Question

A. Your branch has just started the day’s business and many customers are thronging to get banking services. Suddenly the computer system breaks down and the customers and staff are complaining as this problem happens frequently. What should you do?
B. Encik Bahari is a long standing customer of your branch. He applied for a housing loan recently and your head office approved the loan at an interest rate of BLR
+ 2%. Encik Bahari requests for your goodwill as the branch manager to reduce the interest rate to BLR + 1%. You are unable to do it as it is against the rules of the Institute of Banks in Malaysia and Bank Negara Malaysia. How will you explain to Encik Bahari?

A. SBE Private Limited company is applying for a working capital loan. This is the company’s first application for credit facility from your bank. SBE Private Limited company is a medium-sized company that manufactures various types of antique furniture for local as well as international markets. The company is currently facing cash flow problem due to ineffective cost control.

B. XYZ Private Limited company is applying for an additional overdraft facility from your bank. This company has a good track record with your bank. However, the company has been experiencing difficulty lately due to industry-wide recession. According to the finance manager of XYZ Private Limited company, the purpose of the additional facility is to finance the company’s overhead cost.

Part 2
TASK
Obtain the balance sheets of two Commercial banks in Malaysia from their annual reports.
Calculate the following ratios, based on the available information:
1. Capital to total deposits ratio
2. Capital to total assets ratio
3. Capital to risk weighted assets ratio
4. Capital to loans ratio
Based on the ratios, which bank has better capital adequacy? Which bank has better capital
adequacy if you also incorporate qualitative measurement into the assessment?
Various aspects that can be used as qualitative measurement are as follows:
(a) Quality of bank’s management
(b) Quality of bank’s assets
(c) Bank’s earnings history
(d) Quality of bank ownership
(e) Accommodation cost
(f) Quality of operation procedures
(g) Volatility of deposits
(h) Local market conditions

Course Name : MBA FINANCE & BANKING

Answer 1

A. If suddenly the system has crashed and staffs and customers are frequently complaining regarding this issue, then, I should be reporting this problem to the head branch office and ask for the IT department to help resolve this issue.

As the staffs and customers are facing this issue frequently, it needed to be solved as early as it could be. Fir proper working of any organization, its important that its system are working properly. All the staffs and customers should be endured that specialists are looking after the issue and the problem would be resolved within a short span.

For the time the problem continues, an alternative system should be build so that work does not stop and goes on. Also customers would not have to face problems in availing services.

These are things one should do in the case discussed above.

B. As he is a long standing customers of the Bank, I should try to make him understand calmly that every financial institution have their own set rules to which they have to work with. And such rules cannot be changed for anyone as this would be against their ethics. And if anyone outsider came to know about reducing interest rate for a particular customer, then the bank could come in dander. Thus there is risk bank too.

Mr Encik Bahari should be made to understand the ethics of the companies well which would be enough to make him understand that the interest rates are fixed and they cannot be changes by requests.

Thus, to avail the services, every individuals needs to pay the same. This way, he will understand that company cannot reduce the interest rate and hence would be ready to take loan at bank conditions.