comprehensive and complex tasks
overall problem understanding
displays comprehensive understanding for existing problems in
consideration of possible solutions
development hypotheses and
execution analyses
structures analyses in a proper manner and deduces well-grounded (well-
grounded) analyses
conclusions and
recommendations
defines core messages logically considering Pros and Cons; develops
recommendations and phrases them persuasively; defends the derived
opinion
work organization and
compliance deadlines
develops and supervises plannings and meets defined deadlines
(milestones)
efficiency and commitment
executes comprehensive and complex tasks efficiently; features strong
commitment during work
quality and reliability of
analyses
features strict accuracy and intellectual integrity when analyzing; ensures
proper format and quality of extracted results
quality prepared documents
(PPTs, WORD, etc.)
prepares documents in "Top-Management quality" and ensures highest
standard in all communication efforts (structure, verbalism, grammar,
spelling)
ability to cope with stress
features consistent working quality given even big workload; remains cool-
headed and commited under pressure and in critical situations
documentation efforts keeps record in a structured, comprehensive and efficient way
verbalism
expresses relevant ideas and recommendations always in convincing and
appropriate manner; communicates precisely and focuses on core
message
interview skills develops independent interview-guideline, asks "right" questions
moderation
prepares and executes meetings target-oriented and resolves arising
conflicts professionally and constructively
communication and
presentation style
manages the communication (also in difficult situations) clearly and seld-
confidently, structures the presentation-flow (story-line) properly
overall behaviour
behaves professionally in association with customers and honors their
employees
target group orientation
considers the problems and framework of the customers when conducting
analyses and defining recommendations
positioning
achieves full acceptance and trust and tries to establish sustainable
relationships; considered as being "on top of the topic"
guidance and instruction
employees
defines the goals and steers the employees clearly and precisely (towards
common goal); acts as a role-model and supports the learning of team-
mates
moderation
prepares and executes meetings target-oriented and resolves arising
conflicts professionally and constructively
communication and
presentation style
manages the communication (also in difficult situations) clearly and seld-
confidently, structures the presentation-flow (story-line) properly
team co-operation
enables a positive atmosphere and efficient information-flow; motivates
team-mates and supports them with their tasks
team organisation organizes formal, punctual and efficient teamwork
team acceptance and
positioning
acts as strong personality, is open towards internal criticism and respected
due to professional behaviour; considered as being "on top of the topic"
self-identification re room for
improvement
improves existing weaknesses actively and supports colleagues in both
identification and improvements of their critical areas
utilization various sources
utilizes existing know-how sources (e.g., internal and external datbases,
networks)
protection know-how initiates and supervises learning (project) documentation
extension know-how
transfers and records the experience gaining from the ongoing project
(e.g., papers, publications)
6.know-how-
management
5.communicationtoandacceptanceby
(internal)employees
remarks
Performance Review
1.expertknow-how
skills
3.workingqualityandorganization
employee:
2.problemsolving-competence
4.communicationtoandacceptanceby
(external)customers
The quantitative steering for organizational units
is based upon a ‘cockpit structure’ with a few KPIs
Incentives
16. 16Wind-Down-Entities | Amsterdam 17th April 2015
I. Wind-Down Strategy
II. Target Operating Model and Processes
III. People and Incentives/Steering
IV. Questions and Answers
17. Germany
Contact
Dr. Julius Freiherr Grote
Chief Executive Officer
HETA Asset Resolution Bulgaria OOD
Julius.Grote@heta-asset-resolution.bg
Web
www.heta-asset-resolution.bg
www.aaaplatform.com
Thank you very much
17Wind-Down-Entities | Amsterdam 17th April 2015
18. 18Wind-Down-Entities | Amsterdam 17th April 2015
Disclaimer
HETA Asset Resolution Bulgaria OOD (the “Company”) does not make any
representation or warranty, expressly or implicitly, as to the validity, accuracy,
reliability, suitability or completeness of any of the information contained in
the presentation.
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to, or arising directly or indirectly out of the contents of or any omissions
from this presentation.
This presentation is being provided to the recipient and may not be
reproduced, distributed, passed on or published, in whole or in part, to any
person without the prior written consent of the Company.
The content of the presentation is not to be construed as legal, business,
investment or tax advice. Each recipient should consult with its own
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By viewing this presentation, the recipient acknowledges, and agrees to
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