Juan: The era of anonymous banking in the Czech Republic is over

Patria Online: What are the most significant and evident changes Societe Generale (SG) has initiated and realized in Komercni banka (KB) since its acquisition in 2001? Is KB on track to reach its transformation targets outlined more than two years ago?

Alexis Juan: Last year, Komerční banka completed an extensive transformation programme, part of which was the implementation of the parent Société Générale’s business model, which is successfully applied in many countries of the world. Our approach to customers has changed profoundly – today, it is based on three pillars: accessibility, proximity and professionalism. Thanks to multi-channel approach, the bank is accessible for its clients 24 hours a day 7 days a week from anywhere. The bank is also near its clients because today, every client has his relationship manager, which in my mind is a really important change in the quality of our customer service; we can talk about the end of anonymous banking in the Czech Republic.

Patria Online: KB (SG) has decided to focus on the retail market and this strategy is similar to its major domestic competitors (CSOB, CS). Has not KB thus lost a part of its unique profile among large domestic banks?

Alexis Juan: Komerční banka’s objective is to be the market leader in all segments, ranging from individuals to large corporations. We are successful in meeting this objective. After the bank’s privatisation we very often heard the view that Komerční banka cannot be a universal bank, that it would have to decide whether to focus on retail banking or on investment banking. I believe that a look at the development of the bank’s financial results since 2001 and the related development of the share price is sufficient validation that our thinking is correct.

Patria Online: The average purchase power of KB’s retail clients has been considered to be above the standard of its peers. What is KB’s current target group? Do you feel KB’s average retail client is still superior to CS’s and CSOB’s clients in this respect?

Alexis Juan: It is obvious that the quality of our services and products combined with our professionalism and innovation capacities has traditionally attracted affluent clients and we still have a strong position on this segment. However being recognized as the most trustful and reliable bank in the Czech Republic does not attract only wealthy customer...
Our strategy is to be a universal bank, providing to all segments of clients the financial products and services they need at the quality level they expect. Today, our multi channel approach, our wide and competitive range of products and services enable our bank to match the expectations of all Czech clients, no matter if they are children, student, entrepreneur, teachers, retired people, top executives...

Patria Online: Several years after SG’s acquisition of KB, do you consider the purchase price of EUR 1.2bn as fair, high or low from the point of view of the current majority owner? Was the purchase advantageous for SG?

Alexis Juan: The price that SG paid for KB was set for victory, SG’s analyses were absolutely correct. SG overpaid the second highest bid by several millions of euro. If somebody offers for a company 40 per cent more than the competitor, one or the other must simply have made a mistake. This was not the case with Komerční banka.

Patria Online: Would you call competition on the Czech banking market as rather tough, weak or comparable to e.g. competition in France?

Alexis Juan: Competition in the Czech Republic is rather tough now, and it will grow tougher as the country joins the European Union. Customers in the CR have more and more information about banking and financial services and can compare a structure and quality of offer not only in respect of banks on the Czech market but also with banks abroad.
Some differences exist between the Czech Republic and e.g. France. We have to take into consideration that in Western Europe or USA several generations have had an opportunity to get accustomed to consumer loans, mortgages, life insurance, pension founds etc. This offer is relatively new for clients in the CR. If you compare the ratio of indebtedness of households in EU countries and in the CR, you can see that there is a big difference. But as I said, interest of Czech customers in sophisticated products and services is progressively increasing. Success of our cash-less branch, which was opened last year, is a very interesting example. Increasing utilisation of payment cards, phone and internet banking is to noted as well. I consider the increasing interest in non-cash transactions as good news.

Patria Online: Could you indicate what changes KB is preparing for its product and services range in the coming months? Which products and services will be in the client spotlight and the major drivers of KB’s performance this year?

Alexis Juan: Of course, KB is preparing launch of several new products for 2004 which is in line in our strategy of being innovative and dynamic. Any information will not be communicated before their launch on the market.
It is primarily the quality of products and services, which is and will be the key factor of success. That is why we have launched a special department focused only on settlements of claims and complaints of our clients and we also plan to establish a position of ombudsman who would decide on more complicated cases. Komerční banka wants to listen to its clients, to talk with them and to be innovative – innovative in respect of the offer of our products and services and their quality.

Patria Online: Should we expect further consolidation among smaller players on the Czech banking market to be able to compete to the "big three"? Are you afraid of this scenario?

Alexis Juan: If by consolidation you mean a further growth and expansion of the smaller players on the market, then we have to say that we take this competition very seriously, as in fact I have already mentioned. Obviously, also the smaller players are carefully monitoring market developments and are adjusting to them very quickly. As I have mentioned, KB wants to be the market leader in all customer segments, and we are carrying out this strategy successfully. Thus, we carefully watch our competitors, but we certainly are not afraid of this scenario.

Patria Online: How KB's clients can benefit from KB's membership in the Societe Generale group? For example, may KB's clients use worldwide Societe Generale's services under the advantageous conditions? Are there any tangible synergies between the parent company and KB?

Alexis Juan: Komerční banka’s has many opportunities on how to use and leverage Société Générale’s know-how. This is, naturally, taking place for the benefit of the clients. Société Génerale belongs to the biggest and most important bank groups in the European Union. Société Générale is serving 15 million customers over the world and KB has got an opportunity to use this long-term professional experience.
For example - our co-operation with Société Générale allows us to serve specific clients who operate in the international environment and brings synergic effects. We have the French and European Desk (FED) in Komerční banka, which is a support organisational unit of the Komerční banka and Société Générale networks, committed to facilitating foreign clients’ access to some of our products or loans. It works the same way vis-a-vis foreign countries. A great advantage of KB’s membership of the Société Générale Group also lies in the area of international trade financing. This is a business line where much depends on credit, history, experience and position. Being a member of a positively perceived group such as SG is, naturally carries more weight.

Patria Online: Do you have personal experience with KB’s products and services and their quality? Are you a KB client?

Alexis Juan: Yes, and I am a satisfied client, and I have naturally my personal relationship manager.

Patria Online would like to thank Mr. Alexis Juan for having the pleasure of obtaining the interview.

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