Case Study

6040 WordsDec 5, 201225 Pages
FINA 6092 Advanced Financial Management Harvard Business School Case Study ! Shenzhen Development Bank Case Report Section A: Group 6 Name CATALOGUE PART 1: BACKGROUND INTRODUCTION ..................................................................... 1 PART 2: THE INVESTMENT VALUE OF SHENZHEN DEVELOPMENT BANK ..... 1 PART 3: RISK ANALYSIS .................................................................................................... 2 PART 4: RISK CONTROL .................................................................................................... 4 PART 5: ADVANTAGES POSSESSED BY NEWBRIDGE IN THE SDB INVESTMENT…show more content…
In addition, SDB has already gone public thus it enjoys the advantage of smooth financing. Public offering gives opportunities of business expansion and flexibility of capital turnover. Last but not least, investors are easy to get the control of SDB due to its dispersed ownership. According to the case, investors only need to obtain roughly 18% of total shares (which are legal person shares) to become the biggest shareholder of SDB. Therefore, it does not cost so much to get the real control of SDB. Taking the huge development potential, geographic advantage and low acquiring cost into consideration, there is no doubt that SDB is a valuable investment for investors. Part 3: Risk Analysis On one hand, SDB is an attractive target for investment. On the other hand, investors should pay attention of risks involved in the investment. Firstly, the credit risk management of SDB is poor. The lack of a systematic credit policy and a well-defined authorization and approval mechanism, coupled with a poor organizational design of the credit functions, have resulted in ineffectiveness in credit monitoring and slow responsiveness to the market conditions. Several data are extracted from exhibit 9 to reflect the poor asset structure and risk control. ! 2! 2000A 2001A 2002A NPL/Gross Loans 22.7% 15.3% 11.6% LLR/Gross Loans 7.1% 4.7% 3.9% LLR/NPL 31.0% 30.9% 33.2% Asset Quality Judging from these

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