Banczero Case Questions
1. What are BancZero’s credit policies?
Pg. 274
BancZero carried out a stringent credit screening process to its customers; therefore the amount of bad debts was significantly smaller than other banks of its size. BancZero was conservative and most of the loans that were denied did not offer adequate returns given the risks involved. They were very careful when increasing transactions with a particular customer, the scope of exposure only increased if the additional risk provided a more than adequate return. From the banks point of view, if the risk was not worth the reward the bank would not provide the loan.
2. What type of clients are they trying to attract?
Pg. 274
BancZero is directed at attracting clients with an extensive range of financial service needs, like market-making in foreign exchange, derivatives, fund raising from numerous markets, advisory, and mergers and acquisition services. Large conglomerates required such services, and BancZero focused on increasing its transactions with these corporations rather than expanding the size of its client list. BancZero turned its attention to the emerging markets of Asia and Latin America. Investors from advanced countries were enthusiastic to entering emerging markets, and clients in the emerging countries were beginning to need the bank’s skills.
BancZero’s structure was to generate an organization that benefited clients, its practical formulation was a reputable procedure by which employees of numerous divisions designed a “relationship team” for each client and willingly provided comprehensive services.
3. Who are BancZero’s competitors?
Pg. 274
With respect to services and pricing, BancZero operated in an exceedingly competitive environment. In the United States it faced competition from other money center bank holding companies, such as, investment banks, many regional and foreign banks, and an extensive range of non-bank financial institutions. From a global stand point, the
Pg. 274
BancZero carried out a stringent credit screening process to its customers; therefore the amount of bad debts was significantly smaller than other banks of its size. BancZero was conservative and most of the loans that were denied did not offer adequate returns given the risks involved. They were very careful when increasing transactions with a particular customer, the scope of exposure only increased if the additional risk provided a more than adequate return. From the banks point of view, if the risk was not worth the reward the bank would not provide the loan.
2. What type of clients are they trying to attract?
Pg. 274
BancZero is directed at attracting clients with an extensive range of financial service needs, like market-making in foreign exchange, derivatives, fund raising from numerous markets, advisory, and mergers and acquisition services. Large conglomerates required such services, and BancZero focused on increasing its transactions with these corporations rather than expanding the size of its client list. BancZero turned its attention to the emerging markets of Asia and Latin America. Investors from advanced countries were enthusiastic to entering emerging markets, and clients in the emerging countries were beginning to need the bank’s skills.
BancZero’s structure was to generate an organization that benefited clients, its practical formulation was a reputable procedure by which employees of numerous divisions designed a “relationship team” for each client and willingly provided comprehensive services.
3. Who are BancZero’s competitors?
Pg. 274
With respect to services and pricing, BancZero operated in an exceedingly competitive environment. In the United States it faced competition from other money center bank holding companies, such as, investment banks, many regional and foreign banks, and an extensive range of non-bank financial institutions. From a global stand point, the