Lending Decision

Coles Group Limited Formerly know as Coles Myer Limited. The Groups principal activities argon carried out through the following business segments Food, Liquor & Fuel, Kmart, Target and map works. Food, Liquor & Fuel involves retailing grocery, liquor and fuel products. Kmart and Target involve retailing appargonl and ordinary merchandise. Office-works involves retailing office supplies.Major brands include Coles, Bi-Lo. Liquor-land, Vintage Cellars, 1st Choice, Theos, Coles Express, Kmart, Target and Office-works. It operates around 2,600 stores in Australia and bran- raw Zealand. It in any case has branch offices located in China. On 31 March 2006, the Group acquired Sydney Drug Stores Pty Ltd (trading as Pharmacy Direct). On 2 June 2006, it disposed of its Myer business. On 14 June 2006, it completed the acquisition of the Hedley Hotel Group. On 9 November 2006, it divested its Mega-mart storesThe most common claim with regard to the importance of notes in our everyday life is the chastely neutral if comically exaggerated claim that makes the humanity go round. Equally exaggerated but wake a deeper perspicacity is the biblical warning that the love of m peerlessy is the root of all evil, neatly change by George Bernard Shaw into the fear that it is rather the lack of money which is the root of all evil.However, whether it is the love or conversely the lack of money which is potentially sinful, the purpose of the statement in either case is to lowline the raise personal and moral significance of money to society in a way that gives a broader and deeper insight into its importance than simply stressing its basically economic aspects, as when we say that money makes the world go round. hence whether we are speaking of money in simple, socalled primitive communities or in much more than(prenominal) advanced, compound and sophisticated societies, it is not enough merely to examine the narrow economic aspects of money in come out to grasp its true meaning. To analyze the significance of money it must be broadly studied in the context of the particular society concerned. It is a matter for the heart as well as for the drumhead feelings are reasons, too. field of study currencies are an inadequate form of world money, but at least their use in international transactions avoids the faults of good-money. A monetary threadbare based on strategic commodities, no matter whether gold alone or some combination of raw materials, will always get under ones skin from their relatively inelastic and uncertain supply conditions. Producers of the money commodity will have an outright receipts oer some others in the marketplace.Even if we reduce the role of the money commodity to that of last-resort reserve and numeraire for exchange rates, as was the case with the gold exchange standard of Bretton Woods, such a hybrid system is prone to block up down. Commodity-money and credit-money are essentially incompatible forms of money and do not coexist easily with each other. matchless or the other will dominate, and each form of agency will cause its peculiar sources of dissymmetry (e.g., inadequate supply of liquidity, loss of convertibility, inequitably distributed adjustment burdens).National currencies are an inadequate form of world money, but at least their use in international transactions avoids the faults of commodity-money. A monetary standard based on strategic commodities, no matter whether gold alone or some combination of raw materials, will always suffer from their relatively inelastic and uncertain supply conditions. Producers of the money commodity will have an outright advantage over others in the marketplace.Even if we reduce the role of the money commodity to that of last-resort reserve and numeraire for exchange rates, as was the case with the gold exchange standard of Bretton Woods, such a hybrid system is prone to break down. Commoditymoney and credit-money are essentially incompatible forms of money and do not coexist easily with each other. One or the other will dominate, and each form of dominance will cause its peculiar sources of instability (e.g., inadequate supply of liquidity, loss of convertibility, inequitably distributed adjustment burdens).By some measures, the real backbone of world commerce and global employment is made up of the millions of nameless small enterprises that coldm small plots of land, cook food, lead daycare for children, make clay pots or pale yellow mats by hand, do piecework for apparel makers, and carry out the countless other tasks that larger businesses dont do. In the cities of developing countries, for example, a growing percentage of the working population sometimes estimated as high as 50 percent is engaged in microenterprise activity.In the seven countries of southern Africa, there is evidence that small, unregistered enterprises provide work for substantially more people than the regular, judicial ones do. In Latin Ameri ca and the Caribbean, more than 50 million microenterprises employ more than 150 million workers. Even in a wealthy untaught like the United States, more than a quarter of all employees work for establishments of fewer than 20 people, and those businesses render 87 percent of all U.S. business establishments.The tasks these businesses perform cover the whole range of human activity, from the basic principle of housing and farming to the luxuries of entertainment and tourism. In m either parts of the world, microenterprises frequently have only one employee who is also the owner or they benefit from the work of family members who are not really employees at all. In wealthy countries, more microenterprises may be larger, up to 10 or 20 people, for example, but unflustered small in comparison to many of their competitors.But throughout the world, what most of these businesses do have in common is a lack of access to resources. They get tiny serve up from lawyers or accountants often they are not able to afford retail space many of them are not even lawfully registered as businesses.At almost all American banks, the board delegates impart approval authority to the nonrecreational banking faculty. Such delegation permits assistant branch managers up to the president to have varying contribute authority, from $5,000-$10,000 unlocked to $250,000, $500,000, or even $1 million secured. On top of this, the board often delegates still-higher politics to loanword committees or combinations of loan officers.Using