Suppose that one of the largest commercial banks in your country has recently experienced a significant...

Suppose that one of the largest commercial banks in your country has recently experienced a significant distress which led to the bank being put under special management by the central bank. As the newly appointed caretaker CEO of the distressed commercial bank, you are required to present a turnaround management strategy for the bank to the senior management of the central bank. Carefully articulate your turnaround management strategies that would return the bank to a sustainable profitable path. The proposed turnaround management strategy should demonstrate a clear diagnostic knowledge of the root causes of the bank’s distressed condition?

Expert Solution

Turnaround strategy that would be proposed by me would include-

A. Collection of previous debts aggressively by announcement of hair cuts before they are completely written off.

B. appointment of asset reconstruction company and selling of all those loans who have a probability of losing further value.

C. Focusing on the asset quality by by only issuance of those loans who are having a very good credit rating and credit worthiness.

D.maintenance of a good capital adequacy ratio in order to have itself hedged against any adverse economic scenarios.

E. I would also look for fresh capital raising as it will help the bank in issuance of good loans so that it will be minimising the impact of bad loans and better its books of accounts.

F. Critically examining the collection prosedure so that the loan collection procedure could be e enhanced in order to have better collections.

G. disclosure of proper requirement should also be focused in order to have no unfair practices in the company and protect the interest of stakeholders.

jeff jeffy answered 1 year ago

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