...competitive advantage over its rivals. The importance of internal controls and risk management is highly recognized at Wellfleet. Wellfleet aligns their risk management to Basel II Accord and guidelines. The bank has a unique risk profile and warranted risk-taking discipline. The bank aggressively pursues growth in the large-scale transformational deals. The bank wants to grow aggressively but with balance. As the bank grows, they need to make sure that their risk infrastructure keeps apace with the business opportunities. A consequence for their growth strategy, the bank is facing several risks, such as legal/regulatory risk, credit risk, business risk and operational risk. The legal/regulatory risk is presented by changing international regulatory rules, the bank is required to set aside and manage capital reserves in response to these new regulatory rules. The global economy is becoming more competitive and Wellfleet bank is growing against a risky environment. Companies may default and that present credit risk to the bank. Wellfleet has more strict risk control than its competitors, and pay more attention to the risk modeling rather than the holistic view of the company requesting the facility or industries it operates in. The business risk followed by key lending decisions that the bank makes may result in an opportunity loss for revenue from current/potential customers. The power of the risk management function caused lots of tension in the corporate banking unit. The bank has...
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...This article can be divided into four parts, explaining the risks of Wellfleet Bank, additional risks after new focus and recruitment, calculation for the proposal and analysis of risk management processes in order. Risks of Wellfleet Bank Given its strategy, Wellfleet bank may face several kinds of risks: credit risk, country or sovereign risk, regulatory risk, compartmentalized risk and market risk. Credit risk was the first one that Wellfleet bank may have. Credit risk arises from the possibility that promised cash flows held by the bank, such as loans or bonds, will not be paid in full. According to the case, the number of proposals for the Group Credit Committee to project increased from 220 (for 2008) to over 300 (for 2009). What’s more, the largest credit proposals were nearing $1 billion each and each of these large-scale credit applications involved a mega-risk. As per the mantra of the bank, “If a billion-dollar deal went wrong, it could sink the ship.” Secondly, regardless of its customer base, which was most of its 6 million retail customers and 15,000 corporate clients resided out of the U.K., Wellfleet’s headquarter was still in London and it complied with regulations and standards like any other U.K.-based banks. Wellfleet considered the “first-world compliance standards” as an important competitive advantage over local rivals in emerging markets. But the risk was its repayments from the local borrowers might be interrupted by the interference of foreign governments...
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...Case Analysis – Risk Management at Wellfleet Bank: All That Glitters Is Not Gold. 1. Given its strategy, what kind of risks does Wellfleet Bank face? The first possible risk would be the operation risk. Refer to Wellfleet Bank, the Group Credit Committee has a unlimited level of authority. They could approve loans of any size within the bank’s regulatory limits which means there is no supervisory group can stop the group’s decision. Furthermore, to preserve the independence of the credit-approval process, the “Alpha Pass” did not involve the most senior executive management (e.g., business CEOs) in the deal flow. Under the current operation procedure, if a billion dollar deal went wrong it could sink the ship. The second possible risk is the regulatory risk. It is related to the compliance with the Basel II Standards and Credit Risks. The cost of operation will increase and the attractiveness of investment in Wellfleet Bank will decrease when the government amends or changes the law on banking regulations (e.g. more restriction). Thirdly, Wellfleet is also facing is the concentration risk. Refer to the case, Wellfleet has a pretty much higher concentration on its Corporate Banking Group. The group contributes around 60% of profit before taxes and 70% of bank assets in the last financial year (2007). As a result, the bank may suffer a huge loss if the business on corporate banking goes downwards. Last but not least, there are also many minor risks that Wellfleet...
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...So it is quite impossible to define bank in just one word. However, bank can be described as such a financial institution that takes in funds as deposits repayable on demand or at short notice. According to the Shorter Oxford English Dictionary, “Bank is an establishment for the custody of money received from or on behalf of its customers. Its essential duty is to pay their drafts on it, its profit arise from the use of the money left unemployed by them.” Types of Bank There are many types of bank among them the main types of bank can be categorized as follows: a) Commercial Bank b) Development Bank b) Central Bank 1.2 Brief Introduction about Commercial Bank A commercial bank is a financial intermediary which collects credit from lenders in the form of deposits and lends in the form of loans. Encyclopedia Says: Commercial banking activities are different than those of investment banking, which include underwriting, acting as an intermediary between an issuer of securities and the investing public, facilitating mergers and other corporate...
