Risk management at wellfleet bank Essay Example for Free

Risk management at wellfleet bank Essay This case illustrates risk management in the world of corporate lending which is quite di? erent from the retail, subprime, and mortgage lending at the root of the recent banking turmoil. It is also interesting because Well? eet (actually, Standard Chartered PLC; ticker symbol: STAN) is one of the few banks which successfully weathered the 2007-2009 credit crisis. Chief executive Alastair Dowes has to decide if the risk governance process is adequate to uncover mega-risks in light of the current risk-assessment process and the credit decision regarding a bn loan application. Working for the Chief Credit O? cer (CCO) as a senior loan supervisor, you have been asked to assess and review the risks in the proposal and to make a credit recommendation, i. e. , whether Well? eet should accept the loan application or not. At the same time, you are worried about gray-area risk decisions and, in particular, the fact that risk-adjusted performance measurement can rarely be automated. Risk governance requires executives to strike a balance between risk modeling and qualitative business judgment—a holistic (rather than silo-based) view of risks. You are preparing either an executive memo to the CCO and CEO or a presentation to WellFleet’s credit committee. The following questions are meant to guide your analysis: 1. How much credit risk should banks take? What avenues do they have to manage credit risk ex ante and ex post? 2. Research the history of WellFleet = Standard Chartered. How well has Well? eet performed? Why and how has it avoided major problems in its orporate loan portfolio? Was the bank lucky or smart? 3. Analyze the risk management process at WellFleet Bank. What suggestions might you make to the CEO about improving the process? (a) What are the objectives of loan o? cers and supervisors, respectively? What about the risk management unit? (b) Are the incentives of line and risk management units aligned? Why or why not? (c) How would you organize origination and risk management activities? What risk factors drive the credit exposure to Gatwick? Analyze what a credit bet on Gatwick really amounts to. a) Download stock prices for pure gold-mining companies such as Barrick (ticker: ABX) and Newmont (ticker: NEM) as well as a gold prices and the SP 500. Calculate the instantaneous return Rit = ln PPit . it? 1 (b) Compute the correlation matrix for the 4 variables. How would you interpret the results? (c) Run a CAPM-type regression of the gold-miner’s return Rit on a constant, the SP 500 return Rmt the gold return Gt by OLS, i. e. , estimate the following model: Rit = ? + ? Rmt + ? Gt + ? t How would you interpret the results? What does it tell you about the credit exposure? 2 5. Calculate the Expected Loss, Economic Revenue and Economic Pro? t for both proposals. What would your decision regarding the two credit proposals be? Why? (a) What steps if any could Well? eet take to reduce its credit exposure to Gatwick? (b) What avenues are open to the bank to manage its credit exposure ex ante (before and in the lending process) and ex post (after the loan went onto its books)? 6. Given Well? eet’s new focus on large corporate deals and its need to recruit relationship managers from investment banks, what are the challenges for the risk culture of the organization, and its style of risk management in particular?

