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Caroline Carr and Beechers Bank:  
Motivation in Tough Times  

This case was written by Dr. Janice Byrne, IESEG School of Management.
It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective
handling of a management situation. The case was compiled from anecdotal evidence and published sources.

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 Caroline Carr.   The Irish Economy   In  the  mid‐1990s.  economic  activity  came  to  be  dominated by property‐related activity.Managing People in Organizations. there were signs that the domestic economy was overheating.  sluggish  growth  and  high  Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I unemployment. low taxes – paved  the  way  for  a  period  of  rapid  economic  growth. Order ref F286353.. from 13-Dec-2016 to 13-Jun-2017.  progressive social change and solidarity.  social  and  economic  developments  ‐  increased  foreign  direct  Order reference F286353 investment.  Usage permitted only within these parameters otherwise contact info@thecasecentre.    Numerous  political.  Caroline  Purchased for use on the MBA42 .  Ireland  emerged  from  a  period  of  recession..  From  2002  to  2008. Generous government tax incentives and speculation in the  buy‐to‐let market led to a construction boom.    In the latter years of the Celtic Tiger. 414-084-1 Caroline Carr and Beechers Bank:   Motivation in Tough Times     On Monday April 19th 2010.  and  house  prices  were  starting  to  rise  rapidly.  Irish  society  exhibited  a  strong  and  2    .  Ireland’s  era  of  impressive  growth  and  economic  success was dubbed the ‘Celtic Tiger’.  He told her that the company had  decided not to react to a defamatory newspaper article criticising her underwriting team. head of the small business lending unit at Beechers Bank. wondered what she should do. Taught by Dino Ruta Cataldo. received a phone call from the communications director.  major state investment in education. The country had become exceptionally dependent on  construction  activity  and  a  classic  property  bubble  developed.    From  1994  to  2008.  the  ratification  of  the  Single  European  Act. at SDA Bocconi School of Management..

(2010). house prices in Ireland rose by a cumulative 300 per cent in real terms2.  Spending  dropped  faster  than  Taught by Dino Ruta Cataldo. at 2.    Unemployment  jumped  from  less  than  5%  of  the  Usage permitted only within these parameters otherwise contact info@thecasecentre.pdf  5  See appendix 2  6 Nyberg uring%20Ireland's%20Progress%202010.cso.  As in many smaller EU economies. Summer 2007.  The property bubble burst and left many  homeowners in negative equity. at SDA Bocconi School of Management. Measuring Irelands progress report accessed Oct 1st 2012 available at  http://www.  Educational material supplied by The Case Centre   Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F286353 The Irish Banking Industry  Prior  to  the  1980s. (2007). rose to 11.   Between 1980 and 2010.  By 2010 household indebtedness was 81 per  cent of gross domestic product ‐ among the highest in the euro area ‐ and about 80 per cent of this  Purchased for use on the MBA42 .  Between 1992 and 2006. from 13-Dec-2016 to 13-Jun-2017.  Indeed.  the  principal  banks  in  the  Irish  banking  sector  were  domestic  in  ownership. incomes in 2009 as householders and  businesses began hoarding cash. credit rationing  had been a familiar  feature  in  both  the  domestic  mortgage  and  commercial  lending  markets  in  Ireland. Economic and Social Research Institute. Misjudging Risk: Causes of the Systemic Banking Crisis in Ireland  3    . they ran relatively small‐scale operations by  international N. 414-084-1 pervasive  preference  for  property  as  an  asset.europarl.5% by April 2010. While they  were among the larger companies in the Irish economy.pdf  4  Central Statistics Office (2010). special article in Quarterly Economic Commentary. available at  http://www. there were six main domestic financial institutions in Ireland5. ‘A Preliminary Report on The Sources of Ireland’s Banking Crisis’  2  Kelly. personal  credit  was  secured  on  property3.  and  had  never  experienced  a  property  crash1.  3 Europa (2010) ‘Household Indebtedness in the EU’ accessed Oct 1st 2012. 2011. Order ref F286353.  Property wealth shrank considerably and consumers were weighed  down by a debt burden made heavier by falling wages. the                                                               1  Regling and Watson.    However  the  Celtic Tiger years saw a significant change in that dynamic. "On the likely extent of falls in Irish house prices".org workforce  at  the  end  of  2007  to  12%  at  the  end  of  June  2009  4.   A key preoccupation of Irish policymakers in the mid to late 1980s was the  lack of  competition in  the domestic banking market6. The saving rate.3% in  2007.      The2008 global financial crisis hit the Irish economy hard. Dublin.europa.Managing People in Organizations. M.

