Case Studies

Multinational Bank

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Multinational Bank Aligns Real Estate Goals with Corporate Objectives

Client

A large multinational bank, the client is a leader in global banking, with a strong and profitable private client franchise. Having over one billion euros in assets, the bank is an industry leader across Europe, and continues to grow in Asia, North America, and emerging markets in over 75 countries. With almost 70,000 employees and over 1,500 locations worldwide, this bank is already a large global corporation with a grasp on the big picture. However, when it came to planning for capital improvements for its real properties spanning the globe, year-by-year budgeting for necessary capital improvements created unexpected and unbudgeted facilities costs for the bank.

Challenge

Decision-making in regards to real estate had historically been tactical and often reactive to business unit demands. The client felt it was very important to identify the most critical problem areas across their facilities portfolio and to move to a more strategic approach that would enable increased efficiency and scalability to support growth. This bank needed a centralized real estate function that would initiate strategic, globally-consistent corporate real estate planning, create data-supported assessment and investment strategies, provide cost transparency for informed decision-making, allow accurate reporting to better manage risk, and enable a coordinated approach for strategic planning and facilities services.

Solution

To meet these objectives, the bank turned to VFA, which worked to pinpoint and document critical problem areas at the bank’s facilities in the United States, Europe and Asia. The team from VFA established a centralized data source of information about all of the bank’s properties using VFA’s strategic asset management software, VFA.facility. One of the benefits of gathering accurate facility data is that the true facility condition not only becomes clear, but also provides a metric to analyze the effect of investing in facility improvements. Industry-wide, this benchmark is known as the Facility Condition Index, or FCI. The FCI is the ratio of deferred maintenance or problem dollars to replacement dollars and provides a straightforward comparison of an organization’s key real estate assets. Using the FCI metric, the bank’s corporate real estate team had the ability to compare similar buildings to each other across regions, as well as to establish target condition ratings. Comparing buildings analytically also rapidly highlighted the buildings that were in the greatest need for repairs or replacements.

Using VFA.facility, the bank created multi-year renewal forecasts and “what if” funding scenarios, and identified investments needed to address the complete lifecycle of the properties. The bank also worked with VFA to meet many requirements of the strategic real estate plan, including the creation of risk correlation at the system level, identifying a redundancy gap analysis of key systems, capturing disposal and lease obligations, and the creation of a five-year capital plan.

Results

As a result of using the VFA solution, the client developed a five-year plan that targeted areas for cost savings, increased efficiency, and offered scalability to support growth. For the first time, the bank had a long-range view of capital planning and was able to promote a consistent approach towards evaluating its facility portfolio across multiple regions while continuing to support the aggressive growth plans of the core business. There is also an accurate view of condition assessments for comparative purposes across all of their capital planning landscape, as well as an opportunity to test out various “what-if” scenarios. Working with VFA has allowed the bank to develop a consistent approach in their decision-making, priorities, and standards. On an on-going basis, Facility Condition Assessment (FCA) reports for all designated facilities now allow the bank to have unified oversight and review of the corporate real estate function and to align the goals of the business with strategic and proactive corporate real estate planning.

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