The Bank of New York and its History Essay -- essays papers

The Bank of New York and it's History On February 23, 1784, a small advertisement appeared in The New York Packet, one of the many New York newspapers of that era. This advertisement announced that prominent New York citizens had established a bank. The bank, established by the prominent, would not officially open for business until June 9, 1784. That bank would come to be known as the bank of New York. Alexander Hamilton, a well-known New York attorney, was asked to write the constitution of the new bank. He complied and therefore Alexander Hamilton was credited with the founding of the Bank of New York. The Bank of New York is the oldest bank in New York and along with that is one of the oldest banks in the world since banking the way we know it today began in the 18th century. Alexander Hamilton later went on to become the Secretary of the Treasury in President George Washington’s first cabinet. In 1789, Hamilton negotiated the first loan obtained by the new Democratic government. The amount of the loan was $200,000, and was issued by The Bank of New York. Hence, not only is the Bank of New York one of the oldest banks in the world, but it is also a historic one because it was the first bank in the United States to issue a loan. Adding to that historic feeling, when the New York Stock Exchange was created in 1792, the first stock traded was the Bank of New York's stock. The Bank of New York played a major role in the economic growth in the New York metropolitan area. The Bank was also involved with the growth of transportation. The construction of the Morris Canal in New Jersey and the Erie Canal in New York were partially funded by the Bank, which also provided financing to the steamboat companies that benefited from these waterways. Through investments in nearly every railroad and utility, as well as in the construction of the New York City subway system, the Bank of New York continued to provide vital capital to the expanding American economy. However, far more emphasis was given to conservative practices and retaining the confidence of our customers. That policy enabled the bank to survive the economic turmoil of the early twentieth century. Throughout its 200-year history, the Bank of New York has been involved in many mergers and acquisitions. Through mergers with the New York Life Insurance & Trust Company, The... ... to service our current needs. It is also important that they are committed to the ongoing investment in technology required to deliver the securities, cash and investment management support services we require. The Bank of New York is a well-established financial institution that has outlasted numerous financial hardships, including the Great Depression. It has a long history of providing excellent services to its customers. In the present day, The Bank of New York continues to live up to that reputation by offering its customers a variety of financial services. The future can only get better for the Bank of New York. With the technological era in full swing, the Bank of New York is taking full advantage by specializing in technological securities. In conclusion, The Bank if New York is a historical financial institution that played an important role in the economic growth of the United States. No other bank can say that it has done as much for the United States as has done the Bank of New York. Bibliography: 1. http://www.gwdg.de/~ifbg/bank_2.html 2. http://www.bankofny.com/about/ahst.htm 3. http://www.bankofny.com/util/usgx.htm 4. www.bankofny.com

Southwest Airlines: Organizational Commitment and Communication

Southwest Airlines’ strong organizational culture is reflected in its mission as shown in its website: â€Å"dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit. † Southwest is a company that not only excels in customer service and profitability but also in employee development. Its organizational commitment is not reduce to the organization; it is actually expand it to an ongoing relationship with the employees where they have the opportunity to express their ideas, suggestions and concerns. This organizational culture has made Southwest Airlines one of the companies with the fewest customer complaints, and an employee turnover ratio of less than 10 percent (D’Aurizio, 2008). The same strong culture Southwest Airlines has built over the time is supported by every employee who has in mind that they have to deliver a warm and friendly assistance to their customers. Southwest management’s strategy could not be any better; the management treats employees as family, expecting from the employees to treat customers like family as well. The company is characterized for having a decentralized structure. In between the CEO and the frontline supervisors, there are only a few levels. Their philosophy on structure is very relaxed. Any employee who feels the need is welcomed to contact someone above their supervisor. The president has three executive vice presidents who each have five or six vice presidents who report to them. There is one vice president of Internal Audits and Special Projects who reports directly to the president. (Rivera, Cornwell, Abenes, 