1.

2 SWOT Analysis

Opportunities
Aggressive selling the
various lending and trust
services of the CCB.
Threats
The branch banking group
solicited the trust account.
Strengths Weaknesses
Creation of two new The loan account was
divisions. approved by the account
officer.
SO1 WO1
Trust division in-charged The marketing department
with undertaking services personnel were allowed to
for individual and business participate in the promo.
clients.
The marketing of the
investment function to
corporate and individual
accounts was entrusted to
the Branch Division.
ST1 WT1
Granting a large loan Giving fixed interest rate.
amount to a client with
barely a year of banking
relationship.
The winners will be
awarded by prizes and
bonuses.

1.3 Central Problem

What should CCB management do to evade similar difficulties in the future?

1.4 Minor Problem/s

The undesirable record of the company because of its poor performance in the recent

years.

1.5 Objectives

To prevent the occurrence of similar challenges in the future.

To have qualified employees.
To dodge any loss of income.

1.6 Alternative Course of Actions

1. Reorganize the current organizational structure of the bank

Pros:
 Specialization of work will be practiced.
The specific needs of each department will be catered accordingly.
Employees will have a clear knowledge of where transactions should be processed.
Clear sense of organization within the bank in the sense that the employees of each

department know who to report to and ask if problems may arise.

Similar problems with the Oriental Company transaction may be avoided

Cons:

Change in the working environment caused by the reorganization of the bank.

Ex. New department heads, working with a few new set of people etc.

2. Retain current structure but fire the responsible employee/s that caused the odd situation with

Oriental Company

Pros:

Relieved of incompetent employees.

Cons:

Hiring of new employee/s.

Similar problems may still occur in the future.
3. Set rules for the deposit drive that the only participating employees are the ones who are

responsible to the transactions related to the drive, if it ever happens again.

Pros:

It is possible that similar problems with the Oriental Company transaction may be

avoided.

Cons:

Other employees will see it as being biased since only selected employees can participate.
The rules that are set are only applicable to the deposit drive which rarely happens. If

bank faces similar problems not during the deposit drive the bank will be vulnerable.

1.7 Recommendation
There are three possible courses of action to avoid similar problems as with Oriental company.

Firing the employees answerable for the mistake cannot guarantee that the problem will not

transpire again. It may still happen but with a different employee. Even if the bank will pursue

firing employees, it still follows a certain procedure. Setting rules in deposit drive may avoid

problems like that of Oriental Company but such rules are only applicable during the deposit

drive. Similar problems may still take place not during the deposit drive. The bank cannot cope

up with the problem if that is the case. While reorganization of the banks organizational

structure may change the working environment but with this change, work will be fast and

organized. It is clear who the heads of each departments are. They will be assigned to specific

work which is less load for each employee.

1.8 Conclusion

Reorganizing the organizational structure (see Exhibit A) is the best way to prevent similar and

other problems to happen in the future. There were a few causes to the odd situation of the

transaction with the Oriental Company:

A. The loan account was solicited, packaged, reviewed and approved SINGLY by the Account

Officer.

B. The granting of a sizeable loan amount to a client with barely a year of banking relationship.

C. The Trust account was solicited by Branch Banking Group.

D. The giving of a fixed or guaranteed interest rate for the trust placement.

E. The marketing department personnel were allowed to participate in the promo.

With these the bank will reorganize its structure in accordance with these rules and policies.

A.GRANTING OF LOANS A Loan packaging are handled by Account Officers but the

EVALUATION & APPROVAL must be handled by the Banks SENIOR MANAGEMENT.

a. In the granting of loans & setting of interest rates, the following factors are to be considered

(1) The number of years of banking relationship of the client; (2) the collateral offered for the
loan; (3) the key officers of the borrowing company; (4) the compensating business and most of

all the

b. (5) profitability of the account.

Compensating business means the total deposits/placements of the borrower & its related

accounts.

Related Accounts means the personal & other accounts of the officers of the borrowing

company

b. The principle THAT NO ONE SHOULD BE IN COMPLETE CONTROL OF A

TRANSACTION MUST BE ADOPTED. There is no proper segregation of duties &

responsibilities in the Bank. A strong internal control policy must be in place for Bank to operate

well. This means that the ACCOUNT OFFICER will serve as the MAKER ; the BRANCH

BANKING GROUP will serve as the CHECKER and the SENIOR MANAGEMENT of CCB

as the APPROVER.

c. Considering the size of the Bank, it is not a sound banking practice for them to grant the P10m

loan to a single borrower. As mandated by the BangkoSentralngPilipinas, banking institutions

must set a Single Borrowers Limit (SBL) for each loan client so as not to jeopardize the bank,

especially in cases of default of payment of the borrower.

B. TRUST ACCOUNTS

a. All TRUST accounts must be centralized at the TRUST DEPARTMENT. From the solicitation,

up to the processing of placements, everything must be SOLELY handled by trust department

under the supervision of a TRUST OFFICER. A trust account is different from a regular bank

account wherein the relationship is BANK-CLIENT relationship. In a trust account, it is called as

FIDUCIARY relationship. The client is called the TRUSTOR and the bank is called the

TRUSTEE. Thereby, all TRUST accounts must be handled by specially trained and highly

competent personnel of the Banks Trust Department.

b. CCB should not give fixed or guaranteed rates for its trust placements because these are

dependent upon the performance of the pooled funds. These pooled funds of the bank are

invested outside the Banks regular business; these are invested in Corporate & Government

Bonds & Stocks. So the rate of the trust placements is directly affected by the performance of the

investment. Therefore, if the investments in STOCKS & BONDS are doing well then, a higher

interest rate may also be given for the trust placement & vice versa. The interest rates of trust

placements are susceptible to the current market trend. What a bank can give to its trust clients

are only INDICATIVE RATES not guaranteed rates.