john's blog

Lessons from IMF/WorldBank Bank Meeting 2009

  1. Global Crisis and Policy Responses

The global recession appears to be at, or reaching, the bottom of the trough, so there is a good chance recovery will emerge. When will the recovery take place depends on where you are located. Growth in Asia seems revived. The US economy has somewhat stabilized. But Europe has signs of suffering from huge hangover.

Beep Banking

The three countries in Indochina (ie Vietnam, Cambodia and Laos) have a population of about 96 million. Only about 20% have bank accounts and therefore access to banking services. However it is estimated that that there are 96 million phone accounts. If the sums are correct, then there lies a great opportunity to transact financial services using the phone.

There will come a day when a mobile or traveling banker will trudge into the rural heartland where many farmers live, instead of just sitting in his office. When the banker meets the farmer the conversation may go like this:

CEOs, don't micro manage

Many CEOs micro manage. They like to "pull up the roots to check whether the tree is healthy, not realizing that this action may kill the tree".

I have spoken to many CEO and their reasons for micro-managing are that:

  1. CEOs like to keep themselves well-informed of the company's daily operations;
  2. CEOs do not trust the staff sufficiently that they can do their assigned duties;
  3. CEOs cannot re-assigned or remove the under-performing staff, so he has ensure that
    they do their jobs;
  4. CEOs have under-skilled managers who cannot perform their duties;

Why CAMEL failed to recognize the weakness of banks?

Many analysts or bank inspectors use the CAMEL for analyzing banks and not knowing the disadvantages of the model. Here is an expose of the potential loopholes and where the EAGLES benchmark may excel.

Demise of CAMEL?

In the CAMEL, analysts assess five key aspects of the operations of a financial institution – Capital, Assets, Management, Earnings and Liquidity – rating them on a scale of 1 to 5. An overall rating of 1 is best while a rating of 5 implies a bank being laden with existing or potential problems.

Activity Based Costing in Banks

Since activity based costing (ABC) was first propounded in 1987, many consulting firms have advertised their specialist services and experiences in the implementation of ABC in the banking sector.

But the dearth of available data, published or otherwise, suggests that ABC is not as widely understood and practiced in the financial services sector as one may be led to believe.
Two reasons account for this: firstly, banks find it difficult to define their products and secondly, the banks think that the dififculty may not warrant the cost.

Is customer profitability analysis applicable for lending bankers?

The profitability of any given relationship to the bank can be reflected in the customer profitability analysis.

The financial statement analysis can only make an evaluation of the financial strengths and wekaness of the borrowing client and have little to do whether the customer is profitable to the bank.

While the customer is profitable in their own financial statments. But in its dealings with the bank the bank's cost of servicing the customer may far exceed the revenues derived from the customer.

It is therefore important to compute customer profitability in lending operations.

Marketing for Bankers - Introduction

From the library of The Leadership Corporation Australia:

  1. How marketing enables banks to offer superior value to their customers?

Lessons from Asian Financial Crisis 1990s: Indonesia and Thailand bear the brunt

In March 1997, at a banking conference in Thailand, the authors identified two major Thai banks that were showing signs of distress.
The following day, the Bangkok Post reported that one of the two banks identified was downgraded by Moodys. That was the start of what is now known as the tom-yam effect. In this article the authors used their EAGLES benchmark to anlayse the performance of the banking sector and in three Asian countries.
Vong, J. et al (1997). Indonesia and Thailand bear the brunt: what went wrong? Bankers Journal Malaysia. No. 104 Dec - Jan 1998 pp 4-7.

How many people are needed to change a light bulb?

How many people are needed to change a light bulb? In some companies its 5 people and some others it may require only 1 or 2.

Why are 5 people needed to change a light bulb?
It takes 1 person to hold the ladder, while another is to climb the ladder and screw on the light bulb. The other 3 persons lift the one who is holding the light bulb, and turns him to screw on the bulb.

What about the 1 person? Well, it takes one person to climb the ladder, balance himself or herself on the ladder, and screw on the light bulb with one hand while the other holding on to the ladder.

Lessons Learned in Change Management

After being a project manager and senior adviser to more than 10 projects since 1983, I have learned some lessons of 4 A's that I wish to share with the TLCA community:

  1. In every project there is a necessary ingredient for success, and that is effective change management procedures must be in place. Most projects will entail changes in the way we work, or change in the systems or change in people's attitudes towards work.
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