Caja Espana Essay

481 Words2 Pages
The articles mentions the liberalization of the Spanish financial system in the 1980s, allowing the banks to expand from their geographical regions to much larger markets in the country. Further, they were able to invest into technology to create high tech computer systems to dominate various markets. Caja Espana was created in the mid-1990s through the merger of five cajas de ahorro in Spain. It then became one of the most cutting edge companies in Spain and through rebranding, it refreshed its corporate image. However, it has various issues in terms of its strategy to more to a less bureaucratic, more customer focused organization. Ultimately, their goal is maximize return on assets through profitable growth. Thus, the change in strategy has caused La Caja to recognize into four different divisions – financial, commercial, technology, and planning & control. Caja Espana employees were reward on their performance through promotions and determined by their qualification and seniority, but had a small variable that was variable on their performance. It goes into detail how the performance compensation was laid out. Next, Caja Espanas’s profitability measurement was laid out – measured at the product level that consisted of client and branch level. The profit calculation was composed of two items – revenue attribution and expense allocation processes – products generated revenue from two sources – fees and financial margin. Financial margins were calculated used pool of funds methodology – the branch’s margin was the difference between the interest obtained and the interest pad to the customer. This method is different than traditional financial accounting measures as it looked at branch performance outside of the profile of the portfolio. Instead of having one rate for various items, Caja chose to have rates for short term rates for operations less than one
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