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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Moominoid who wrote (50105)	5/18/2004 3:04:45 AM
From: Elroy Jetson	Read Replies (1) \| Respond to of 74559

The last bank I saw operating like this was First Interstate Bank about 17 years ago. Well Fargo bought the California FIB parent bank in 1996 which I think almost took Wells Fargo under. I'd guess this problem with MIS is the real cause of the huge trading or lending losses at banks such as Barings, NAB (National Australia Bank), Daiwa, and Credit Lyonais to name a few. I had a friend who had been recently hired to head FIB Risk Management for the Real Estate Lending Group. After four months on the job he told me he hoped First Interstate was sold before it blew up. This is hard to believe, but their financial records were stored on five incompatible computer systems. Loan assets were on one computer, while payment records were on another. The payment computer could generate a printout of non-performing loans by loan number. To create a total of non-performing assets, the non-performing loan numbers were entered into the asset computer system by hand. This would give you a total of assets at risk but not the total past due - that was took more work than it was worth except for specific mega sized loans. My friend was already interviewing at other firms as the bank management was not willing to spend the money to integrate the systems. I think they had their eyes on selling the bank as well. Keeping the IT system barely functioning required an enormous amount of experience and guess-work by a large number of FIB employees. I just found this description of the merger on Google. When Wells Fargo and First Interstate Bank merged in 1996 there were major problems. Wells Fargo tried imposing its virtual banking culture and failed, with the drive to electronic banking at shopping centres and Internet access. At the same time they sacked 75% of FIB's senior managers, and with them went data about how to operate IT systems. As a result records were lost, ATMs were slow, and tens of thousands of account holders defected to competitors. The weakened Wells Fargo then quickly fell into a takeover by Norwest of Minneapolis. patrickdixon.co.uk