Capital City Bank Case Analysis Essay

Capital City Bank (CCB) was a medium size commercial cant owned by a infinitesimal group of shareholders. Its total employee force numbered close 1,000 personnel. Because of the confederacys poor executing in recent years, the owners unconquerable to convey their equity to a group of novel investors who felt that CCB could be turned close to with more aggressive oversight. The transfer of self-command of the bank was followed by primary changes in bank st yardgy as salutary as changes in many attain personnel, many of them at the top level.The staple fiber changes implemented by the vernal perplexity of CCB included a more active pursuit of foreign financing activities as well as a heightened stress on lending activities to large in bodilyd delineates. To better implement these changes in basic st sum upgy, CCB was reorganized.NEW ORGANIZATIONThe reorganization of the bank involved the creation of two tonic divisions, namely, the Corporate Banking atom and the give social class (See Exhibit A).The Corporate Banking Division was give the responsibility of marketing the different lends of the company to large domestic corporations, multinational corporations, as well as to the medium sized companies which had been the traditional clients of the bank. A wide flow of credit lines were tossed to these accounts such as institutionalise Advance Line, Import Letters of opinion, export Bill Purchases Line, Export Packing Credit Line, Domestic Bills Purchase Line, and others. Mr. Vicente Torres, a new recruit from a similar discussion section in another bank in Metro Manila, headed this new division.The Trust Division was charged with undertaking trust operate for individual and business clients. A major service assigned to this division was the coarse Trust bloodline. This involved the pooling of funds pull from various participants, investing this fund in safe and high yielding investments, and manduction the returns from the inve stments among the participants in proportion to the amounts contri preciselyed by each. The Trust Division was however to perform but the investment function. The marketing of this service to corporate and individual accounts was entrusted to the Branch Division. The latter to a fault marketed the work of ten branches of the bank rigid around Metro Manila.THE DEPOSIT toilAs a corollary to aggressive interchange the various lending and trust services of the CCB, bank management also decided to under win an effort to increase nest egg and other beats in the bank. A swear drive was launched involving every(prenominal) the employees of the company. A specialise of rules was drawn up such that all departments and sections of the bank, regardless of whether they performed marketing functions or not, were prone points for new deposits brought in to the bank. The drive was to last-place for six months and the winners would be awarded attractive prizes and bonuses.THE eastern h istoryTowards the end of the year, one of the account officers of the Banking Division approached oriental person Company with an offer for working capital loan. Because oriental had been banking with CCB for near a year, the account officer offered a P10 million working capital loan to oriental at 18% rate of liaison at the time considered a good rate for favored accounts. Oriental considered to take advantage of the favorable interest rate offered and availed of the loan.Shortly thereafter, the Branch marketing group decided to solicit the aforementioned(prenominal) account for the Common Trust Fund of the Trust Division. To attract Oriental to record in the fund, they offered Oriental a 19% return for a P10 million 60-day arranging with the Trust Division. The Finance bus of Oriental was surprised at the disparity amongst the banks lending and deposit rates but decided to take advantage of the Branch Marketing aggroups offer by devising the P10 million placement with the Trust Division.It was not until later in the year that Vicente Torres discovered the odd situation with Oriental. He called the managing director of the Branch Marketing Group and asked How could you go out your traders to offer a higher rate than our lending rate to Oriental? We not only lose money but we also look very goofy to our clients The Branch Marketing Group Manager replied that neither she nor her traders knew that the Banking Division had lent to Oriental at 18%.QUESTIONSWhat were the causes of the odd situation in the case?THE NUMBER superstar CAUSE FOR THE ODD SITUATION IN THIS CASE IS THAT BRANCH MARKETING convocation SOLICITED A integrated ACCOUNT FOR A sell ACCOUNT. IF THEY HAD WANTED TO OFFER THE harvest-time COMMON TRUST FUND TO THE CLIENT, IT SHOULD drive BEEN COURSED THROUGH THE BANKING DIVISION WHO MAINLY TAKES kick AND HANDLES CORPORATE CLIENTS.THE ERROR OCCURRED WHEN RETAIL BANKING SOLICITED A CORPORATE CLIENT.THIS SHOULD HAVE BEEN REFERRED T O THE ACCOUNT police officer HANDLING THIS PARTICULAR CORPORATE CLIENT.What should CCB management do to avoid similar problems in the future?THERE SHOULD BE photo OF DEPARTMENTS AND THEIR SCOPE. RETAIL BANKING DIVISION WHICH IS PRIMARILY THE BRANCH, SHOULD not SOLICIT ACCOUNTS BEING HANDLED BY THE CORPORATE DIVISION (BANKING DIVISION).RETAIL BANKING DIVISION SHOULD cut PRIMARILY ON RETAIL CLIENTS raze IF A CORPORATE CLIENT HAS AN ACCOUNT IN THE BRANCH. CORPORATE CLIENTS ARE HANDLED BY ACCOUNT OFFICERS.A CIRCULAR/ memo SHOULD BE ISSUED STRESSING THE HANDLING OF CORPORATE ANDRETAIL CLIENTS.NEW ORGANIZATION OF CAPITAL metropolis BANK