In 2017, the corporate banking division began rolling out a coverage model to better manage clients
By HABHAJAN SINGH / Pic By ISMAIL CHE RUS & BLOOMBERG
Affin Bank Bhd is all set to take on more on the corporate banking front after rolling out a comprehensive change of its practices, especially with the introduction of the coverage model.
In the last two years, the group’s corporate banking division has undergone some major transformation in terms of how they manage clients.
“We have been doing some deep diving in the space of corporate banking. 2017 was effectively a transition year for us,” Affin Bank corporate banking director Mohammed Nizar Faisal (picture) told The Malaysian Reserve.
Ever since joining Affin Bank in 2016, Nizar and the team have been working to change the face of its corporate banking division which also covers trade finance and cash management.
Since 2016, the division has also been strengthening its compliance and risk management model to mirror standards by regulators and market practices.
“It’s a steep learning curve, and I’m happy to say we are almost there in terms of our systems, culture and framework towards compliance and risk,” he said.
Rolling Out Coverage Model
In 2017, Nizar said the bank’s corporate banking division began rolling out the coverage model.
Previously, he said everyone at Affin Bank was a relationship manager (RM), covering almost all the areas that needed coverage. With the new model, the bankers would start veering towards more specialised roles.
“Affin Bank never had a coverage model for corporate banking. A coverage model is where you have the RMs managing your frontline, originating deals and loans. And you have the middle office doing the credit and paperwork, and supported by the back office for operations, compliance and risk. “This is commonly practiced in foreign banks,” he said.
In essence, the coverage model allows the corporate banking RMs to coordinate coverage efforts for a diverse range of clients across the jurisdiction under multiple industries’ footprints.
They serve as a client’s single point of contact for the full range of products and services available at the institution. They would also work closely with the other departments to ensure that the larger organisation gets to extract full value from the clients.
The new discipline on coverage has pushed RMs to think harder on where the revenue and sustainable income will be made from the relationships they manage.
“It forces the RMs to ask the hard questions and to be more educated on the client’s business and industry cycles. It also instils a systematic approach towards usage of capital and risk-based pricing when looking at deals,” he said.
For the successful implementation of the coverage model, Nizar said the bank had to put into place some building blocks. Content development, for example, is central to the new RMs in the coverage model.
“We have been diligently upskilling via a formal and informal ongoing education process in the areas of financial analysis, cashflow analysis, documentary credit practice, structuring trade finance, cash management and Islamic products, compliance, KYC (know your customer) and usage of market-driven analytics or research on clients and industries.
“Aside from that, there is also content fillers for new regulations and frameworks being implemented within Malaysia,” he said. Among others, the bank has instituted quarterly formal training to fill the gaps for the relevant staff. This includes Friday morning breakfast filler sessions at least two to three times a month where economists and other subject matter experts are invited to speak.
“We covered any and every subject matter relevant to corporate banking to continue to upskill knowledge and content of the bankers,” he said.
In the long run, the coverage model allows RMs to spend more time understanding the client’s needs versus industry perspective given the specialisation.
“A more informed RM is better at understanding the credit and industry cycle of the client and appropriately structure facilities in accordance with the bank’s risk appetite.
“It also allows the RMs to have many touch points within the client’s corporate framework and to understand the real needs and opportunities therein. This is especially important with complex organisations with diverse business interests,” he said.
In 2017, Nizar said one of the feathers in Affin Bank’s cap was when the group handled the RM339 million financing for TNB Sepang Solar Sdn Bhd, the then first large-scale solar project in Malaysia secured by Tenaga Nasional Bhd (TNB).
“It was one of the first large-scale solar deals done by Affin Bank. It was a huge learning curve for everyone in the bank for financing largescale solar. Subsequently, we printed three other solar deals within the group,” he said.
On the whole, Nizar said the corporate banking division has showed sustainable growth of the wallet share of its clients with strong emphasis on cross-selling within the group.
At the same time, it has also successfully on-boarded 45 new-tobank clients with strong credit disposition and a diverse business that is non-traditional to Affin Bank.
“We strive to diversify our client and risk base. The plan is to grow our annual new-to-bank clients by 8%-10% up to 2020,” he said.
As a whole, Affin Bank’s corporate banking division’s total income grew 14.8% in 2017 from the previous year, contributing 44% of the group’s profit contribution.