The year 2008 crisis is called “financial” for a good reason. All the financial innovation and risk-taking notwithstanding, the banks had spent almost a decade behaving like the Pac-Man arcade game character and gobbling up other banks with an aim of building global financial powerhouses. Those involved in and closely familiar with this side of banking activity usually worked under the umbrella of corporate development function at their respective institutions.

What, if anything, has changed after more than six years? At least some of the answers have been provided by the practitioners in a survey released recently by KPMG (employees of our publisher are involved in providing services to KPMG Baltics SIA). A full version of this report is available here.

The good news is that the corporate development function still exists, and more than 60% of respondents believe that their area of responsibility has actually been expanded. Whereas before they used to deal with growth issues primarily, nowadays the corporate developers are increasingly involved in other aspects which have strategic importance for their institutions, like operational efficiency, business transformation, cost reduction, technology advancement and business restructuring.

Meanwhile, only 25% of respondents admit that they have been seeing a decline in deal activity. On the background of overall reduction in the number of deals completed and the volumes transacted, this suggests that much more time is spent on evaluating smaller transactions and fewer of them getting to the closing stage. Many teams are now involved in managing the selling off of assets, operations and portfolios, or activities that require a different skill set to process and a different time frame to get completed.

Another revelation worth noting is related to the prevailing changes in reporting lines. The chief financial officer has become the person that almost 75% of corporate development functions report to nowadays, with only 10% continuing to report to the CEO. This change, as admitted by the respondents, has introduced much closer supervision over the corporate development issues from the CFO and brought more scrutiny over the financial aspects of any deal into the transaction appraisal process.

The corporations usually have a very short institutional memory. With people who have had the first-hand experience of market meltdown moving on to other things, the attitudes and perceptions tend to change back to the pre-crisis mode quite fast. The fact that this has not happened yet in the banking sector demonstrates that, possibly, some lessons have indeed been learned.


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