1、The Quest for Leadership:Strategy&analysis of CEO Succession in European Financial ServicesSTRATEGIC MARKET STUDYNovember 2022|GermanyStrategy&The Strategy&analysis of CEO Succession in European FS provides in-depth insights into recent CEO bank successionsIntroduction:Strategy&analysis of CEO Succe

2、ssion in European Financial ServicesSource:Strategy&analysis1BACKGROUND Todays significantly deteriorating macroeconomic environment(in particular characterized by dynamic energy prices,inflation,labor shortages/increasing wages and geopolitical uncertainty)as well as associated market uncertainty p

3、ose numerous challenges on banks Considering these market dynamics,the relevance of the CEO role increases and is under special scrutiny from all stakeholders(e.g.shareholders,employees)Throughout the last three years(09/2019 09/2022)over approximately 30 CEO successions occurred within the European

4、 banking landscape This study qualitatively and quantitatively analyzes the underlying decision patterns/parameters of banks appointing a new CEO successorSTUDY SCOPE:ANALYZED BANKS/CEO SUCCESSIONSBanks headquartersTypes of banks analyzed57%32%11%Corporate BankRetail/Private BankUniversal BankBanks

5、analyzed(selection)Credit SuisseUBSABN AMROErste GroupNordeaAarealINGBasler KantonalbankStrategy&Approximately 30 CEO successions occurred at leading European Banks throughout the last three yearsQuantitative market insights of bank CEO successions(extract)Source:Strategy&analysis;Note:1)underlying

6、reasons for remaining 10%not assignable230Primary reasons for previous CEO leaving the bank:CEO changes at leading European banks throughout last 3 years48%a new external CEOis appointed52%a new internal CEOis appointedContract terminations by CEO44%Forced resignations by the bank 26%Retirementsby C

7、EO19%Type of CEO departure:1)Planned(e.g.retirement)20%Gender distribution of newly appointed CEO:Sudden(e.g.resignation)70%Men93%Women7%Strategy&Business performance of the bank and reason for departure of the predecessor impact CEO successionBank CEO succession:Main drivers(based on market researc

8、h)Source:Strategy&analysis3OVERALL BUSINESS PERFORMANCE/STATE OF THE BANKWhat is the current business/financial situation of the bank?What is the corporate trajectory/outlook for the bank?DEPARTURE OF PREVIOUS CEOWhat was the underlying driver for the departure of the previous CEO?What is the depart

9、ure of previous CEO a sudden or a planned one?The decision to a appoint an internal or external CEO successor depends onABStrategy&By appointing an internal CEO successor,banks commonly strive for stability and consistencyBank CEO succession:Overall appointment scheme for internal-successorSource:St

10、rategy&analysis;Strategy&CEO success study4PATTERN:INTERNAL VS.EXTERNAL SUCCESSORBUSINESS PEFORMANCEPOSITIVENEGATIVEDEPARTURE OF PREVIOUS CEOPLANNED(e.g.retirement)SUDDEN(e.g.resignation)ABPreferred CEO succession pattern:INTERNAL/EXTERNAL HIREPreferred CEO succession pattern:EXTERNAL HIREPreferred

11、CEO succession pattern:INTERNAL HIRE1 12 23 3KEY INSIGHTS/IMPLICATIONS A well-functioning and growing corporate situation/trajectory strongly correlates to the appointment of an internal CEO successor Due to a faster adaption and smoother transition phase,emergency/sudden departures commonly are lin

12、ked to internal CEO hiresSELECTED RECENT MARKET EXAMPLES Retail Bank :appointment of internal CEO successor after resignation of previous CEO due to a Board dispute Global Bank :appointment of internal CEO successor after ambition to boost overall business/financial performance State Retail Bank :ap

13、pointment of internal CEO successor after retirement of previous CEO1 12 23 3Strategy&Existence of well-established(corporate/personal)connections within the companyBetter/more profound understanding of the companys culture and valuesAn internal CEO hire commonly facilitates corporate stability thro

14、ugh an effective recruiting and onboarding processBank CEO succession:Success factors of internal hireSource:Strategy&analysis5Provision of long-term and sustainable stability(new internally appointed CEO more likely to become a long-term solution)Availability of more accurate information on interna

15、l employees talents:Avoidance of complex and expensive external screening processes(long-term perspective)Incentive for other internal employees aiming to take on leadership roles in the future as wellFaster adaption and smoother transition/succession phaseStrategy&An external CEO successor commonly

16、 offers new strategic business ideas and perspectives for a bankBank CEO succession:Overall appointment scheme for external-successorSource:Strategy&analysis;Strategy&CEO success study6PATTERN:INTERNAL VS.EXTERNAL SUCCESSORBUSINESS PEFORMANCEPOSITIVENEGATIVEDEPARTURE OF PREVIOUS CEOPLANNED(e.g.retir

17、ement)SUDDEN(e.g.resignation)ABPreferred CEO succession pattern:INTERNAL/EXTERNAL HIREPreferred CEO succession pattern:EXTERNAL HIREPreferred CEO succession pattern:INTERNAL HIRE1 12 23 3KEY INSIGHTS/IMPLICATIONS Struggling companies commonly examine the value of drastic/substantial changes by appoi

