Wellfleet Bank
UNIVERSITI UTARA MALAYSIA
COLLEGE OF BUSINESS
BWBB 3193 SEMINAR IN BANKING
CASE STUDY ASSIGNMENT 3
WELLFLEET BANK
SEMESTER 2 SESSION 2013/2014 SUBMITTED TO:
PROF. MADYA MOHAMMED NASSER B. KATIB
PREPARED BY:
NO.
NAME
MATRIK NO.
1.
TAN YEN THING
211366
2.
LAU KOK WAI
212569
3.
CHAN DE LONG
213186
GROUP A
SUBMITTED DATE:
25 MAY 2014
Question 1: Given its strategy, what kind of risks does Wellfleet Bank face?
In generally, Wellfleet Bank faces some kinds or a variety of risk in its daily operations. Therefore, risk faced by Wellfleet Bank in this case study including mega risk, credit risk, operational risk, concentration risk, regulatory risk, market risk, country risk, liquidity risk and so on. First, risk faced by Wellfleet Bank in this case study is mega risk. It is true because Wellfleet Bank’s flagship business, corporate banking had been aggressively to pursue large scale transformational deals in line with the bank’s strategic intent. For example in the case study that they had projected a work load of 220 proposals but had actually reviewed about 304 submissions. As per the mantra of the bank: “if a billion dollar deal went wrong, it could sink the ship”. Second, the credit or default risk in case of syndicated loan and leverage loan which is aggressively pursued by the Wellfleet Bank as the future growth segments. However, as leveraged loans are provided to borrowers will carrying a higher debt and risk of default which could affects the bank significantly. Third, operational risk linked through Wellfleet Bank’s daily activities such as auditing, monitoring and support system. An example of operational risk for Wellfleet Bank would be in case the deputy group chief risk officer and group head of client relationships officer disagreed over a proposal then chief credit officer would take ultimate decision. Fourth, concentration risk that faced by Wellfleet Bank due to assets is very much concentrated on the Corporate
COLLEGE OF BUSINESS
BWBB 3193 SEMINAR IN BANKING
CASE STUDY ASSIGNMENT 3
WELLFLEET BANK
SEMESTER 2 SESSION 2013/2014 SUBMITTED TO:
PROF. MADYA MOHAMMED NASSER B. KATIB
PREPARED BY:
NO.
NAME
MATRIK NO.
1.
TAN YEN THING
211366
2.
LAU KOK WAI
212569
3.
CHAN DE LONG
213186
GROUP A
SUBMITTED DATE:
25 MAY 2014
Question 1: Given its strategy, what kind of risks does Wellfleet Bank face?
In generally, Wellfleet Bank faces some kinds or a variety of risk in its daily operations. Therefore, risk faced by Wellfleet Bank in this case study including mega risk, credit risk, operational risk, concentration risk, regulatory risk, market risk, country risk, liquidity risk and so on. First, risk faced by Wellfleet Bank in this case study is mega risk. It is true because Wellfleet Bank’s flagship business, corporate banking had been aggressively to pursue large scale transformational deals in line with the bank’s strategic intent. For example in the case study that they had projected a work load of 220 proposals but had actually reviewed about 304 submissions. As per the mantra of the bank: “if a billion dollar deal went wrong, it could sink the ship”. Second, the credit or default risk in case of syndicated loan and leverage loan which is aggressively pursued by the Wellfleet Bank as the future growth segments. However, as leveraged loans are provided to borrowers will carrying a higher debt and risk of default which could affects the bank significantly. Third, operational risk linked through Wellfleet Bank’s daily activities such as auditing, monitoring and support system. An example of operational risk for Wellfleet Bank would be in case the deputy group chief risk officer and group head of client relationships officer disagreed over a proposal then chief credit officer would take ultimate decision. Fourth, concentration risk that faced by Wellfleet Bank due to assets is very much concentrated on the Corporate
References: Risk Mangement Case Study at Wellfleet Bank. (2011, April). Retrieved May 19, 2014, from Blacklce: http://www.blackicepartners.com/wp-content/uploads/2012/03/Risk-Management-Case-Study-at-Wellfleet-Bank.pdf Ghanshyam Gupta, B. P. (2012, December 9). Risk Management at Wellfleet Bank: "Megadeals". Retrieved May 20, 2014, from Scribd: http://www.scribd.com/doc/116144082/Risk-Management-at-Wellfleet-Bank-Megadeals