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...‘’ Risk Management at Wellfleet Bank: Deciding about Megadeals’’ 1. a) What kind of risks does Wellfleet Bank face? They consider financial (revenue risk) and other variety of business progress risks. Those risks are depends on industry and company structure. Credit Committee undertakes essential risks are Market Risk, Operational Risk, Compliance Risk, Country Risk (economic and political strength/weakness), Reputational Risk and Business Risk. Also company success is impacted by external factors such as competition, risky environment and internally complexity of products. In my opinion not only financial numbers, company revenue, net profit, debt are the only measurements for risk management. These numbers figure our companies past success, also future business threats and opportunities is taking into account. b) What are the challenges for the risk culture of the organization that its new focus on large corporate deals and its need to recruit relationship managers from investment banks create? Actually the case explains that the flagship business for Wellfleet is corporate banking. They are strongly focused to enlarge transformational deals with clients. It is very profitable business for the bank. Risk culture of the organization works as a circle of Credit Committee, clients and client relationship managers who directly contact each other and understand their needs to find better profitable solution for booth side. Then the bank offer their...
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...my study on “Credit Approval & Monitoring process of BRAC Bank Limited” with respect to Bangladesh Bank guidelines. My faculty supervisor Mr Khandaker Zahidul Alam, Assistant Professor of BRAC Business School, BRAC University, also approved the topic and authorized me to prepare this report as part of the fulfillment of internship requirement and gave me proper guidance and assistance over time. 1.2 Background of the Report Four years back, Bangladesh Bank undertook a project to review the global best practices in the banking sector and examines in the possibility of introducing these in the banking industry of Bangladesh. Four ‘Focus Groups’ were formed with participation from Nationalized Commercial Banks, Private Commercial Banks & Foreign Banks with representatives from the Bangladesh Bank as team coordinators to look into the practices of the best performing banks both at home and abroad. These focus groups identified and selected five core risk areas and produced a document that would be a basic risk management model for each of the five 'core' risk areas of banking. The five core risk areas are as follows- a) Credit Risks; b) Asset & Liability / Balance Sheet Risks; c) Foreign Exchange Risks; d) Internal Control & Compliance Risks; and e) Money Laundering Risks. Bangladesh Bank in one of it’s circular (BRPD Circular no.17) advised the commercial banks of Bangladesh to put in place an effective credit approval and...
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...INTERNSHIP REPORT ON CREDIT RISK MANAGEMENT OF DHAKA BANK LIMTED [pic] EXCELLENCE IN BANKING DEPARTMENT OF FINANCE & BANKING UNIVERSITY OF CHITTAGONG CHITTAGONG. CREDIT RISK MANAGEMENT OF Preface The banking sector of Bangladesh is dominated by commercial banks with huge debt burdens. Inefficiency in loan sanctioning, expansion of preferential loans, and poor classification and administration of loans has led to the slow recovery of credit extended by the banks. To restore efficiency and accountability in this sector, an effective credit risk management system is necessary. To manage credit risk efficiently Bangladesh Bank has provided a guideline for CRM. Besides, Basel Committee on Banking Supervision has set a guideline on Sound credit risk assessment and valuation for loan in order to encourage banking supervisors globally to promote sound practices for managing credit risk. This paper presents a comparative picture of credit risk management of Dhaka Bank Limited with Bangladesh Bank’s guidelines and Basel Committee for Banking Supervision’s (BCBS) guideline regarding Credit Risk Management. This report also provides an overview of the Credit Risk Management of DBL. In this report DBL’s credit risk management system is analyzed into three sections. First of all the policy guidelines have been analyzed and compared with Bangladesh bank’s guideline. After that the organizational structure & responsibilities have been analyzed...
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...Internship Report On Loan Processing, Credit Appraisal, Follow-Up &Recovery Procedure of IFIC Bank Limited Internship Report On Loan Processing, Credit Appraisal, Follow–up & Recovery Procedure Of IFIC Bank Limited Prepared For: Mohammad Tanvi Newaz Assistant Professor, BRAC Business School BRAC University Prepared By Nafisa Marzan ID: 10304087 BRAC Business School Major in HRM & Finance BBA (Summer 2014) Date of Submission: 10September, 2014 Letter of Transmittal Date: 18th September, 2014 Mohammad Tanvi Newaz Assistant Professor, and Coordinator, MBA Program BRAC Business School BRAC University Subject: Submission of Internship Report on “Loan Processing, Credit Appraisal, Follow – up& Recovery Procedure of IFIC Bank Limited”. Dear Sir, With due respect and humble submission, I like to state that I have completed my Internship report on “Loan Processing, Credit Appraisal & follow-up Recovery Procedure of IFIC Bank Limited”. The internship program has given me the opportunity to learn about different aspects of this well reputed organization. Before facing the corporate world, I have gathered general idea about the organization culture and activities. Without sincere cooperation and proper guidance of you it was not possible for me to prepare this report. For this act of kindness, I am grateful to you. I have tried my best to make this report as informative, practical, reliable and relevant as Possible. In preparation of this...
