“Implementing a Sound Strategic Business Plan to Reverse Losses”
The Client Situation:
The New York Branch of an international bank was required by its Board of Directors to create a 3 year Strategic Business Plan. Previous plans had proved unacceptable. The Branch was incurring a sizeable loss due to narrowing spreads in its corporate lending market, thinning spreads on its investment portfolio and loan loss provisions to clean up its loan portfolio. The goal was to reach a pretax and pre-provision profitability level of over $1 million within the next 3 years.
The GAP Approach:
The GAP Team completed a comprehensive review of the Branch’s operations including:
- extensive interviews with all senior staff
- review of prior business plans prepared by the Branch
- in-depth analysis of historical financial reports
- analysis of the Branch’s loan and treasury portfolios and its funding position
- review of the Branch’s organization chart and allocation of responsibilities among its departments
The Benefits:
The Branch’s performance improved and sustainable profitability was achieved by:
- increasing the sales and marketing effort
- developing and implementing a comprehensive calling/selling program
- creating a new product development unit
- increasing the level of cooperation and support from the Head Office
- increasing funding lines both in amounts and tenors from counterparties
- reducing the concentration of funding and renegotiating more favorable rates
- selling the fixed income securities portfolio and adding new treasury assets with matched funding or derivatives designed to mitigate interest rate risk
By achieving these primary areas for improvement, increasing revenues, reducing and controlling costs and improving the funding position, the Branch will reach its financial goal of generating in excess of $1 million over the next 3 years.
“Implementing a New Foreign Exchange Platform”
The Client Situation:
A New England based bank planned to install a new foreign exchange platform and needed assistance in defining and documenting the accounting policies and allocation rules which needed to be designed into the system.
The GAP Approach:
The GAP team was retained to:
- document existing foreign exchange and related activities covered in the scope of
the new system - review existing documentation of current accounting policies and allocation
methodologies - identify any activities that are not currently documented and determine the
accounting policies that are being used
The Benefits:
The GAP team was able to:
- eliminate, whenever possible, all manual intervention and utilize the functionality
of the new system - enable traders to have the information they need to manage their overall foreign
exchange risk - generate all intercompany funding entries ensuring ease of reconcilement and
elimination for month end consolidated reporting
