A. Your branch has just started the day’s business and many customers are thronging to get banking services. Suddenly the computer system breaks down and the customers and staff are complaining as this problem happens frequently. What should you do?
B. Encik Bahari is a long standing customer of your branch. He applied for a housing loan recently and your head office approved the loan at an interest rate of BLR
+ 2%. Encik Bahari requests for your goodwill as the branch manager to reduce the interest rate to BLR + 1%. You are unable to do it as it is against the rules of the Institute of Banks in Malaysia and Bank Negara Malaysia. How will you explain to Encik Bahari?

A. SBE Private Limited company is applying for a working capital loan. This is the company’s first application for credit facility from your bank. SBE Private Limited company is a medium-sized company that manufactures various types of antique furniture for local as well as international markets. The company is currently facing cash flow problem due to ineffective cost control.

B. XYZ Private Limited company is applying for an additional overdraft facility from your bank. This company has a good track record with your bank. However, the company has been experiencing difficulty lately due to industry-wide recession. According to the finance manager of XYZ Private Limited company, the purpose of the additional facility is to finance the company’s overhead cost.

Part 2
TASK
Obtain the balance sheets of two Commercial banks in Malaysia from their annual reports.
Calculate the following ratios, based on the available information:
1. Capital to total deposits ratio
2. Capital to total assets ratio
3. Capital to risk weighted assets ratio
4. Capital to loans ratio
Based on the ratios, which bank has better capital adequacy? Which bank has better capital
adequacy if you also incorporate qualitative measurement into the assessment?
Various aspects that can be used as qualitative measurement are as follows:
(a) Quality of bank’s management
(b) Quality of bank’s assets
(c) Bank’s earnings history
(d) Quality of bank ownership
(e) Accommodation cost
(f) Quality of operation procedures
(g) Volatility of deposits
(h) Local market conditions

Answer rating: 100% (QA)

ANSWER 1 Capital to total deposits ratio Bank A 8 Bank B 12 Bank B has better capital adequacy 2 Cap... View the full answer