ENIGMA 2.

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INSTRUCTIONS-
1.Time allotted: 240 minutes.
2.Read the case study carefully.
3.The solutions should be detailed and in points and should not
exceed a word limit of 750 words or 3 pages.
4. The answer should be divided in two parts:
 Detailed reasons behind the strange behaviour on investor’s part.
 SWOT Analysis.
5. The following should be there in the document:
 Names of Participants
 Email IDs
 Course and College
 Contact number
 STERLING&CO.
Company Profile
Found in 1890, Sterling&Co. (India Branch) provides investment, corporate, and retail
banking products and services in India. The company offers investment banking products
and services, such as financial advisory, capital raising, financing, and risk management
services to corporations, governments, and financial institutions. It serves the corporate
finance needs of communications, consumer, financial institutions, financial sponsors,
healthcare, industrial, media, natural resources, power and utilities, real estate, retail,
technology, and transportation industries. The company also delivers strategic advisory
services related to mergers and acquisitions; and offers equity capital market products,
The clients of Sterling&Co. India consist of individuals, multinational companies, public
sector companies and a large number of small and medium enterprises. Services consisting
of payment and cash management services, trade, finance, loans, deposits and treasury
solutions are offered to clients.

About the Founder

Sterling&Co traces its origins back to 1890 when brothers, John Stanley and Thomas
Cooper started trading as goldsmith bankers in Lombard Street, London. The name
"Sterling&Co." became associated with the business in 1926, when Stanley's son-in-law
James Sterling became a partner.

Capital & Funding

The British bank reported pre-tax profits of £1.9 billion ($2.49 billion) for the quarter. This
nearly tripled the pre-tax profit of £659 million for the same period last year and above a
consensus estimate compiled by the bank, leading it to announce its best quarter in more
than three years. Shares were up 2.7 percent on Thursday morning as European markets
opened.
"This is obviously a very strong quarter for Sterling&Co, one of the first quarter since the
restructuring began where we're really clear of all the major impediments — there's no
more litigation hanging over us, no more costs to achieve, no more restructuring costs. One
of the first clean quarters for the bank, and portends for things to come," James Sterling
said.

Strategy
The strategy of Sterling&Co. is to build on their strength as a transatlantic consumer,
corporate and investment bank, anchored in our two homes markets of the UK and US, with
global reach. Consistent with the objective of delivering long-term sustainable value for all
their stakeholders, they have developed their Shared Growth Ambition. The aim is to make
decisions and do business that provides their clients and customers, and the communities
which they serve, with access to a prosperous future.
Major Competition
Sterling Co.’s competitive set are investment banks like RBS (Royal Bank of Scotland),
Goldman Sachs Group, JP Morgan and Chase. Etc.

Challenge
The Financial advisory division of Sterling&Co. has been observing a rather strange
behaviour by investors in a recent market study. Normally, a stock market sell-off sets off a
buying spree in Government Bonds, as investors look for security in the steadier
government debt market. However, that’s not the case now. There are cases showing a
sharp plunge in stocks is actually happening because investors have been selling longer-
dated Government Bonds. As Government Bonds are sold, yields, which move opposite
price, rise, and that drives up interest rates for a whole range of consumer and business
loans. According to an analysis, such a sell-off in stocks typically triggers a “flight to safety”
into Government Bonds. It seems like times have changed.

Task
You are a Financial Advisor at Sterling&Co. and the head of the market
research team. You have to come up with detailed reasons behind this
strange behaviour responsible for triggering a “flight away from safety”.
You also have to perform a SWOT analysis of the firm.