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...News Article: Basel III guidelines could strengthen credit profiles of banks: S&P Date: January 13, 2012 Source: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/basel-iii-guidelines-could-strengthen-credit-profiles-of-banks-sp/articleshow/114786 Banks in India are suffering from capital and credit profiles and only the proposed prudential guidelines based on Basel III guidelines can strengthen them. Recently, the Reserve Bank of India (RBI) draft guidelines on financial management used by the Indian Banks is not working effectively. Probably, it will only benefit the stand-alone credit profiles of the banks. This simply explains that in the world of financial management and banking, an effective guideline to ensure stability of the banking operations is needed will improve not only the Stand-Alone Credit Profiles but also most importantly to improve generally the capital and credit profiles of all government and private banks to support the growth of the economy. Banks in India today has high economic risks because the conservative approach does not enhance capitalization in a country. The banks needed capital at present to improve Indian banks’ risk-adjusted capital ratios, the lowest among its Asian peers. India has the RBI’s guidelines on capitalization, which is more stringent than the Basel Committee on Banking Supervision proposal. In addition, RBI’s has conservative guidelines compare with its Asian peers and banks can meet...
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...Table of Contents Type chapter title (level 1)1 Type chapter title (level 2)2 Type chapter title (level 3)3 Type chapter title (level 3)3 Type chapter title (level 3)3 Type chapter title (level 3)3 Type chapter title (level 3)3 Type chapter title (level 1)4 Type chapter title (level 2)5 Type chapter title (level 3)6 TARGET MARKET:- BANK AL HABIB limited has conservative credit approach. They provide loan to those customers who are already their customers and have accounts with bank. We can say that they are solely focusing on relationship oriented lending for major corporate exposure. Thus it is clear that bank has mitigated their risk. This is the main reason that credit department have zero non performing loan. BANK AL HBAIB while providing loans to their existing customer’s bank pledge some security against that loan. So the risk is minimized. Against the loan the the security which is pledged by borrower should not be used by bank, but the pledged should be only for the purpose of security. For corporate sector bank also keep some proprety as a mortgage. Bank can use mortgage security. Procedure for mortgage is bank hire human resource for the legal opinion in which assigend person should prepare legal documents regarding the mortgage security, transfer letter. Assigned company also find the forseable value of the mortgagae security. For corporation bank also create a charge (portion). This is basically claimed of bank on the company assets. This charge...
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...Introduction: The Gatwick Gold Corporation business credit proposal brought Wellfleet Bank with an opportunity to obtain a highly profitable deal and conduct a new and long-term relationship with the third-largest gold producer in the world, and a number of “broader issues” at same time. Corresponding to the attitude the Chief Risk Officer Cromwell holds for risk, ensuring the risk infrastructure is growing with business opportunities at same speed. Identifying and measuring all risks involved in any deals becomes a crucial and high priority mission in such risky environment. Question 1: First, it is important and necessary to identify all the kind of risk Wellfleet Bank faces in this strategy. Syndicated and leveraged loans have played important roles in Wellfleet Banks’ corporate bank business since 2004. Facility for Gatwick Gold Corporation, with a large amount of debt already, a 1-year bridging loan of $1billion is considered as a leveraged loan. Gatwick Gold Corporation had committed a $50 million facility before. A sudden increase in this limit by $1 billion surprised relationship manager Jaidev Kapoor, who had 10-year working experience in Wellfleet. In addition, a syndicated loan agreement is the kind of loan in which a borrower requires a large or sophisticated facility or multiple types of facility by the channel through funding from a group of lenders. It facilitates the loan process by combining several separate bilateral loans, each with different terms and...
