The Boston Consulting Group has been hired by US-based bank Comerica to run a strategic review of its expenses and to identify areas of revenue expansion. The bank has in recent years seen a number of bad loans hit its books, with many investors keen to see a sale of the bank – which may be on the cards, as recently hinted by the CEO, would a buyer be found.
Comerica was founded in 1849 and is today headquartered in Dallas, Texas. The financial services company offers three key financial services through its major businesses: wholesale banking, retail banking and wealth management. As of March 2016, Comerica reported total assets of $69 billion.
In recent years Comerica has found itself in increasing distress as a number of bad loans and high costs have begun to affect its balance sheet. In a bid to rein in costs, as well as explore new avenues for revenue growth, the bank’s Chairman and CEO, Ralph Babb, has called in the Boston Consulting Group, a global management consulting firm.
The Boston Consulting Group will run a broad-based review of costs and new business opportunities, to identify where savings and revenue growth can be realised. The work from BCG may in part be aimed at streamlining the company for a possible sale in the near future. Babb has hinted at the possibility of a sale for some time. The sale may be difficult to achieve, however, with reportedly few prospective buyers available for one of the US’ largest banks. Analysts suggest that the bank is currently trading at around book value – thus a relatively good deal compared to rivals that are trading at around 1.3x their book values, were a buyer to step forward.
Recently, bank shareholders were rocked by news that CFO Karen Parkhill was leaving "to pursue other opportunities". David Duprey, formerly an EY partner, who joined Comerica in 2006, has taken over the CFO position. The appointment of Duprey, according to Babb, "will play an important role in driving the future of Comerica and creating value for our shareholders, especially in working with the Boston Consulting Group in its current review of our revenue and expense base.” The management shakeup may, therefore, be in the interest of the bank’s shareholders in the longer-term, rather than a sign that the rats are abandoning a sinking ship.