The American International Bank Case
THE AMERICAN INTERNATIONAL BANK CASE
* Summary of the Situation
Tamara Long sat in her office reflecting on the tough past 6 weeks. She was the head of the international department at the American International Bank (AIB). Six weeks ago, the Chairman of the bank had called Tamara into his office. A bulletin had just come over the bank 's wire indicating that a military coup had taken place in Portugal.
The bulletin also reported that the new military dictator had frozen all foreign assets in Portugal and had imposed strict currency controls to keep capital from fleeing the country. When the Chairman heard about this, he asked Tamara a perfectly logical question:
What was the bank 's exposure in Portugal?
It had taken Tamara over a month to get the information, and even then she had to admit that it was not very accurate. AIB did not have an integrated information system in the international department. Each overseas branch had its own small computer keep track of its customers and handle the daily operations of the bank.
Tamara had to call people in each branch and ask them to manually search their records for loans to businesses based in Portugal, loans denominated in Portuguese escudos, loans backed or guaranteed by assets in Portugal, and other deposits or foreign exchange exposures. Since the branch records were by customer rather than by county of risk or by currency, the branches had to manually check each customer account to determine whether any loans met the search criteria. It had taken several weeks to compile this list and recheck it for accuracy.
Tamara seemed to recall a monthly report which presented exposure by country and currency, but when she asked her data processing department about the report, she was told that it had been discontinued over six months earlier when no one expressed interest in it. In Tamara 's opinion, and demonstrated by the current situation, these reports should have been retained. They were of vital concern in
* Summary of the Situation
Tamara Long sat in her office reflecting on the tough past 6 weeks. She was the head of the international department at the American International Bank (AIB). Six weeks ago, the Chairman of the bank had called Tamara into his office. A bulletin had just come over the bank 's wire indicating that a military coup had taken place in Portugal.
The bulletin also reported that the new military dictator had frozen all foreign assets in Portugal and had imposed strict currency controls to keep capital from fleeing the country. When the Chairman heard about this, he asked Tamara a perfectly logical question:
What was the bank 's exposure in Portugal?
It had taken Tamara over a month to get the information, and even then she had to admit that it was not very accurate. AIB did not have an integrated information system in the international department. Each overseas branch had its own small computer keep track of its customers and handle the daily operations of the bank.
Tamara had to call people in each branch and ask them to manually search their records for loans to businesses based in Portugal, loans denominated in Portuguese escudos, loans backed or guaranteed by assets in Portugal, and other deposits or foreign exchange exposures. Since the branch records were by customer rather than by county of risk or by currency, the branches had to manually check each customer account to determine whether any loans met the search criteria. It had taken several weeks to compile this list and recheck it for accuracy.
Tamara seemed to recall a monthly report which presented exposure by country and currency, but when she asked her data processing department about the report, she was told that it had been discontinued over six months earlier when no one expressed interest in it. In Tamara 's opinion, and demonstrated by the current situation, these reports should have been retained. They were of vital concern in