18、nting a new external CEO(by offering new strategic ideas and perspectives)Generally the selection of an external CEO successor is rather unlikely in the cases of sudden departures of the previous CEOSELECTED RECENT MARKET EXAMPLES Private Bank :appointment of external CEO-successor after resignation

19、 of previous CEO due to failed acquisition negotiations Global Bank :appointment of external CEO-successor after resignation of previous CEO due to a failed growth trajectory Cantonal Bank :appointment of external CEO-successor after retirement of previous CEO1 12 23 3Strategy&Newly appointed intern

20、al CEOs are mainly promoted from a business resort and were previously part of the banks mgmt.boardBank CEO succession:Former position of newly-appointed internal CEOSource:Strategy&analysis;Strategy&CEO success study7PATTERN:FORMER POSITION NEW INTERNAL CEOKEY INSIGHTS/IMPLICATIONS Majority of newl

21、y appointed CEOs previously covered functions/roles in the banks business resorts(e.g.Corporate/Wholesale Banking,Retail Banking)Besides,newly appointed CEOs commonly are promoted from within the management board(e.g.CFO,CRO)to the CEO functionSELECTED RECENT MARKET EXAMPLES Retail Bank :appointment

22、 of the former Head Personal Banking as the new the CEO Global Bank :appointment of the former Managing Director Wholesale as the new CEO Cantonal Bank:appointment of the former Head Corporate Center as the new CEO1 1Business resorts(e.g.Personal Banking,Asset Management)60%of all internal CEO succe

23、ssorsCorporate resorts(e.g.Risk Management,Finance,Corporate Center)40%of all internal CEO successors1 13 32 22 23 3Strategy&Overall share of female CEOs with approximately 7%low,but above the global cross-industry average of 4%Bank CEO succession:Gender distribution of departing&new CEONote:1)same

24、ratio applies for departing and new CEO;2)Results Strategy&CEO 2018 success studySource:Strategy&analysis;Strategy&CEO success study8PATTERN:GENDER DISTRIBUTION/SHARE CEOsKEY INSIGHTS/IMPLICATIONS Only approximately every 10thCEO succession in European Banking was associated with a female CEO(releva

25、nt for both predecessor and successor)Across industries,the largest share of incoming female CEOs can be observed in the Utilities Sector(8%)and Communication Services Sector(8%),global industry-diagnostic with an average of 5%2)SELECTED RECENT MARKET EXAMPLES Global Bank :appointment of a new male

26、CEO in September 2021 Global Bank :appointment of a new female CEO in September 2019 Retail Bank:appointment of a new female CEO in September 20221 1FEMALEDeparting CEONew CEOMALE7%1)93%1)1 12 23 32 23 3Strategy&Sudden departures represent the predominant pattern in banks CEO successions only 1 in 5

27、 CEOs retires in a planned mannerBank CEO succession:Reasons for CEO departureNote:1)Results Strategy&CEO 2018 success study;2)underlying reasons for remaining 10%not assignableSource:Strategy&analysis;Strategy&CEO success study9PATTERN:REASONS FOR CEO DEPARTUREKEY INSIGHTS/IMPLICATIONS Sudden/force

28、d CEO turnovers(e.g.through disputes between CEO and board and subsequent disputes)account for approximately 70%of the CEO successions throughout the last three years Across industries,planned sudden/forced CEO turnovers(incl.M&A)occur only in average 23%of CEO successions1)SELECTED RECENT MARKET EX

29、AMPLES Global bank :appointment of new CEO,after previous CEO became takes over new role at other bank/competitor Global bank :appointment of new CEO,after previous CEO clashed with the banks management board over business strategy Cantonal Bank :appointment of new CEO,after previous CEO retired1 12

30、 23 3Early contract terminations by CEOForced resignations by the bankRetirementsby CEOSUDDEN2)PLANNED2)44%of all CEO successions1 12 23 326%of all CEO successions20%of all CEO successionsStrategy&Study insights suggest three key empirical patterns for European banks when appointing a new CEOThree k

31、ey CEO succession patterns derivedSource:Strategy&analysis10“The banks overall business situation matters when appointing an internal or external CEO successor”A strong and growing corporate performance(trajectory)of a bank strongly correlates to the appointment of an internal CEO successor on the o

32、ther hand,struggling companies commonly examine the value of radical changes by appointing a new external CEO(by offering new strategic ideas and perspectives).“Low female CEO ratio shapes European banking landscape”Only every 10thCEO succession in the European banking landscape is associated with a

33、 female processor or successor.Despite an industry average of approximately 5%,further advancements/dynamics are anticipated in the European banking landscape looking forward.“Sudden/forced turnovers are common succession patterns across the European Banking landscape”Only 20%of the CEO successions

34、in the European banking landscape throughout the last three years were associated with a planned CEO succession.Sudden or respectively forced turnovers are the predominant succession pattern.Strategy&Strategy&Your Strategy&contacts11Strategy&Dr.Philipp WackerbeckPartner,Global Head of Financial Serv

35、ices,Strategy&+49 170 2238 Jonas HeydaschManager,Financial Services,Strategy&+41 79 152 Thank 2022 PwC.All rights reserved.PwC refers to the PwC network and/or one or more of its member firms,each of which is a separate legal entity.Please see for further details.Disclaimer:This content is general information purposes only,and should not be used as a substitute for consultation with professional advisors.