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...Introduction In general sense we mean “Bank” as a financial institution that deals with money. But when we use the term bank it generally means ‘commercial bank’ that collects the deposit from surplus unit of the society and then lends the deposits to the deficit units of the society. The word ‘Bank’ was probably derived from the word ‘Bench’s during ancient time Jews used to do money –lending business sitting on long benched. First modern banking was introduced in 1668 in Stockholm as ‘savings bank’, which opened up a new era of banking activities throughout the European Mainland. In the north Asia region, the afghan traders popularly known as Kabliwallas introduced early banking system. Muslim businessmen from Kabul, Afghanistan came to India and started money lending business in exchange of interest sometime in 1312A.D, they were known as Kabliwallas. All over the world the dimension of Banking has been changing rapidly due to Deregulation, Technological innovation and Globalization. Banking in Bangladesh has to keep pace with the global change. Now Banks must compete in the market place both with local institution as well as foreign ones. To survive and thrive in such a competitive banking world, two important requirements are Development of appropriate financial infrastructure by the central bank and Development of "professionalism" in the sense of developing an appropriate manpower structure and its expertise and experience. To introduce skilled...
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...Risk Management Risk Management Case Study at Wellfleet Bank Xx April 2011 Wellfleet Bank’s Practice Audit & Risk Committee Board Group Risk Committee Reputational Risk Committee Country Risk Committee Operational Risk Committee Group Credit Committee Market Risk Committee Credit Officer Credit Officer Credit Officer Credit Officer 2 Business Risk Committee (Consumer Bank) Business Risk Committee (Corporate Bank) Board of Directors Wellfleet Bank’s Practice • The board of directors and top management demand a “no-surprises” culture. • The board hold ultimate responsibility for the effective management of risks. • The board delegates the management of risks to the Group Risk Committee (which includes all the executive directors), while the board’s Audit and Risk Committee (consisting of non-executive directors) reviews specific risk areas and monitors the activities of the Group Risk Committee Observation from the Case Study • The Corporate Banking Group has been aggressively pursuing large-scale transformational deals in line with the Bank’s strategic intent but there isn’t any Risk Appetite Statement which states the associated tolerance level. • The Board, CEO and Group CRO have no direct involvement with the loan approval process, apart from their periodic review of the corporate loan portfolio after decision has been made. 3 Group Risk Committee Wellfleet Bank’s...
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...In the later 19th century, Finance was a part of the Economics. But due to the globalization and more expansion of international trade, Finance plays the major role for the economic development. The development of a modern economy would not have been possible without the use of money. Bank is an important and essential financial institution for the necessity of the use of money and the protection of the money. Bangladesh is now integral part of global market. As such there is an urgent requirement for Bangladesh to place the traditional banking pretties in harness with the global trades of a free market economy by following international Banking customs, practices and standards. Today clients of a bank in Bangladesh are exposed as well as interNational markets. They have to stay update with their practice and standards to meet the demands of achieving harmony in the high standards of a free economy. Rationale of the Study: Now a days banking sector have built up as the most important player of the economy. Economists have observed that loan is of the most important aspects of economic activity because of its great role in establishing various projects that generates production and thus generating employment. The only important aspect of loan is economic and social development in addition to achieving a suitable profit margin. Islamic banks consider loan as the basic motivation for community development and a means to get rid of social and economic problems through employment...
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...2010 A Grand Project Report on Credit Risk Management at State Bank of Mysore N. R. Institute of Business Management 23/3/2010 A Grand Project Report on Credit Risk Management at State Bank of Mysore N. R. Institu of Business Manag itute agement A Grand Project Report on rand Credit Risk Manag anagement at State Bank of M k Mysore (IN PARTIAL FULFILLMENT OF PROJECT STUDY COURSE, IN TWO YEARS FULL TIME LMENT O WO YEAR MASTER OF BUSINESS ADMIN SS ADMINISTRATION PROGRAMME OF GUJARAT U UJARAT UNIVERSITY) Submitted To: Prof. Dharmesh Shah hah (Asst. Professor, NRIBM) Submitted By: Subm Sandip A. Makwa (08056) akwana Luv D. Palk (08064) . Palkar Prof. Viral Pandya (Asst. Professor, NRIBM) (Batch: 2008-10) N. R. Institu of Business Management nstitute ent CERTIFICATE This is to certify that Mr. Sa ndip A. Makwa wana (08056) and Mr. Luv D. Palk alkar (08064 ) students of N.R.Institute of Business Management has successf te essfully completed their grand project on “Credit Risk Management at State Bank of Mysore” “Credit Mysore” Ba in partial fulfillment o two years Master of Business Administration of s A Programme of Gujarat University. This is their original wor and has not t U work been submitted elsewhere ere. _________________________ Dr. Hitesh Ruparel Director In-charge, NRIBM _____________________________ Prof. Dharmesh Shah Asst. Professor, NRIBM & Internal Project Guide ______________ _______________________ Prof. Vir Pandya...
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