 Misjudging Risk: Causes of the Systemic Banking Crisis in Ireland  10  Nyberg. 2011.  They provided  Usage permitted only within these parameters otherwise contact info@thecasecentre.  the  greatest  demand  for  credit  came  from  builders  and  property  developers. In other banks. 2012.  In  their  attempts  to  sustain  market  share  and  profitability. 414-084-1 entry of foreign banks intensified competition in lending7. Order ref F286353.  and  lauded  by  many  (investors. boards seem to  have simply decided on higher target growth rates. Property‐related lending was seen as ‘the only game in town’ for growth‐ Educational material supplied by The Case Centre oriented  banking.  analysts.  seeking  to  differentiate  themselves. Numerous consumer and small business  groups  claimed  there  was  insufficient  credit  and  lobbied  for  government  action  and  reform  in  the  banking  sector. Many banks were increasingly led and managed by people with less practical experience of  credit  and  risk  management  than  before. began to offer more streamlined loan approval processes8.  rating  agencies  and  the  media)  as  a  role  model  for  other  Irish  banks  to  emulate9. 2010  8  Clarke and Hardyman. In the mid 2000s.      Purchased for use on the MBA42 .  One  bank  in  particular  (Anglo  Irish  Bank)  was  widely  admired  domestically  and  Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F286353 abroad. as they strove to hold their share of a  rapidly expanding market. 2011. Domestic banks looked abroad for funding                                                              7  Regling and Watson.    Strategy  implementation  and  the  accompanying  risk  policy  was  implicitly  left  to Taught by Dino Ruta Cataldo. Misjudging Risk: Causes of the Systemic Banking Crisis in Ireland  11 Nyberg Report. Discussion Paper Series  9 Nyberg Report.  Competition between the Irish lending institutions intensified. from 13-Dec-2016 to 13-Jun-2017.  It  appeared  that  neither  banks  nor  borrowers  apparently  really  understood  the  risks  they  were  taking11.  In  line  with  the  increased  demand  for  property  described  above. Crisis in the Irish Banking System. some Irish banks began pursuing a policy of ‘relationship banking’. loans  to  a  limited  number  of  entrepreneurs  operating  in  the  riskier  parts  of  the  property  market. with little apparent realisation of the attendant  risks. 2011.  consultants.  Irish lending grew so fast that it outpaced growth in domestic deposits. Misjudging Risk: Causes of the Systemic Banking Crisis in Ireland  4    .  In some banks this strategy  was consciously adopted by the board and was properly delimited10. Geary Institute.    These  developments  led  to  a  significant  change  in  the  process  of  lending  as  domestic  institutions. other Irish banks gradually lowered their credit standards. at SDA Bocconi School of Management.    In  an  environment  where  the  supply  of  credit  available  exceeded  good  quality  loan  demand.Managing People in Organizations.  banks  relaxed  their  lending  standards.

