National Bank of Borneo

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Case Study
National Bank of Borneo
Part 1
Overview
1. Time Context
The case of National Bank of Borneo happened on November 20, 1986, the date when the sultanate of Brunei announced the closing of the said bank. 2. Viewpoint
The viewpoint to be used in solving the case is that of Mr. Abdul Rahman’s, the newly appointed controller of NBB. 3. Major Policy Statement
National Bank of Borneo is a bank which is the larger of the two local banks in Borneo. It has advances of $ 1.128 billion, deposits of $ 1.147 billion, total capital and reserves of $ 199.4 million, and a post tax profit of $ 31.1 million.

4. Background of the Case
a. The Company
National Bank of Borneo is one of local banks in Brunei. Its establishment was indebted to Mr. Khoo Teck Puat the father of the detained Khoo Ban HocK. Mr. Khoo Teck Puat is a son of a rich trader, who in 1933 merged several banks together to form Singapore’s biggest, OCBC or Overseas- Chinese Banking Corporation. After his impeded rise in the position, he left and went to Malaysia.

In Malaysia he founded Malayan Banking and very rapidly he was able to open 100 branches in just one year. In six years time, the bank that he founded equal that of OCBC in Singapore, with this he was able to own 60% of Malayan Banking. Seven years later the Malayan Central Bank or BN Bank of Negara forced Khoo out, alleging excessive lending to his own companies.

After leaving Malayan Banking he retained his interest in the bank’s branch in Brunei. This branch was about to be closed in 1962 but with the help of share investment by the royal company, the bank now called National Bank of Borneo prospered.

b. The Industry
NBB belongs to the banking industry. As with all the failure in the management of finance and all the controversies NBB is through, we can say that the bank is already on its decline stage. The company has the potential to be competitive internationally but these transactions to foreign banks have been frozen. c. The Management

The bank’s president was Prince Sufri Balkiah and his predecessor is Prince Mohammed both were member of the Government’s cabinet. 5. Environmental Analysis
d. SWOT Analysis
Strength-
* NBB , being owned by a family that is known to be one of the richest in Asia has loads of sources of cash. * The experienced management of NBB and so as the connection of NBB to the government. * Larger of the two local banks.

Weaknesses -
* Poor allocation of resources.
* Weak financial management.

Oppurtunities -
* The transactions to foreign banks.
* The London Stock brokerage from which Khoo bought large percentage of shares.
Threats-
* The direct influence of the government to NBB. * The kind of relationship Khoo family has with the royal family.

6. Present Company Departmental Plans
Product Planning and Development
Banking transactions has been established and developed not only locally but also to other correspondent banks world wide . Market Planning
Interest earned from the Khoo related loans were customarily rolled over and appeared on the bank’s accounts as accrued profits. This practice enables the bank to show a profit for marketing.

Financial Planning
Million shares
National (nominees)61.4
Leo Investment Corp.9.0
Taurus Investment Corp.5.0
Khoo TecK Puat1.0
Khoo Family3.8
80.2

Shares issued90.0
Shareholders277

Production Planning
Almost all the transactions of NBB were all because of the efforts and connections of Khoo. All its production planning has been due to his experience in banking locally and internationally.

Organizational Planning
Chairman –Khoo Ban Hock
President -Prince Sufri Balkiah
Executive Director-Chin Ping Fang
Part II
Problem Resolution
1. Background of the case
The problem of NBB surfaced surfaced in June 1985 when another bank went...
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