BCG - The Boston Consulting Group

Situation

Our client, one of the largest European banks that provides diversified financial services, was considering making a strategic investment in a domestic city commercial bank in China. The investment would fulfill two strategic objectives: first, enable the domestic bank to transform its existing operations and develop a strong retail franchise; second, help the domestic bank expand into other cities within its province, primarily through acquisitions of other city commercial banks. BCG was tasked with helping this client understand the operating environment of the target bank and identify other potential markets in the same province.

Approach

After conducting extensive research, both qualitative and quantitative, the BCG team mapped the market environment at both the city and provincial levels in order to understand the strategic position and franchise value of the target bank. Next, we formulated a three-year business plan based on financials provided by the target bank, management interviews, and external assessments. This document gave our client the information it needed to make its final investment decision.

Impact and value created

BCG prepared a detailed analysis of the proposed target, including market size, growth history, growth potential, competitive landscape, and regulations—as well a comprehensive three-year business plan. With this strong and insightful knowledge base, the client felt confident to acquire a minority stake in the target bank.

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