Monday, July 26, 2010
Tuenti: The begining of the End??
Que puede hacer Tuenti para parar su caída libre? Will it survive? Que puede ser la mejor estrategia para esta empresa - maximizar los ingresos (publicidad) hasta que dure, ir hacia un nicho (muy nicho) donde Facebook no le puede tocar? Puede competir de alguna manera con Facebook? Es un caso de Hi5 a la española? Cual es vuestra opinion...? Que pueden aprender los startups españoles con este caso?
Wednesday, August 19, 2009
Spanish Banks Take Advantage of the Crisis to Clean-Up Their Retail Operations
When I recently spoke with the COO of a major U.S. bank, he expressed how he admired the current state of the Spanish banks. This admiration is shared by bankers, across the world and primarily refers to the healthy state of Spanish commercial banks vis-à-vis the other markets.
However, if we look at the retail banking side, it becomes quite obvious that we are over-banked in Spain, by an excessively inefficient retail banking network, with employees that are often compared with “los funcionarios” (the government employees). It is hard to walk down a hundred meters on any street in Spain and not come across a bank branch. Even Banco de Espana, the “Spanish Federal Reserve”, has made several recommendations to reduce the 45,689 branches and 278,301 employees that current exist in Spain. The fact is that there are 1.2 branches for every 1,000 Spaniards (versus approximately 1 branch per 5,000 Brits) and 7 bank employees for every thousand in Spain, makes it clear that something is wrong.
And then the economic crisis arrived….
The current economic situation has given the excuse and the reason for the banks to take critical steps to improve their retail structure. Over the last 12 months, Spanish banks have closed 942 branches and laid off 9,303 employees, enabling them to improve the operating margins by an average of 3.96% (amongst the Top 11 Spanish banks), per internal data from the banks. At the same time, there is no doubt that further closures and layoffs are essential for improving the health of the retail banking system. Perhaps, a little excessive, but by the British standards, Spain only needs 9,000 branches versus the current 45,000 and no more than 100,000 employees in the retail branches.
There was a time when it seemed that the only way for Spanish retail banks to grow was to increase the number of branches. However, over the last few years, success stories in online banking, such as ING Direct have shown that to no longer be the case. With banks, such as, BBVA incorporating strategies like “personalized banking”, new ways to grow market share are in the works.
A healthier and more efficient retail banking system is likely to become another reason to envy the Spanish financial services sector.
However, if we look at the retail banking side, it becomes quite obvious that we are over-banked in Spain, by an excessively inefficient retail banking network, with employees that are often compared with “los funcionarios” (the government employees). It is hard to walk down a hundred meters on any street in Spain and not come across a bank branch. Even Banco de Espana, the “Spanish Federal Reserve”, has made several recommendations to reduce the 45,689 branches and 278,301 employees that current exist in Spain. The fact is that there are 1.2 branches for every 1,000 Spaniards (versus approximately 1 branch per 5,000 Brits) and 7 bank employees for every thousand in Spain, makes it clear that something is wrong.
And then the economic crisis arrived….
The current economic situation has given the excuse and the reason for the banks to take critical steps to improve their retail structure. Over the last 12 months, Spanish banks have closed 942 branches and laid off 9,303 employees, enabling them to improve the operating margins by an average of 3.96% (amongst the Top 11 Spanish banks), per internal data from the banks. At the same time, there is no doubt that further closures and layoffs are essential for improving the health of the retail banking system. Perhaps, a little excessive, but by the British standards, Spain only needs 9,000 branches versus the current 45,000 and no more than 100,000 employees in the retail branches.
There was a time when it seemed that the only way for Spanish retail banks to grow was to increase the number of branches. However, over the last few years, success stories in online banking, such as ING Direct have shown that to no longer be the case. With banks, such as, BBVA incorporating strategies like “personalized banking”, new ways to grow market share are in the works.
A healthier and more efficient retail banking system is likely to become another reason to envy the Spanish financial services sector.
