Cover
Story German
Banks: Managing Transformation
-- Katuri
Nageswara Rao
In
present recession, German banks are languishing under
the burden of low profitability, high costs and poor
corporate credit quality. While tax cuts, public spending
and labor reforms could spur growth, the imperatives
of the `growth and stability pact' of EMU do not allow
implementation of some of these reforms. Lack of strong
political will is the other stumbling block. While German
banks do not have Japanese type problems of high NPAs,
overexposure to sensitive sectors etc., they do need
corrections through consolidation and reforms before
the present problems turn into a crisis. © IUP. All Rights Reserved.
German
Banks: Managing Transformation Dresdner Bank
-- Katuri
Nageswara Rao
In
a scenario of economic recession and structural rigidities,
Dresdner Bank, a major German bank of international
repute, is also facing severe problems of profitability
and growth like any other bank of Germany. It has been
embarking upon restructuring through consolidation during
the last two-and-half years. It has joined hands with
Allianz, an internationally reputed insurance company,
for cross-selling opportunities. It has been withdrawing
from non-core business activities, taking cost-cutting
measures including staff retrenchment. It achieved partial
success in cutting costs and consolidating operations
by third quarter of 2002. However, it has a long way
to go to improve profitability © IUP. All Rights Reserved.
Banking
Scenario
Foreign
Banks: Pack Up Time?
-- Aloka
Majumdar
Four
foreign banks namely Dresdner Bank, Commerzbank, KBC
Bank and Siam Commercial are closing their Indian operations.
At a time when many foreign banks are planning to expand/restructure
their business, smaller foreign banks are closing their
shops. The basic reasons are new hard rules by RBI and
stiff competition from domestic public and private banks.
The banks whose strategies are not in place have no
other option. It is for the first time since 1991 that
the number of foreign banks is on a decline in India.
©
Business India, January 6-19, 2003. Reprinted with permission.
Banking
Strategy
Gauging
Vulnerability in Banks
-- Madan
Sabnavis
The
article investigates the vulnerability of the banks
across the industry based on five ratios namely other
income to total income, cost to income, provisions to
operating profit, interest expenditure to interest income
and net profit to total income. It is observed that
private banks are more vulnerable than public sector
banks. The banks like ICICI Bank, UTI Bank, GTB and
Vysya Bank are extremely vulnerable to shift in interest
rates. The regulator should check these vulnerabilities
at the right time to prevent any catastrophe in the
Indian banking industry.
©
Business Line, February 7, 2003. Reprinted with permission.
Credit
Management
Banking
Sledgehammers for NPA Flies
-- N
Narasimhan
Instead
of concentrating on large borrowers, the banks are sending
notices to small units under the Securitization Act.
They are ignoring the cost-benefit analysis to recover
the NPAs. The small units being large-scale employment
providers and net foreign exchange earners in contrast
to large units are more valuable to economy. As the
banks are restructuring/writing off the loans of large
borrowers, if such facility is extended to small units
they can further strengthen the economy.
©
Business Standard, January 30, 2003. Reprinted with
permission.
E-Banking
ERP
as `The Technology Solution' for the Indian Banks -- Satchidananda
S Sogala
The
ERP, a product of IT, is only a tool and the business
benefit will come only by creating the business restructuring
and encouraging the people to use the facility. The
benefits from the ERP implementation are both qualitative
and quantitative. There is abundant evidence for the
benefits accruing from the ERP implementations, when
successfully completed. ERP helps achieve better control
and provide support for decision-making both of which
can help banks achieve financial savings through cost
control and better integration.
©
Satchidananda S Sogala. Reprinted with permission.
Bank
Scan
Bank
of India
-- Yash
Paul Pahuja
Bank
of India with strong fundamentals and reduction in NPAs
seems to be fully prepared for challenges of open market. © IUP. All Rights Reserved.
Banking
Products
Bancassurance:
Issues and Challenges
-- D
Satish
Bancassurance
has always lured financial services providers. However,
it is yet to take off widely as a business model. More
than anything else, the key to successful bancassurance
business model lies in understanding and satisfying
varied needs of customers. © IUP. All Rights Reserved.
Management
Issues
Management
Challenges in Banking
-- GP
Muniappan
Indian
banking was operating in a relatively comfortable and
protected environment before the reform process. The
reform process has brought the era of intense competition.
It has paved the way for achieving remarkable improvement
in various parameters. Every aspect of functioning of
the banking industry, be it profitability, NPA management,
customer service, risk management, human resource development
etc., has to undergo the process of transformation to
align with the international best practices. Managing
the challenges effectively becomes the most urgent task
for the banks' management.
©
Reserve Bank of India. Reprinted with permission |
