Question

If you are the manager of a large retail bank and you find that some customers are not profitable, how could you manage the divestment process?

Please Give a well explained answer using proper terminology

Answer 1

Divestment is a significant form of retrenchment policy that banks generally use when addressing a group of unprofitable customers for the banks. They do not cooperate with banks' cash flow policy, which often results in the divestment of banks. The manager of a bank needs to be well-acknowledged about the divestment policies to avoid the bank failing.

Any reluctance to divesture is a self-perpetuating idea where the possibility of loss is more than making a profit. A specific situation which is unactionable and unavoidable in making money from the customer is suitable for divestment. It can be considered as a situational economic concept that can prevent a bank from falling.

A sequential flow should be taken for managing the divestment process in banking. The process is as follows:

• Monitoring customer portfolio: A regular review of the customer portfolio is necessarily required in a divestment process. The manager should oversee the profiles and portfolio of unfruitful consumers.

• Buyer identification: Buyer identification is the second step where the bank should find an active buyer who can buy a particular portion of the bank's overall share.

• Performing divestiture: preforming divesture is a legal process of divestment when a specific portion or share of the bank will be transferred to the buyer.

• Transition management: The manager must control the entire transition process of divesture. Strategy and cost are two different areas of transition. The bank will start with zeal with sufficient cash flow in hand.