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The reallocation of customer segments and product competencies proceeds along four lines (see figures in the chart):
(1) At the beginning of 2005 we set up the SMEs Austria business segment to enhance profitability in this “problem area” of Austria-based business. The related “SME plus” programme has been completed successfully. The SMEs Austria segment has been divided up between the Retail Division and the Corporates Division. This has been done to establish a uniform structure within UniCredit Group and also because a number of SME customers, more specifically small business customers, can best be served through an “industrial” approach which takes account of the large number of low-volume transactions and standard requirements in day-to-day business. On the other hand, a growing number of medium-sized companies now uses products and services which were previously developed and reserved for large corporates. The criteria for serving customers in the Corporates Division are an annual turnover of at least € 3 m or international business of a significant size – i.e. Cross Border Client Group (CBCG) customers – or the use of trade finance or corporate finance products or financial derivatives. According to these criteria, some 17,000 customers with a total financing volume of € 18 bn and investments (including securities) totalling € 27 bn which were previously included in the SMEs Austria segment – and accounted for over two-thirds of that segment’s total revenues – were allocated to the Corporates Division. The remaining 70,000 customers with a total business volume of over € 4 bn on the assets side and almost € 4.5 bn on the liabilities side, but accounting for only one-third of total revenues, have been transferred to the Retail Division.
(2) In line with the definition of UniCredit’s Private Banking & Asset Management (PB&AM) Division, Capital Invest – now Pioneer Investments Austria – and AMG as well as the profitable top customer segment comprising high net worth individuals (served by BANKPRIVAT and Schoellerbank) have been transferred from the Retail Division to PB&AM. PB&AM covers both asset gathering (with a focus on customer service) and asset management activities (with a focus on production).
There is no change in the total volume of Austrian customer business (the three old segments as compared with the three new segments), but the new segmentation leads to a loss recorded in the Retail Division; this means that there is a need for more intensive restructuring efforts.
(3) With the bundling of competencies in the areas of trading in financial markets and of investment banking in a wider sense, CA IB Corporate Finance and other product responsibilities of large-volume investment banking were transferred from the Corporates Division (previously Large Corporates & Real Estate) to the new Markets & Investment Banking Division (MIB) with effect from the beginning of 2007. This applies to capital market-related structured finance, syndication activities and (with the transfer of CA IB Corporate Finance) business in equity capital markets, M&A advisory services and merchant banking.
(4) The strongest impact on the income statement, and on BA-CA’s role within UniCredit Group, results from Group-internal transfers as BA-CA assumes the holding company function for CEE (including Turkey and Russia, but without Poland and Ukraine). Pursuant to the shareholders’ agreement of March 2006, and in response to unforeseeable developments which occurred after that date, HVB Splitska banka and Bank BPH were sold in 2006. In the course of 2007, the CEE banking subsidiaries of HVB and UniCredit will be transferred to BA-CA.