Saturday, August 8, 2009
Travel Agencies: A Dying Breed? – The Transformation of the Industry
Over the last couple of decades, tourism has become one of the key industries, for the Spanish economy. Spain has transformed to being the #2 destination for international tourists and Spaniards have increasingly joined the ranks of some of the most prolific travelers, around the world.
Behind the scenes, some interesting occurrences happened… By the end of 2007, the number of agencies in Spain had grown to over 9,000 points of sales versus 3,000 and 4,000 in the UK and Germany, respectively. In addition to the higher economic standards, which prompted more Spaniards to travel, the growth in the numbers of agencies was credited to the change in the way the major Spanish airlines worked with the Agents. In the late-1990´s, Iberia switched from a simple 5% commission per sale, to a volume-based commission model, which offered additional incentives to the agencies to grow in size.
Everything seemed to be going well until recently. The number of agencies continued to grow until 2007, but suddenly things have turned sour. Amadeus, the Spain-based provider of reservation technology, reported losing 4.8% of clients and Federacion Española de Asociacionses de Agencias de Viaje reported that over 1,000 points of sales disappeared, in 2008. The two leading causes for this cleaning act are: (i) growth in Internet sales, with the continued success of companies, like eDreams, Rumbo and Lastminute and (ii) the ongoing economic crisis.
An executive from the Carlos Wagonlit Travel (Expansion, May 20, 2009) recently commented on the ideal number of points of sale for Spain being 5,000 and 6,000. It is widely understood by the industry that the offline and the online players have become positioned for different segments of the market. The online market positioned in the air and train tickets and the hotel rooms markets, with the offline sellers targeting the more complex cruises and package tours.
This assessment seems rather optimistic towards the offline travel agencies. Over the next few years, the number of surviving points of sales should be much smaller, as consumers and online players become more sophisticated in managing sales of more complex travel offers. In order to survive, offline agencies, particularly the independent ones, would have to become more specialized, focusing on niche travel, integrate Internet offering and grow in size. It is now or never…
Behind the scenes, some interesting occurrences happened… By the end of 2007, the number of agencies in Spain had grown to over 9,000 points of sales versus 3,000 and 4,000 in the UK and Germany, respectively. In addition to the higher economic standards, which prompted more Spaniards to travel, the growth in the numbers of agencies was credited to the change in the way the major Spanish airlines worked with the Agents. In the late-1990´s, Iberia switched from a simple 5% commission per sale, to a volume-based commission model, which offered additional incentives to the agencies to grow in size.
Everything seemed to be going well until recently. The number of agencies continued to grow until 2007, but suddenly things have turned sour. Amadeus, the Spain-based provider of reservation technology, reported losing 4.8% of clients and Federacion Española de Asociacionses de Agencias de Viaje reported that over 1,000 points of sales disappeared, in 2008. The two leading causes for this cleaning act are: (i) growth in Internet sales, with the continued success of companies, like eDreams, Rumbo and Lastminute and (ii) the ongoing economic crisis.
An executive from the Carlos Wagonlit Travel (Expansion, May 20, 2009) recently commented on the ideal number of points of sale for Spain being 5,000 and 6,000. It is widely understood by the industry that the offline and the online players have become positioned for different segments of the market. The online market positioned in the air and train tickets and the hotel rooms markets, with the offline sellers targeting the more complex cruises and package tours.
This assessment seems rather optimistic towards the offline travel agencies. Over the next few years, the number of surviving points of sales should be much smaller, as consumers and online players become more sophisticated in managing sales of more complex travel offers. In order to survive, offline agencies, particularly the independent ones, would have to become more specialized, focusing on niche travel, integrate Internet offering and grow in size. It is now or never…
Thursday, August 6, 2009
Spanish Internet Usage Remains at the Bottom of EU Figures: Opportunities for Some
With only 1 out of 3 Spaniards using Internet on a regular basis (regular being at least once a week) and with nearly 38% of the population claiming to have never used the Internet, Spain appears at the tail end of the Europeans, along with the Bulgarians, Greeks, Romanians and the Cypriots.
