Shareholder Value Enhancement
The primary objective of any management team is to create value for its shareholders.
The link between value creation for shareholders and the business actions of the management team is not fully appreciated in many parts of the world, including the Middle East. Variations in share price are often blamed on factors beyond the control of the management.
While it is true that general economic conditions influence stock market indices, there is a strong correlation between a financial institution’s business portfolio and the performance of its share price.
This is a perspective of Value Based Management.
Evidence in GCC Banking Sector
There is strong evidence that supports the importance of Value Based Management.
For instance, stock markets in the GCC have examples of financial institutions valued at or below their book value, while others are valued at multiples of their book value.
The price-earnings ratios of financial institutions differ significantly. Some institutions have lost more than 50% of their market value in the recent past, while others have achieved stability in their share price.
Our Capability
The GBC team of consultants helps boards and senior management improve the market value of financial institutions.
Using a combination of diagnostic modelling to ascertain Shareholder Value Added (SVA) of individual businesses, business portfolio restructuring and an effective communication strategy, the GBC team helps in implementing share price improvement plans.