Commerzbank is turning to Bain as the German bank seeks to boost revenue and contain costs, Bloomberg has learned.
This is not the first mission of its kind for Bain at Commerzbank: the firm had already been mandated in 2019 on a subject of cost reduction – in parallel with several missions from competing firms.
Objective of this new mission: to adapt the bank’s strategy to a rapidly changing economic context. Adjustments that would involve obtaining new wealth management mandates from accounts already clients in private banking; increase the use of digital services offered by the bank, as well as services related to sustainable development.
A mission that comes as the CEO of the bank Manfred Knof is halfway through a 4-year turnaround plan, the objective of which is to increase the group’s profitability. But a hike in the European Central Bank’s key interest rate and runaway consumer price inflation have rendered this strategy largely obsolete – hence Bain’s mission.
A new tenure for Bain at Commerzbank somewhat against the grain as the banking sector is at the forefront of some palpable slowdown in buying strategy advisory assignments in several markets.
If, since the release of covid, the purchases of missions had been overdrive by a catch-up effect, the rise of digital subjects, the urgency of decarbonization or the resurgence of deals (in particular the private equity wheel and due dil), a slowdown is now being felt.
Thus, Andrea Orcel, the boss of UniCredit, he cut consulting expenses in half. The same at Credit Suisse which, in 2022, wanted to halve the 2 billion Swiss francs that the bank had allocated to 16,430 consultants, suppliers or subcontractors in 2021. Finally, according to the Financial TimesUBS is also cutting its advisory spending.
The slowdown in deals and a reorientation of the Big Four and MBBs (McKinsey, Boston Consulting Group and Bain) towards other subjects such as those of ESG (environment, social and governance), tech and digital or reversal, could result in downward pressure on fees.
A source tells the FT that he has heard of consultants in the UK offering their clients free consulting services from consultants “at the beach”.
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