71032219 Chemical Bank Final
Harvard Business School
CHEMICAL BANK
Allocation of profits
Chemical Bank
Sixth Largest U.S. commercial bank in 1983
With 20,000 employees
Having $ 46.9 billion in assets
Offered a broad range of financial services
throughout the world.
Major Profit centres
Chemical
Bank
Personal and Banking
Services
group
World banking Group
Treasury
Group
Areas involved in Due bills controversy
Personal and
Banking
Services group Metropolita n Division
Trust and
Investment
Division
Treasury
Group
Governme nt Trading segment Finance
Division
Treasury Division
Looked after the funding needs of
Chemical bank.
Bonus Pool: (10-15)% of net earnings before tax- direct & allocated costs
Foreign
Exchange
Governme nt Trading
Treasury
Municipal
Trading
Money
Market
Trading
Metropolitan Division
Goal: To become “One-stop” Financial center for its customer Products Offered: 1. Money Market Accounts
2. Discount Brokerage services
Components of Metropolitan division
Retail branch network VISA
Metropolita n Chemical consumer
Finance corporation
Master
Card
Metropolitan Division (Contd.)
Evaluation Criteria:
Senior Manager: Profit center basis
Branch Manager: Goal
System
Goal System
1. Budget: Expected performance level.
2. Base Accounting level: minimum performance level
3. Goal: Target level to achieve
Trust and Investment Division
Services offered:
• Money management services to individual and institutional investors
• International banking services
• Set up Due bills accounts and provide data processing services
Finance Division
Major responsibilities
• Strategy Planning
• Corporate Finance
• Accounting and control
• Management Accounting & Taxes
Management Accounting & Taxes which managed product & customer profitability was headed by Ken Lavine. Ken was responsible for resolving all transfer pricing issues and had ultimate decision – making authority in this area. Due Bills
An acknowledgement that the bank had sold securities to the customer, that his
CHEMICAL BANK
Allocation of profits
Chemical Bank
Sixth Largest U.S. commercial bank in 1983
With 20,000 employees
Having $ 46.9 billion in assets
Offered a broad range of financial services
throughout the world.
Major Profit centres
Chemical
Bank
Personal and Banking
Services
group
World banking Group
Treasury
Group
Areas involved in Due bills controversy
Personal and
Banking
Services group Metropolita n Division
Trust and
Investment
Division
Treasury
Group
Governme nt Trading segment Finance
Division
Treasury Division
Looked after the funding needs of
Chemical bank.
Bonus Pool: (10-15)% of net earnings before tax- direct & allocated costs
Foreign
Exchange
Governme nt Trading
Treasury
Municipal
Trading
Money
Market
Trading
Metropolitan Division
Goal: To become “One-stop” Financial center for its customer Products Offered: 1. Money Market Accounts
2. Discount Brokerage services
Components of Metropolitan division
Retail branch network VISA
Metropolita n Chemical consumer
Finance corporation
Master
Card
Metropolitan Division (Contd.)
Evaluation Criteria:
Senior Manager: Profit center basis
Branch Manager: Goal
System
Goal System
1. Budget: Expected performance level.
2. Base Accounting level: minimum performance level
3. Goal: Target level to achieve
Trust and Investment Division
Services offered:
• Money management services to individual and institutional investors
• International banking services
• Set up Due bills accounts and provide data processing services
Finance Division
Major responsibilities
• Strategy Planning
• Corporate Finance
• Accounting and control
• Management Accounting & Taxes
Management Accounting & Taxes which managed product & customer profitability was headed by Ken Lavine. Ken was responsible for resolving all transfer pricing issues and had ultimate decision – making authority in this area. Due Bills
An acknowledgement that the bank had sold securities to the customer, that his