Canadian banks outperformed most of their global counterparts in 2002 but face a number of key issues as the corporate banking industry is at the cusp of major changes, finds a report released today by The Boston Consulting Group.

While overall, the global corporate banking industry destroyed US $50 billion in value last year, most segments of Canadian corporate banking actually generated value in 2002, according to the report, The Path to Value Creation: Global Corporate Banking 2003.

“On average, Canadian banks performed better — and in some cases markedly better — than the global industry,” says Juergen Schwarz, VP and director of The Boston Consulting Group and lead author of the report.

“There are important lessons Canadian banks can take from this work to ensure they don’t suffer the same fate as many of the world’s other banks — especially regarding large cap clients and international ventures.”

The report surveyed of the performance of 65 of the world’s large corporate banks. This group included more than 40 of the world’s top 100 banks measured by tier-one capital.

The report identifies three levers that corporate banks should use to improve value generation:

  1. a focused business strategy that clearly chooses markets, segments and clients;
  2. a segment-specific business approach that tailors sales force and product approaches to the economics of chosen segments, avoiding over- and under servicing clients; and
  3. world-class capabilities, including comprehensive credit management, business transparency, effective people management, rewards for value creators, and strong management discipline

    “While, for the most part, Canadian banks earned their cost of capital, they can still improve their performance considerably,” added Schwarz, who manages BCG’s global corporate banking practice from Toronto. “The rules of the game keep changing. Corporate banking needs to develop a stronger sales orientation to continue to create value with select clients and within chosen segments. This will require a change in culture and capabilities.”