1. Create a balanced scorecard strategic map for Silicon Valley Bank where you take into account its strategy to create a competitive advantage and the risk to a bank run. Specifically,
   1. Choose maximum 6 performance measures to reflect the strategy and the strategic risks of the bank. Explain the measure with one sentence each. (2 marks).
   2. Write the causal links between the measures as follows. (2 marks).
      1. Measure1 --> Measure2
      2. Measure2 --> Measure3

Budget and actual results for Buckeye National Bank in 20x6

The Buckeye National Bank aims to restore its profitability to the levels seen in 20x3 and 20x4 by decreasing the number of loss-making retail accounts and increasing the number of profitable business accounts. They belief that if they drop 30,000 (to 120,000 in total) of the most demanding retail customers, the average cost per retail customer will drop to $10 per account. They aim to increase the number of business accounts to 65,000 in total at the same cost per business account as in 20x5, i.e. $23.55 per account. The cost per account can be used to calculate the ABC indirect costs. The net interest income per retail account ($10) and per business account ($40) is expected to be the same as in 20x6.

They expect the credit losses and noninterest income to be like the previous year at $500,000 and $1,200,000 respectively. They treat these costs as fixed cost and income independent of the number of business accounts. Other noninterest expenses are also assumed to be a fixed cost at $955,000. Finally, income tax is calculated at 32.5% of income before taxes.

The full budget is given below and in the "Income statement" tab of the excel spreadsheet with the calculations. Unfortunately, the actual results were a disaster as show in the table below. The actual results are also given in the updated excel spreadsheet in the "Income statement" tab.

	Budget 20x6	Flexible 20x6	Actual 20x6
Retail Customers	120		100
Business Customers	65		20
Net interest income	3,800		2,100
Provision for credit losses	500		1,000
Net interest income after provision for credit losses	3,300		1,100
Noninterest income	1,000		1,000
Income prior to noninterest expenses and income tax	4,300		2,100
ABC indirect Costs	2,731		1,500
Other noninterest expenses	955		1,000
Income before income taxes	614		-400
Income tax expense	200
Net Income	415		-400

Answer rating: 100% (QA)

A strategic map is a visual tool used to communicate and manage an organizations strategyIt shows the causeandeffect relationships between the financi... View the full answer