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4559
MAY 19, 2010

V. KASTURI RANGAN SUNRU YONG

Alpen Bank: Launching the Credit Card in Romania
Introduction
In September 2006, Gregory Carle sat pensively at his desk at Alpen Bank’s corporate headquarters in Zurich. The previous evening he and the senior management team had enjoyed themselves dining late above the picturesque Limmat Valley, but now it was time to focus his attention on the task at hand. As Alpen’s country manager for Romania, Carle was contemplating a credit card launch in the Romania market, which he would pursue if he could be confident that it would add €5 million of annual profit to the Consumer Bank segment within two years (see Exhibit 1 for a summary of the financial performance of the Consumer Bank segment of Alpen Bank in Romania). Carle had been with Alpen since 1992, when he joined the bank’s global marketing group. His appointment in 2000 to country manager for Romania coincided with the bank’s opening its first branch in the capital city of Bucharest. Since then, Carle had overseen the opening of 14 additional branches in Romania, with Alpen Bank developing a reputation for excellence in serving affluent clientele. In addition to basic deposit, checking, and personal loan services, customers had access to a wealth management program composed of financial planning and investment products. The idea of a credit card for Romanian consumers was not new. Historically, Alpen management had balked at launching a card business due to low per-capita income levels, a poorly developed infrastructure of point-of-sale terminals, and the population’s inexperience with consumer credit. The country’s imminent entry into the European Union had led to a reassessment of this decision. However, Richard Tschumperlin, head of the bank’s International Consumer Businesses and Carle’s boss, remained skeptical that it was time for Alpen to introduce a card business: I’m not sure there is enough of a market there. Are there enough households with enough money? How much would it cost us to build a customer base? We have been very successful ________________________________________________________________________________________________________________ HBS Professor V. Kasturi Rangan and writer Sunru Yong prepared this case solely as a basis for class discussion and not as an endorsement, a source of primary data, or an illustration of effective or ineffective management. The authors thank Judy Bei of Citibank (HBS MBA 2001) and Rob Chen of Visa (HBS MBA 1999) for their valuable contributions to the development of this case. This case, though based on real events, is fictionalized, and any resemblance to actual persons or entities is coincidental. There are occasional references to actual companies in the narration. Copyright © 2010 Harvard Business School Publishing. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, storedin a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business Publishing. Harvard Business Publishing is an affiliate of Harvard Business School.

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4559 | Alpen Bank: Launching the Credit Card in Romania

building a profitable banking business for the wealthy—over 200,000 customers in a country with just 7.7 million households, which is great penetration. I worry that pursuing this credit card idea would be a risky distraction. Unlike Tschumperlin, Carle believed a credit card business would be an important growth vehicle, but he was aware of the skepticism within the Zurich headquarters. Certainly, he had to consider the financial and reputational costs of any missteps. He would need convincing analysis to win support...
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