2003) The Southwest culture creates and integrates a dedicated and motivated workforce that succeeds together. The owners’ leadership style is led by example; that is how Kelleher treats his employees, like family, he is open to communicate and he also knows the vital role in forming this unique culture. Before people become employed at Southwest, the managers in charge of the hiring interview make sure they embed the organizational culture in the candidates. When they become part of the Southwest family, then they are treated like part of it. Any event in the lives of the employees are acknowledged and celebrated by everyone, everyone cherish for the success and happiness of the members of the family. The company establishes special programs for families of employees. The company listens to comments and feedback, not only from employees, but also employees’ families, customers, and vendors (D’Aurizio, 2008). This company has become profitable by putting into practice the philosophy of an open communication. Southwest does not have the culture only in paper, they actually live it. The managers start giving the example to the employees, and they follow their leaders. Southwest strategically generates satisfaction to their employees, this needs satisfactions will later reflect and convert into satisfaction to the customer and shareholder value via organizational capabilities I believe the success of Southwest Airlines comes from the combination of different sources of power. Part of it comes from the expert power, and also from the reward power. Southwest management had has the ability and knowledge to create such an amazing organizational culture, this ability is the expertise power. Now the way they have applied the idea into real actions, the fact that they led by example and treat the employees as family is the reward power. The management has gained the respect, trust and loyalty from their employees. This is because of what they have done not only with words but more important with actions. Concerning the communication aspect, this plays an important role in the organizational culture of Southwest Airlines and the way the employees perceive that culture. The website Reference for Business (2009) explain how the contend of a message send will be perceive in different way by every individual. Each person gives their own personal meaning to the message received. This also happens due to the experience, the receiver makes sense out of a message based on experience. No one can perceive experiences in the same exact way as another does. Each individual has a unique set of experiences, a unique perceptual â€Å"filter,† that helps them to understand or interpret messages received. These filters are built over time by each individual person according to their childhood background, and the life experiences. Finally, we can say that the combination of the message received and he experience of the receiver is what makes an interpretation of the message. This is the reason why Southwest management emphasizes in a clear and concrete communication. They know how some messages can be easily misunderstood or twisted on the way. And this is the reason why they keep an open communication to the employees. Allowing questions when the message was not clear, as well as allowing suggestions when the employees do not agree. The challenge for every organization is how to create a great channel of communication that will enable employees to comprehend messages in the way they were originally intended to be transmitted. According to Beebe and Masterson, â€Å"conflict in a group occurs when members disagree over two or more options that a group can take in trying to make a decision, resolve a problem, or achieve a goal† (Chapter 7, p. 69). Other types of conflicts can occur as a result of differences in goal. Now, the good news about conflict is that it can be use in a positive way contrarily to the popular belief that states that a conflict should always be avoided. Southwest Airlines, for example, could use conflict to challenge their employees to research, or come up with ideas of how to resolve some specific issues, problems. Additional researches will help to determine a better way to fix problem that are costing a lot of money to the company. The commitment of Southwest airlines is to a culture that motivates, empowers and promotes employees to make the company one of the best companies to work for, as well as one of the most profitable one. One of the most important tools this company uses is the open communication and the in-house advancement that encourages a positive perception of company culture, allowing employees the opportunity to express ideas, suggestions, concerns that Make them believe they are part of the Southwest â€Å"family†. Southwest best strategy is the commitment not only to the organization itself but also to the employees. Everyone there is part of a big family who works hard to keep harmony n within the family. They use great leadership styles where the managers led by example and they are always open to any communication. This company should be use as example as what it is to build a great culture and a great organizational commitment.

