KNOWLEDGE The Most Valuable Intangible

KNOWLEDGE The Most Valuable Intangible
RMA Journal, The, June, 2001 by Anju P. Bhargava

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While employed by a large bank, the author oversaw a study of loan losses with the intent to prevent such problems in the future. The results are as useful to banks today as they were to the institution conducting the analysis in the early 1990s.

One of the many challenges facing bankers is also one of the most important: internalizing lessons learned from past losses. Although each economic cycle has its unique characteristics, given vary ing underlying forces at work, banking veterans can attest that the fundamental lessons remain unchanged. They also can attest that sharing this message with younger professionals can be a frustrating exercise.

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Lending, Opus 101. Whatever the circumstances surrounding it, the basic credit transaction remains the same. Fundamentally, a loan results from the interaction between the relationship manager and the customer. The instruments through which the relationship manager orchestrates the transaction are knowledge, the micro culture within the business unit, the quality of the portfolio, bank policies, and the corporate strategic vision. Just as the success of a concert depends on weather, audience, acoustics, and other factors, the RM's symphony can go out of tune from myriad external factors affecting the industry as well as repercussions from regional and global economic shifts. Loan losses result from a disconnect of one or more of these internal or external factors.

One Bank's Story
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In the 1990s, a $30 billion regional bank (the U.S. subsidiary of a major global bank) recognized the need to capture and integrate its collective learning into the organization's awareness system. The bank management acknowledged a simple truth: you have to know where you have been to know where you are going. It set to work changing the credit culture environment and putting a management decision audit tool in place.

In 1994, the bank's office of the chairman authorized an in-depth study--an autopsy, actually--of more than $1 billion in charge-offs from 1989 through 1993. The purpose was to ensure that history would not repeat itself. Quantifying the crisis provided a way for the staff to understand the past and accept the transformation of the bank's credit culture through key corrective initiatives. (According to the Office of the Comptroller of Currency, this was the only financial institution to undertake such an extensive and critical introspective analysis, though many others had a similar loss experience).

The study began by forming a small (1.5 person) task force in the risk management unit. This independent area had not been involved in decision-making during the crisis period. Separation from the line, including the workout areas, allowed for objectivity in research.

A multi-pronged approach to leverage learning integrated credit analysis, audit, and reengineering techniques with technology. As the bank's MIS was geared more towards data capture than analysis, a data base was developed to capture the qualitative information and take different snapshots of the quantified loan loss portfolio. Through an in-depth review of the credit files supplemented by interviews, each credit was dissected to record the facts and the understanding behind the numbers. The objective was to turn the data in the files along with the experience and the wisdom of the people into a usable tool.

DEFENZOR: A NEWSPAPER FROM THE HEART & SOUL OF AZTLAN

DEFENZOR: A NEWSPAPER FROM THE HEART & SOUL OF AZTLAN 608 Indiana Street, Robstown, Texas 78380 (361) 387-6216 email: staff@defenzor.net ... Note: The posting here do not reflect the position of El Defenzor newspaper nor its staff. This board was created to encourage a mutual dialogue on improving matters in our community.
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Re(3): Abhor what is evil; hold fast to what is good.
Posted on June 23, 2007 at 04:11:40 AM by 4 ringo......you know watt.......

Jules: Wanna know what I'm buyin' Ringo?
Pumpkin: What?
Jules: Your life. I'm givin' you that money so I don't hafta kill your ass. You read the Bible?
Pumpkin: Not regularly.
Jules: There's a passage I got memorized. Ezekiel 25:17. The path of the righteous man is beset on all sides by the inequities of the selfish and the tyranny of evil men. Blessed is he who, in the name of charity and good will, shepherds the weak through the valley of the darkness. For he is truly his brother's keeper and the finder of lost children. And I will strike down upon thee with great vengeance and furious anger those who attempt to poison and destroy my brothers. And you will know I am the Lord when I lay my vengeance upon you. I been sayin' that shit for years. And if you ever heard it, it meant your ass. I never really questioned what it meant. I thought it was just a cold-blooded thing to say to a motherfucker before you popped a cap in his ass. But I saw some shit this mornin' made me think twice. Now I'm thinkin': it could mean you're the evil man. And I'm the righteous man. And Mr. 9mm here, he's the shepherd protecting my righteous ass in the valley of darkness. Or it could be you're the righteous man and I'm the shepherd and it's the world that's evil and selfish. I'd like that. But that shit ain't the truth. The truth is you're the weak. And I'm the tyranny of evil men. But I'm tryin', Ringo. I'm tryin' real hard to be a shepherd.

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Scotland Yard
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New Scotland Yard, London
New Scotland Yard, London

Alternative meanings: Scotland Yard (band), Scotland Yard (board game)

New Scotland Yard, Scotland Yard or The Yard, is the headquarters of the Metropolitan Police Service, responsible for policing Greater London (although not the City of London itself, see City of London Police). New Scotland Yard occupies a 20-story office block along Broadway and Victoria Street in Westminster, about 450 metres away from the Houses of Parliament. The famous rotating sign, which is often seen on live television statements and in films, is outside the main entrance on Broadway.

Founded on 29 September 1829, on a street off Whitehall, Scotland Yard was,ent, beside the present-day Ministry of Defence. In 1967, New Scotland Yard moved to the present 20-story building at 10 Broadway.