Ross Abernathy and the Frontier National Bank

BUSINESS REPORT

ROSS ABERNATHY AND THE FRONTIER NATIONAL BANK

(i)

EXECUTIVE SUMMARY

The Frontier National Bank was the oldest, biggest and the most profitable bank but started losing its market standing and profitability post the World War II. The present CEO was about to retire and in order to restructure the bank and regain profitability, the directors had started looking for a new Chief Executive Officer.

Ross Abernathy was elected as the president of the bank and was thereafter appointed as Chairman and Chief Executive Officer. He was a hardcore banker by profession and has been an ambitious person through his professional life. He had understood the Board’s agenda of complete restructuring of the bank and regain profitability. He wanted a team that could assist him in this objective which he didn’t find in the current human resource of the bank. He decided to take advice from his two professors and his former lawyer. He was given three different alternatives that were relevant and inescapable. Ross was to analyze all the three alternatives keeping in mind the best and rational solution with a clearly defined action plan

(ii)

TABLE OF CONTENTS

SL CHAPTER PAGES

1. Situational Analysis 3

2. Problem Statement 4

3. Decision Criteria 5

4. Generation of Alternatives 6

5. Evaluation of Alternatives 7

6. Recommendation 8

7. Action Plan 9

8. Contingency Plan 10

3

SITUATIONAL ANALYSIS

1. The FNB was the oldest bank in one of the country’s rapidly growing regions.

2. By the end of the WW II it has started generating losses and steadily lost market standing and profitability. Its reputation of being the leading bank of the country started to diminish.

3. Despite of the losses and ineffective staff, it had $7 billion worth of possessions.

4. During late seventies when the current CEO reached the bank’s retirement age of 70 years, the organisation faced a risk of being merged with a smaller but dynamic competitor because of swiftly declining profitability, declining liquidity and inadequate capital.

5. The current CEO wanted to continue the family legacy of the bank and proposed his son-in-law to succeed him.

6. Owings to the poor performance of the bank and to restructure the reputed bank, the Board appointed a search committee for appointing an outside candidate for the post of CEO. They had agreed to rope in Ross Abernathy

7. Ross Abernathy was initially apprehensive but agreed to join the bank as Chairman and CEO after having being President of the bank for 2 months, during the time the old chairman was about to retire.

8. Ross took the task after some initial concerns realized that it would require him another 3 years to shape and restructure the bank.

9. He knew a lot was to be done to restructure the bank. The previous team members of the Frontier executives were old and unenthusiastic. Therefore, it was necessary for him to introduce a new team.

10. Ross observed that the bank was lacking in various aspects like corporate business, the pension fund business and international business. He had to not only to revamp the existing banking activities but also had the task of taking FNB to new heights.

4

PROBLEM STATEMENT

The problem highlighted in this case for the bank is the development of the new team that can work effectively and efficiently with new CEO.

5

DECISION CRITERIA???

1. How to improve the profitability of the bank.

2. How to form a team that will help him steer the bank to enhance profitability.

3. Acceptance of team by the existing FNB employees.

4. Morale and motivation within the existing team.

5. Should he form the team out of:-

(a) Bank’s human resource and help them improve their performance standards or

(b) Bring in his Chicago team with whom he has worked before or

(c) Hire professionals in the field.

6

...