The Transatlantic Airline Market Between The United States...

Market Description: The transatlantic airline market between the United States and Europe is the single largest intercontinental market in the world, with rigorous competition between dozens of airlines. The transatlantic market consists of passengers, both seeking business and pleasure needs. Within the first year of offering transatlantic flights, higher income professionals travelling for business purposes will be targeted, along with families and students travelling on a J-1 visa. As the market is heavily competitive, targeted segments such as families and students will be relatively elastic to a change in price, with hope of finding the best deal. If Ryanair can replicate its hugely successful model, offering savings on landing fee†¦show more content†¦Dublin is a powerful connecting hub for transatlantic routes; Aer Lingus has now turned its focus on long haul growth, resuming flights to Los Angeles, and a host of other destinations. Strengths, weaknesses, opportunities and threat analysis: Strengths: Ryanair have a number of strengths on which to build on: 1. Low costs- Ryanair has the lowest unit costs in Europe and one of the lowest when compared to international airliners. Lower costs can be passed onto customers in the form of cheaper prices, which Ryanair will need to offer in order to compete. Research from the Centre for Aviation showed that whether it was cost per seat or cost per passenger, Ryanair costs were less that of their competitors. (Source: CAPA- Centre for Aviation- Unit cost analysis of Emirates, IAG Virgin; about learning from a new model, not unpicking it) 2. Low fares- This is a result of lower costs, enabling Ryanair to offer lower costs than their competitors. If Ryanair can replicate their current cost model which has proved so successful in the European market and transfer it into transatlantic routes, they could offer flights at a significant amount less than Delta and BA. 3. Size- Currently, Ryanair is larger in transporting passengers than Aer Lingus and British Airways. Due to its enormous size, it has given Ryanair significant negotiating power over Boeing, and has undoubtedly provided Ryanair with discounts and led to Ryanair’sShow MoreRelatedThe Business Model Conceived By Ceo Michael O Leary3225 Words   |  13 Pagesbusiness model conceived by CEO Michael O’Leary affords the company much in the ways of agility and long-term adaptability. With the economic recovery of the European Union, new threats arise to challenge Ryanair such as an emerging budget air carrier market, fluctuating fuel prices, and controversial customer relations. Examined in this paper will be the internal cost accounting factors that affect the firm as well as an analysis of Ryanair’s Strengths, Weaknesses, Opportunities, and Environmental ThreatsRead MoreOperation and Strategy management for Ryanair2421 Words   |  10 PagesRyanair in the airlin e industry. Ryanair is a low cost budget airline travelling across 1600 routes from 57 bases connecting 180 destinations in 29 different countries (Ryanair.com). Ryanair first started its operations in 1985 between Ireland and London. The first year it commuted around 5000 customers but the company really took off in 1990 when Michael O’ Leary was appointed the CEO of the company. The company was envisaged by its CEO Michael O’ Leary and adapted the Southwest airline model fromRead MoreBusiness Plan of Skytrails Airline, Ltd.14517 Words   |  59 PagesBUSINESS PLAN SKYTRAILS AIRLINE, LTD. London Stansted Airport London, United Kingdom SkyTrails Airline plans to establish itself as a niche player in the long-haul market of business travel. By continuously focusing on the needs of the premium-class business traveller, SkyTrails will provide the best value proposition in the markets it serves. It will offer customers a compelling value proposition: a high level of service and comfort at 50 percent of the current published business-classRead MorePorters 5 Force, Pest and Swot Analysis4769 Words   |  20 Pagessomething about the situation they are trying to affect and take control when they must.† 1.2 Leadership Theories: McGregors Theory X and Y: In theory X McGregor states that the only reason people work is for money and they don’t get satisfaction out of their job. However in theory Y, McGregor takes a different approach and states that people work for more than just money, that they can be motivated by the want for job satisfaction and acceptance in the workplace. Situational Theory: ProposesRead MoreAirfrance Klm Merger Case2230 Words   |  9 Pages1. Introduction In 2004 Europe’s largest airline group was formed after the European Commission had approved a merger between French Air France and Dutch KLM. A merger of this dimension certainly has major influences on the economy. This paper will give an insight on the incidents of this instance, the economic consequences and it will deal with the question whether the European Commission’s decision was reasonable. First of all the two firms will be introduced and an overview about the merger willRead MoreThe Impacts of September 11, 2001 on the Aviation Industrys Marketing Mix2149 Words   |  9 Pagesthe impacts of the September 11, 2001 terrorist attacks on the aviation industry. Specifically, how aviation industry members were forced to alter their marketing mix in response to the events. The four P s of marketing were all modified. The airlines had to change their product (route structures) and their prices. They also had to change their promotion tactics to ease the customer s fear factor. Lastly they had to alter the means of delivering their product to the consumer due to enhanceRead Moreswissair alliances case study2464 Words   |  10 PagesPhilippines I- Case Background The Swiss Air Transport Co. Ltd., was founded in 1931 to fly between Switzerland and a handful of central European locations. By 1949, the company had become the Swiss flag airline, and had inaugurated long-haul intercontinental service over the North Atlantic. By 1970, Swissair also served destinations in Asia, Africa, and South America. In 1990, Swissair was among the top 20 airlines in international revenue-passenger-kilometers flown and among the top ten in internationalRead MoreTo What Extent Did World War II Affect Economic Relations Between The Us And The Netherlands?1321 Words   |  6 PagesMagnus Mulder IB Extended Essay August 31, 2015 Dutch American Relations Before and After WWII Research Question: To what extent did World War II affect economic relations between The US and the Netherlands? Thesis: Abstract: Introduction: To look at the change in economic relations between the netherlands and the U.S. on either side of WWII it is hard to not mix in some politics and military theory as it is a world war, arguably the biggest conflict in the history of the world (that we know of)Read MoreSwot and Pestel Analysis of an Organisation of Your Choice. British Airways Plc3340 Words   |  14 Pagesthe purpose of analysing the internal and external analysis which affects British Airways plc (British Airways) strategy. British Airways is a fast growing airline company applying the innovative approach of their strategic process, however they have experienced conflicts dealing the market for the reason of increase of competition in the market. The report begins about the history of British Airways which started after the end of World War I. Describing the company’s objectives and long term visionRead MoreU.s. Airlines Open Skies Program And Continuation Of Globalization3603 Words   |  15 Pagesglobalization, U.S. airlines are facing stiffer competition. As the possibility of cabotage looms in the future, American passengers may have more opportunities to fly foreign carriers both at home and abroad. ‘Open Skies’ operations have commenced on transatlantic and intra-EU routes, meaning that choice of carrier has expanded for U.S. air travelers abroad. EU authorities challenenged US authorities for the right to operate EU carriers within the U.S. domestic market, as well as the right