In terms of business, the Spanish companies do not do much better. Only 10% of the Spanish businesses are using Internet to sell their products and services versus the European average of 19%. Similarly, 19% of the Spanish companies purchase goods online versus the European average of 28%.
Not all is bad. In terms of mobile services, Spain is second to Sweden in 3G usage, with the penetration of 6% and at the European average in terms of mobile Internet usage.
Where does that leave us? It is clear that the Spanish Internet market is not yet as mature as that of other Western European countries. Over the next few years, Spain should see higher growth rates vis-à-vis other major markets creating interesting opportunities for both Internet plays and for technology companies serving the Spanish businesses.
http://ec.europa.eu/information_society/eeurope/i2010/index_en.htm
In terms of business, the Spanish companies do not do much better. Only 10% of the Spanish businesses are using Internet to sell their products and services versus the European average of 19%. Similarly, 19% of the Spanish companies purchase goods online versus the European average of 28%.
Not all is bad. In terms of mobile services, Spain is second to Sweden in 3G usage, with the penetration of 6% and at the European average in terms of mobile Internet usage.
Where does that leave us? It is clear that the Spanish Internet market is not yet as mature as that of other Western European countries. Over the next few years, Spain should see higher growth rates vis-à-vis other major markets creating interesting opportunities for both Internet plays and for technology companies serving the Spanish businesses.
http://ec.europa.eu/information_society/eeurope/i2010/index_en.htm
Private Equity Transforms Local Manufacturer into a Global Player: MCH Private Equity and HCS Group Case
In 2005, Pardo was a typical Spanish family-owned manufacturer, catering to the local market, with its social-sanitary equipment, such as hospital electric beds. It was clear that if the company did not evolve, it would probably disappear, in a few more years.
Then came in MCH Private Equity, one of the few active Spanish players in the market and acquired Pardo. What has followed has been the text-book transformation of the company - professional management, R&D, and internationalization. Since 2005, the renamed company, HCS Group (Grupo HCS) has evolved from €32 Million in revenues to projected revenues of €45 Million, a growth of 41%, expanded its product lines, and grown to sell in markets, including Portugal, Germany, UK, US, Latin America and North Africa.
Such opportunities in Spain, particularly in the lower mid-market, remain plenty and private equity continues to be well placed to take advantage of such.
Then came in MCH Private Equity, one of the few active Spanish players in the market and acquired Pardo. What has followed has been the text-book transformation of the company - professional management, R&D, and internationalization. Since 2005, the renamed company, HCS Group (Grupo HCS) has evolved from €32 Million in revenues to projected revenues of €45 Million, a growth of 41%, expanded its product lines, and grown to sell in markets, including Portugal, Germany, UK, US, Latin America and North Africa.
Such opportunities in Spain, particularly in the lower mid-market, remain plenty and private equity continues to be well placed to take advantage of such.
Wednesday, August 5, 2009
William Hill moves Online Gaming to Gibraltar
UK´s William Hill has moved its online gaming division to Gibraltar, with the expectations of major tax savings. With William Hill in Gibraltar, the Rock now boasts of a new major in its already massive array of gamining companies, including PartyGaming and 32 Red.
In addition to tax savings, this move enables William Hill to the best online gaming talent, low personnel costs and two large home markets - the UK and Spain.
While having such key players so close to home, does not add euros to the Spanish tax system, it does benefit the country and Andalusia, in particular, in other key areas - employment and consumption.
In addition to tax savings, this move enables William Hill to the best online gaming talent, low personnel costs and two large home markets - the UK and Spain.
While having such key players so close to home, does not add euros to the Spanish tax system, it does benefit the country and Andalusia, in particular, in other key areas - employment and consumption.
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