a hypothetical example, if the add limit of the pecuniary institution is $5 million per borrower, the directors may delegate from $1 up to $1 million to individual officers, officers in tandem, and loan committees. This leaves all loans above $1 million and under $5 million to be approved by the board itself. In essence, the board has set itself as approver of the most sophisticated, most risky, and most complex alter arrangements, while the pro fessional loan staff handles the relatively inexpensive and less-risky loan approvals.Add to this the fact that if the loans go seriously wrong, and the board has approved the loans, then the state and federal regulatory agencies may take remedial actions against the directors. Many financial institutions adopt in-house lending limits which are significantly lower than the lending limit to any one borrower that is legally available. For example, prior to the sale of First of America Bancorp to National City in 1998, the legal lending limit of First of America was $180 million to any one borrower. On the other hand, its board refused to make any loans in excess of $24 million.The directors felt that $24 million was comfortable risk exposure. Several financial institutions have set their in-house lending limit equal to the professional loan committees lending authority, thus for all intents and purposes eliminating the board as a source of loan approvals. Micro-enterprises are more flexible and mobile than the much larger, more complex and building-bound businesses.They provide part-time work to women and men who also have to take care of families, and seasonal work in places where crops have to be harvested. They require little capital, office space, or startup title. They can thrive in rural areas, thereby slowing the tidy sum to urbanization. Jobs in microenterprises are accessible to immigrants and disenfranchised people who subscribe to to moonlight or share jobs. And they are run by women at least as often as men, helping to reverse a pervasive global inequity.Microenterprises also offer an alternative to the conventional strategy for bringing development to unforesightful nations making large loans to governments for massive power or infrastructure projects. Such project-oriented development has come under growing criticism from grassroots activists, who say the projects often benefit large contractors and central governments more than they help loc al people. More investment in smaller, local industries, they argue, could bring economic and social benefits at far less cost. Their view is reflected in an old Chinese saying, many little things done in many little places by many little people will change the most of the world.For years, the First National Bank of Omaha, Neb., had a board consisting exclusively of inside professional bankers who made all loan decisions. In these financial institutions the professionals make the loan approval decisions, not the amateurs.Finally, it is up to the board to set the loan authorities and to review such loan authorities per loan officer on an annual or more frequent basis. The board must also revise lending authority by type of lending function, depending upon the size of the financial institution, so as to protect the institution from risky, in abstract lending by staff members. The board in these cases normally reacts to the recommendations of senior management, especially the senior le nding officer, who is in charge of the inviolate lending function.As we transition away from the high growth years of the past two decades, its an appropriate time to reflect upon the future of the banking perseverance. As the economy continues to slow from what has been a remarkable global expansion, the banking industry finds itself in the middle of a dramatic transformation.Several significant trends are impacting key decision-makers of traditional financial institutions, and many are grappling with their role in the New human economy even as they try to reinforce the traditional attributes that have made them competitive. Financial institutions also face challenges on the services-side as there has been a proliferation in the number of customer touch points with the growth of the Internet, wireless, as well as traditional channels such as branches and telephone banking.This has added further pressure on profitability and on increased dexterity. Many boards today are trying t o reconcile the need for greater operating efficiency while realizing that traditional channels are not going away any time soon, and at the same time recognizing the need for newer distribution channels to serve the changing demographics.There is also the need to be more creative in offering traditional and non-traditional banking and other products. This need complements the need for new revenue streams particularly non-interest fee income sources. Additionally, there is a keen acknowledgement that banks must know a lot more about their customers so they can serve them better and more profitably.Most traditional institution brands are built around service, trust and community. These are fundamental attributes that financial institutions have enjoyed for over a century. fault strength will become increasingly important as institutions compete for customers. Brand identity will become more important because choices among customers will increase, making it more important for your p ut audience to differentiate between competitors. Financial institutions will differentiate on service, trust or share a particular community or demographic set. Their brand recognition and identity will be increasingly important to their customers and will enable them to filter through the competition.REFERENCESMicro-Enterprises, Magazine article by Hal Kane World Watch, Vol. 9, March-April 1996The consumption of the Board in lending, Part 1 of 3 Parts Reexamining Directors Role in the Lending Process, Journal article by Dr. Douglas V. Austin ABA Banking Journal, Vol. 94, 2002. The Future of Banking and the Role of Technology, Journal article by Louis Hernandez Jr., Michael D. Nicastro ABA Banking Journal, Vol. 93, 2001. The Role of Social Capital in Development An Empirical Assessment, Book by Christiaan Grootaert, Thierry Van Bastelaer Cambridge University Press, 2002 Competitive industrial Development in the Age of Information The Role of Cooperation in the Technology Sector , Book by Richard J. Braudo, Jeffrey G. Macintosh Routledge, 1999