The bank managers dilemma case study solution

As a young branch manager at a relatively small retail office within a large bank holdingcompany, Sara has been challenged by her superiors to increase loan and deposit volumewithin her local banking market. In Saras first year on the job, she has designed andimplemented an aggressive calling program in which she visits local businesses and solicitsnew corporate accounts for the bank. Her initial efforts have been most successful. In spiteof strong competition from other local financial institutions, Sara has managed to land a new$2 million deposit account from a local apartment management firm, Silver Valley Estates,and she is currently negotiating with Silver Valleys president to provide a $300,000mortgage loan for his new personal residence.After a recent credit committee meeting at the banks regional headquarters where Sara presented the mortgage loan request and received approval from the banks senior leaders for this loan, Sara is called to her bosss office. She can hardly contain her excitement ingreeting her boss, telling him of the new mortgage loan she is planning to make. Uponhearing the news, Saras boss frowns and tells her of a mistake that occurred in the banksdeposit operations center several weeks ago.It seems a group of checks worth $20,000 deposited into Silver Valleys rental collection account two months ago were returned to the bank for nonsufficient funds by the Federal Reserve. Instead of promptly deducting the bad checks from Silver Valleys account and returning them to the firm, one of the deposit operations clerks at the bank inadvertently placed the checks in his bottom desk drawer and forgot about them. After several weeks, the banks auditors located the checks, and now Sara must debit Silver Valleys account and return the checks tothe firm.Sara protests to her boss that this action would clearly be wrong, because the banks written policy states that checks accepted for deposit cannot be returned after the tenth business day following their date of deposit. In addition, Sara explains that one condition of the banks mortgage loan approval to Silver Valleys president is that the firm must maintain a major deposit account with Saras branch. She knows that if she charges the Silver Valley account for the bad check loss, she will anger Silver Valleys president, lose the $2 million deposit account and the new mortgage loan, and sacrifice all future business from Silver Valley to competing financial institutions in her local market.Saras boss claims that he understands her dilemma, but he is adamant in his instruction to her. The bank cannot afford a $20,000 loss to a new corporate depositor, and she must debit Silver Valleys account to cover the bad check loss. Moreover, Sara is quietly warned that discussing this matter with any other senior officers of the bank will prove most damaging to her career. a)What should she do?

b)How can Sara protect the welfare of her customer and still remain loyal to her boss?

c)How can Sara abide by the banks deposit collection policy and obey her boss'sinstructions?

d)With whom can Sara discuss her dilemma, when she has been explicitly warned not to discuss the problem with other bank managers?

e)If Sara does decide to turn to other bank officers for advice, whom should she trust?f)Who Are the Primary Stakeholders?g)Which possible alternative provides the greatest benefit to the greatest number of people?

(Be sure to point out how other deposit customers at the bank might be affected by the banks apparent willingness to selectively ignore its deposit collections policy.)h)Are the rights of some stakeholders more important than the rights of others?

If so, whose rights are most important in this case, and whose rights are least important? Why?i)Which alternative course of action violates the rights of the greatest number of stakeholders in the case?

Which course of action compromises the rights of the fewest number of stakeholders?

j)Which alternative course of action distributes the benefits and burdens most fairly among the stakeholders?

Which course of action results in the most inequitable distribution of benefits and burdens?

k)What course of action should Sara take? Which alternative would you choose if you were in her position? Why would you make that particular choice

?l)Are there any additional facts youwould like to know about the case before you make a particular derision? If so, what are these facts, and why are they important to your decision process?