Appendix A: 40 Banks composing Interview Sample Algemene Bank Nederland NV Bank of America American Security and Trust Company NA Australia and New Zealand Banking Group Ltd. Banca Nazionale dell'Agricoltura Banca Nazionale del Lavoro Banco Hispano Americana Banque l'Indochine et de Suez Ban que N ationale de Paris Banque Worms Canadian Imperial Bank of Commerce CitibankNA Continental Illinois National Bank and Trust Company of Chicago Credito Italiano Crocker National Bank Dai-Ichi Kangyo Bank Ltd Dresdner Bank AG The Fidelity Bank First City National Bank of Houston The First National Bank of Chicago Girard Trust Bank Harris Trust and Savings Bank Hessische Landesbank-Girozentrale Hong Kong and Shanghai Banking Corporation Lloyds Bank Ltd Morgan Guaranty Trust Company of New York National City Bank (Cleveland) National Westminster Bank Ltd The Bank of Nova Scotia The Philadelphia National Bank Rainier National Bank 147 148 The Management Function in International Banking Security Pacific National Bank Societe Generale de Belgique Swiss Bank Corporation Texas Commerce Bank NA The Toronto-Dominion Bank The Bank of Tokyo Ltd Union Bank of Switzerland Union Commerce Bank United California Bank Appendix B: Questionnaire Submitted to 40 Banks 1. How would you rank the following objectives of your international banking function in terms of importance? (a) net profit contribution to the bank (b) service existing customers of the bank (c) meet the competition of other banks (d) develop new business/customers for your bank (e) other objectives 2. Which of the following best describes the organisational structure in your international function: A. Decision-making (i) decentralised decision-making with significant use of regional headquarters and delegation to officers in the field, or (ii) centralised structure with home office making the bulk of the credit and other decisions B. Marketing (i) functional/product related approach to customers with emphasis on industry or functional special­ isation, or (ii) geographic approach with focus on regional ex­ pertise. C. Interaction with Domestic Banking Function (i) is there a so-called 'multinational' or 'world cor­ poration' group which has line marketing respon­ sibility for major corporations throughout the world with cross-border operations and, there- 149 150 The Management Function in International Banking fore, cuts across the traditional 'domestic vs. in­ ternational' distinction? (ii) is there a single head of international banking with no other major responsibilities? (iii) if so, to whom does he report? (iv) would it be possible to have a copy of your inter­ national organisation chart? 3. The Credit Function A. Decision-making Process Would you say that you rely more heavily for credit decisions on: (i) a credit committee which vets most credit pro­ posals, or (ii) credit limits to individual bank officers who are able to commit to most loans without reference to a committee. B. Which of the following levels of loan loss reserve (as a percent of outstandings) do you feel would be most appropriate in the future for your international busi­ ness: 0.0% to0.5% 0.5% to 1.0% 1.0% to 1.5% 1.5% or higher 4. Profitability A. Do you calculate an estimated profit contribution of your international function to your bank? If so, is it 0-10% of the total 10-20% 20-30% 30-40% 40-50% 50% or more? B. Do you expect this percentatage contribution to in­ crease in the medium term? AppendixB 151 C. Does your bank feel there is a policy limit to the percentage which international should represent as a portion of the total? D. Which of the following profitability criteria do you consider most relevant to your international business? return on assets employed return on capital (imputed if necessary) utilised percentage of overall bank profits absolute level of profits another criterion? E. What rate of profit growth do you consider most likely over the medium term for your international business? 5. Competitive Strategy How would you rank the following competitive strategies in terms of importance to your international function? provide specialist expertise in specific sectors which cannot be surpassed offering unique products and services ability to commit large amounts of financing speed and flexibility of decision-making large, loyal customer base coupled with knowledge of their requirements ability to quote the finest/best terms geographic coverage of the market other factor? 6. Range of Products/Diversification Do you regard it as important to offer a range of services going beyond the traditional deposit/lending and trade financing services traditionally provided by international commercial banks? If so, which of the following do you consider impor- tant to your international strategy? merchant/investment banking leasing, factoring and other bank related services non-finance related activities such as consulting, equity investments, etc. 152 The Management Function in International Banking 7. Future Outlook How would you rank the following in terms of serious­ ness of threat to your international business in the long run? credit losses from heavily-borrowed developing coun­ tries other credit losses competition and its impact on gross profits rising expense levels shortage of trained, competent people a world depression or political cataclysm which is effectively beyond the power of individual bankers to prevent a crisis of banking confidence such as Herstatt which becomes a self-fulfilling prophecy another problem? 8. Staffing: (a) what was the age of the present head of international when he assumed this job? (b) how many years had he been with the bank before assuming this function? (c) did the bank's present chief executive pass through the international function as part of his career path? (d) does the present head of international have a univer­ sity degree? (e) how many employees are there in the international function? (f) can you estimate the amount of international profits per international employee? (g) does the international department have its own specific training programme for university graduates? 9. Overseas Network: A. Which of the following best describes your strategy in establishing an overseas banking network? offices/branches which do extensive local as well as international business in a large number of national markets abroad AppendixB 153 offices/branches in most or all of the world's leading financial centres which primarily carry on interna­ tional business offices/branches only in a limited number of off­ shore centres so as to permit home office access to the international market no offshore offices beyond a limited number of representatives who do not do business directly B. Would you say that your overseas network is largely in place (based on present market circum­ stances) a significant expansion still to occur at the beginning of a major expansion phase. C. Which of the following best describes your attitude to consortium/joint venture operations? would never consider them only if it is the only way to penetrate a given market very useful and appropriate for your organisation D. Which of the following best describes your attitude to the profitability of a given offshore entity? profits are attributed to each offshore office/ implantation and the office is closed/merged with another if a minimum profit contribution is not achieved we try to measure the profit contribution of most or all of the entities but would place a high value on non-financial considerations in opening or closing an office profitability of individual offices is not of major importance in evaluating individual parts of the network 10. Management Information: A. Do you feel you have adequate management informa­ tion to run your international function? B. Which of the following do you receive on a regular basis? total international profit contribution on a monthly or quarterly basis 154 The Management Function in International Banking complete description of FIX positions on a daily or weekly basis regular deposit mismatch reports showing liquidity as well as profit risk complete loan portfolio analysis including country exposure on a weekly or monthly basis profit centre analysis on a monthly or quarterly basis showing contribution of major departments and offshore entities regular reports on loans considered as bearing a risk of possible loss Appendix C: Questionnaire Submitted to 30 Senior Corporate Financial Officers 1. Selection of International Banks A. Are there any circumstances under which you would add to the list of banks presently providing international services to you? Do you actually discourage 'cold calls' by banks which have no present relationship with you? B. If you are prepared to add to your list of banks, could you list, in order of importance, the criteria on which such a bank would be selected? willingness to assume credit risk (such as country credit) others not prepared to take fineness of their terms (spread, maturity, etc.) personal relationships which facilitate doing business together new or imaginative solution to a problem speed and responsiveness of decision-making process size of the commitment they can make comprehensive range of services another criterion? 2. Evaluation of Banks' Marketing Approach A. If you were to criticise the efforts by international banks to develop a relationship with your company, which of the following possible criticisms would be the most relevant? lack of preparation/understanding of your business lack of any specific product/solution