Csr Polytechnic Case Study Essay

Statement of the problem: Considering that polytechnic saving bank Inc. A thrift bank suffering from a cringe-evoking operational losses and capital deficiency due to its weak management, How would PSBI improve its unsatisfactory financial conditions and critically deficient performance? Objectives: -To ensure the fulfilment of BOD in their duties and responsibilities under BSP circular 283 -To hire 3independent qualified ethical and trustworthy workers in replacement of the terminated president and the resignation of its successor -To comply BSP the infused additional capital of P5 Million -To immediately infuse the 57.4Million in the new capital to comply with the minimum capital requirement for thrift banks -To Strengthen the Bank’s risk management function in order to regain the trust back from its depositors and investors Areas of consideration *EXTERNAL 1. Legal/political – in its failure in fiduciary trust and confidence in financial institutions rather to help the capital markets and the economy it causes a great effects on individual by the PBI’s disregard of such corporate governance principle -PSBI must meet its required amount to enable to continue its operation as a thrift bank but because of deficiency it can serve as a rural bank which has lesser minimum requirement that being a thrift bank – given under BSP circular 283 BOD fulfil their duties and responsibilities 2. Economy – Polytechnic Savings Bank, Inc. operating as an economy in the use of resources created to serve as a community focused which needed P82M to continue operation and save thrift bank from dwindling capital *Operating External factors a) Workforce –PSBI’s BOD had no banking experience, doing unethically acts or anomalies b)Customers- individuals and small businesses c) Competitors- Other banks B. Internal Aspects 1. Financial Aspects -It is said that PSBI has its unsatisfactory financial condition that the bank is unstable and cannot withstand adverse business conditions and fluctuations because of its poor financial ratios which it requires the amount of P55.2milion capital to gain and to fully continue its operations due to capital deficiency and loss. 2. Operational -PSBI’s operation resulting from memorandum of undertaking (MOU) turned from bad to worse 3. Management -the various financial anomalies undertaken by the management were found during the fraud and forensic audit of the bank therefore PSBI’s improving such weak management because of failure in oversight functions and supervision on affairs inside bank premises. -A complete failure in the fiduciary responsibilities of the officers swot STRENGTHS| WEAKNESSES| -Wayward Group of companies (mother of PSBI)| -failure in fiduciary trust-BOD had no experience in banking-Poor financial ratios| OPPORTUNITIES| THREATS| -Rehabilitation program-buyers, investors, depositors| -adverse business conditions and fluctuations-stop operation as a thrift bank| ALTERNATIVE COURSES OF ACTION A. Sell the bank instead working on the impression that the bank performance would not improve due to weak management Pros: -To save thrift bank from capital deficiency with four potential buyers (with an asking price of P10million to P30million) Cons: -considering that P1.00 selling price for the bank would not even be a bargain -Not one expressed any real interest to complete the purchase among these potential buyers B. Focus on Rehabilitation program Pros: Program designed to address the capital deficiency and operational  losses of the bank Cons: Considering that PSBI has no choice left because PSBI is undergoing from a cringe-evoking operational losses and capital deficiency due to its weak management C.Improve the importance of corporate governance principle in Fiduciary trust and confidence in financial institution Pros: -help strengthen the bank’s risk management function -To regain the trust back from other depositor’s and investor’s -To save the bank from its financial conditions and critically deficient performance -To help capital markets, economy, and each individual lives -To continue operation as a Thrift bank -To improve good governance, managerial and operational factors outside and inside bank premises Cons: -considering there’s a complete failure in the fiduciary responsibilities of the officers D. Conduct annual examination Pros: -to have an annual report on financial operations showed on investors -Must encourage and provide an accurate and timely information’s to their investors about financial status -To have a proper screening and access to PSBI bank’s employees and workers information in the internal management fields in actively oversight functions and supervise their affair of the bank -To avoid fraud and forensic audit of the bank Cons: -Considering that The Internal control system, which were supposed to provide a check and balance were all overridden to disregard