Focusing on large corporate deals

Risk management and internal control have crucial importance in banking activities.
Wellfleet’s management identified syndicated and leveraged loans to large corporate clients as
areas of significant future growth for its corporate banking business. We have already known
that Wellfleet concentrated on corporate banking. Although it is very profitable for the bank to
focus on enlarging transformational deals with clients, it involves a lot of challenges and risks. It
may risk all the Wellfleet’s management, and it would be an operational risk, a regulatory risk, a
concentration risk, and a reputational risk. Too much authority designed in GCC could affect the
interaction between credit committee, clients, and client relationships managers. It can
influence the decision-making and relationship between managers and employees since
Wellfleet has a hierarchical work process in credit officers. The credit committee has the
ultimate authority on decisions, perhaps because of having too much control over the Group
Credit Committee. The Group Credit Committee consists of three senior members: the group
chief credit officer, who serves as chair, the deputy chief risk officer, and the group head of
client relationships, who represents the business viewpoint. This committee structure
guarantees the decision process is a balancing mechanism between credit function and
relationship function. Therefore, any credit proposal that is too big is required not signed-off
before getting the Group Credit Committee. If a proposal with known characteristics should go
through the basic levels to reach Group Credit Committee for final approval, it will take more
time than necessary to seal a deal. This inefficiency will reduce the attractiveness to potential
clients and make the bank lose competitiveness with other banks.

Suggestions
A suggestion would be to develop a balanced decision structure-based proposal
characteristics, such as loan size, applicant company size, applicant history records. Meanwhile,
credit officers could sign off over the small loans by small companies with suitable forms, big
loans by a large company with spot records could directly go to the Group Credit Committee.