BM2001

Bautista, Marchilyn P.
Rodanilla, Rovel A.
Fua, Lee Anthony

BSA501
CASE ANALYSIS: Corona Commercial Bank Inc. (CCBI)

Corona Commercial Bank Inc. is a commercial bank incorporated more than 20 years ago, with a total of 100
branches, 30 of which were strategically located in Metro Manila, 25 in Luzon, 25 in the Visayas, and 20 in
Mindanao. To cope with stiff competition from various universal banks, they decided to decentralize their
commercial loan operation, with the ultimate purpose of increasing their profitability and at the same time,
improving the processing time by granting approving authority to the branches’ regional office aside from
the Credit Committee and Executive Committee at Head Office (HO).

Below are the excerpts of the Board Meeting relative to the significant and crucial changes in the bank’s core
business:

Chairman and President: “Guys, relative to our plan to be more competitive, as I mentioned during our
Annual Stockholder’s meeting, its high time for us to be now competing with the giants in the industry
(meaning the universal banks). With our more than two (2) decades in operation, our people have been
trained so well and had become seasoned bankers. Thus, it is now time to grant our branches approving
authority on loans, especially for Small-Medium Enterprises (SMEs) and the Region Heads, to tap the middle
markets further. This is so that our HO-Commercial Division can focus on large accounts and be competitive
in interest rates, and have a balanced portfolio.”

Vice-chairman: “I seconded this direction from our Chairman. But we need a little more training for our
Branch Manager’s on the quality and criteria of accounts they will solicit so that there will be no
corresponding increase in our past-due loans. Also, we should push them to go for retail, where interest rates
need not be very low, to cushion the impact of giving prime and preferential rates to large accounts which we
intend to get from top banks.”

Director and Treasurer: “We will see to it that the branches and the regions will be given proper training and
full support from our Commercial Loans Dept at HO. We may even deploy some of our Account Officers and
Loan Assistants to their respective areas.”

Independent Director: “As Chair of the Audit Committee, we will schedule a meeting with the Heads of
Commercial Loan Division and Branches Division to formulate an approving authority on Interest rates and
amount of Loans to be granted particularly to Branch Level, Regional level, Credit Committee, Executive
Committee together with the corresponding processes, workflow, and monitoring systems which will be
presented for approval to next en banc board meeting.”

Chairman and President: “Guys, Keep it up. This is a breakthrough in our bank; I am just too excited to relay
this new direction to our Stakeholders. With nothing to discuss anymore, let this meeting be adjourned.”

Required:
Do the following:
1. Propose a special approving authority limits on lending rates (based on the present prevailing interest
rate in the market) and the amount of loans based on the following headings:
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Authority Limits
Branch Credit Individuals from all over the region
Committee would be immediately represented
by the bank's lowest committee. It is
expected of branch supervisors to
conduct a background check on the
investors to make sure they can
return the money.
Regional The Branch Credit Committee's
Credit activities will be monitored by the
Committee regional credit committee. However,
this committee will have a broader
responsibility to make sure that
banks' security is protected and that
no additional loans are given to
people who are not financially stable.
HO-Credit The central committee that includes
Committee both the Region and the Branch is
this committee. Insofar as the
individual has complied with the
necessary guidelines, this committee
may grant any specific amount of
loans. The individual's connection to
the bank and the size of their
deposits should be used to determine
the size of the loan at the head office.
Executive This is the highest Committee, which
Committee collaborates with businesses or
individuals involved in significant
capital investments. The amount of
the loan that will be granted may also
be determined by the assets of the
individual or the corporation. The
Committee is tasked with promoting
effective and equitable access to
banking services and maintaining the
bank's stability and soundness.
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BM2001
Interest Rate Approving Committee
$300/$100,000 A loan or any resolution must be
7% approved by a vote of the
majority of the Branch Credit
Committee and Regional Credit
Committee members who are
present at the meeting.
$2,500/$500,000 To approve a loan or a
6% resolution, members of the
Regional Credit Committee must
vote by a majority of those
present at the meeting.
$5,000/$5 million Members of the HO-Credit
4.8% Committee: Any loan or
resolution must be approved by
a vote of the majority of those
present at the meeting.
$30,000/$5 million Members of the Executive
4.99% Committee e, any loan or
resolution must be approved by a
vote of the majority of those in
attendance at the meeting.
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2. Justify your proposed credit authorities in three (3) to five (5) sentences.

All necessary procedures would be ensured by the aforementioned credit authorities. For instance,
drafting and monitoring the execution of agreements between the creditor and the bank. The Committees
are responsible for ensuring that borrowers pay their arrears as needed. The aforementioned credit
authority would make certain that each and every one of the necessary steps was taken. For instance,
drafting and monitoring the execution of agreements between the bank and the creditor. It is the
responsibility of the Committees to see that debtors settle their arrears as soon as possible.

3. Suggest at least three (3) credit policy guidelines related to Internal Control as to the approval,
processing, release, documentation, and accommodation on Loan transactions of the bank.

I. To secure the loan, the borrower should provide the guarantor. Even if the borrower has previously
defaulted on the loan, they should still be legible.
II. All risks should be analyzed, defined, tracked, and the necessary precautions taken as part of a risk
management procedure.
III. Borrowers should repay their loans on time and at the appropriate interest rate. The borrower may
face additional penalties if they fail to compensate.

Rubric for grading:

CRITERIA PERFORMANCE INDICATORS POINTS
Content Applicable ideas were presented 3
Organization of Ideas Details were discussed with no grammatical error 2
TOTAL 5

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