 macroeconomic and structural – interacted  to cause Ireland’s banking crisis and  solvency. ‘Dr Alan Ahearne: Debt still a huge challenge despite our foreign assets’.Managing People in Organizations. 2010. 2011  16  See appendix 3 for a timeline of events related to the Irish banking crisis  5    .ie/opinion/analysis/dr‐alan‐ahearne‐debt‐still‐a‐huge‐challenge‐despite‐our‐ foreign‐assets‐26830196.   Official  policies  and  bank  governance  failings  seriously  exacerbated  Ireland's  credit  and  property  boom and depleted its fiscal and banking buffers when the crisis struck13.    In  the  face  of  the  impending  collapse  of  the  domestic  banking  sector  in  late  Taught by Dino Ruta Cataldo. September 2008.html  13 RTE News. at a panicked all‐night meeting. 414-084-1 and banks mainly used inflows of money from abroad to fund the domestic property market12.  However. Order ref F286353. when the world's inter‐bank market froze during the  Purchased for use on the MBA42 . the Irish government gave a blanket guarantee not  only to depositors but to all bond‐holders of the six main domestic financial institutions.8bn15.     However. Almost  Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F286353 half of these losses were attributable to a single bank. accessed at‐banks2/  14 Regling K. Anglo Irish Bank. from 13-Dec-2016 to 13-Jun-2017.  over  the  following  two  years  the  agency  downgraded  Ireland’s  Banking  Industry  Country  Risk  Assessment  (Bicra)  three  times. at SDA Bocconi School of Management. June 2010. Irish banks found themselves saddled with two major problems: liquidity  Usage permitted only within these parameters otherwise contact info@thecasecentre. 2012. and Watson.  ‘Regling‐Watson: Government policy exacerbated crisis’. which (along with another of  the  top  six  lending  institutions)  was  re‐titled  as  the  Irish  Bank  Resolution  Corporation  Limited  (IBRC)16.     The Irish Banking Crisis  Indeed.     In 2008.rte.  leaving  Ireland  languishing  in  group                                                               12 Irish Independent. This group includes those countries considered by S&P to have the strongest banking  systems  in  the  world.  The cost to  the taxpayers of bank recapitalization was eventually estimated at approximately €62. M.independent. many different factors – external and domestic. 2007‐2008 financial crisis. Most of the remaining losses were incurred by two of the nation’s older banks. A Preliminary Report on The Sources of Ireland’s Banking Crisis  15  Brian Lenihan. accessed  at   http://www. Ireland was ranked alongside Canada and Sweden in group one of Standard & Poor’s (S&P)  credit ranking. Minister for Finance.

 January 2010.rte.000  staff  (94%  full‐time  and  6%  part‐ time)  with  a  breakdown  of  42%  male  and  58%  female  workers.                                                               17 RTE News. Macro Financial Review.     Beechers Bank  Beechers Bank is a long established Irish bank operating in business and retail banking in the home  and  international came under extreme and sustained pressure not to reverse the bank guarantee19.  The  strength  of  Ireland’s  banking  system  as  of  February  2010  ranked  on  a  par  with  that  of  South Korea.      The collapse of the banking system caused confidence in the Irish economy to plummet. One big imperative of  Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F286353 the Irish Parliament was to favour small business lending. 2011  20  Central Bank of Ireland. 2012  6    . Ireland was  forced to enter an EU‐IMF loan programme in November 2010. from 13-Dec-2016 to 13-Jun-2017. the Irish financial sector liabilities for the European banking system meant that the Irish government  Usage permitted only within these parameters otherwise contact info@thecasecentre.rte. By then. ‘S&P raises banks' problem loans estimate’ accessed April 2011  http://www. ‘S&P raises banks' problem loans estimate’ accessed April 2011  http://www.  Share  prices  in  the  banks  plummeted  by  an  average of 95% between May 2007 and April 2010. at SDA Bocconi School of Management.  The newly imposed ownership stake of the Irish government in the main banks meant that  Educational material supplied by The Case Centre diplomats were increasingly ‘calling the shots’ to banking top management. the systemic implications of  Purchased for use on the MBA42 . commercial.Managing People in Organizations. The credit ratings of four of the six Irish banks were also  cut  by  S&P18. of the failed banks were nationalized and Irish taxpayers were saddled with the crushing burden of‐banks/  19  Beesley. industrial and agricultural sectors. January 2010. Czech Republic and Slovakia.  Beechers  bank  provides  a  broad  range of financial services in Ireland to the‐banks/    18  RTE News. The acceptance rate for SME loans fell from 97 per cent in 2007  to 53 per cent in 201020.    The  stock  market  reflected  this  reality. The private debts  Taught by Dino Ruta Cataldo.    In  2010.  Policy makers set SME lending targets for  Irish banks but lobby groups for the small business sector continued to complain that many of their  members were being refused loans.  the  bank  employed  20. 414-084-1 four17. Order ref F286353.

  Beechers Bank’s exposure on the international market front was also quite  extensive  Educational material supplied by The Case Centre and  therefore  suffered  from  the  global  recession.  compared  to  a  high  of  18euro  four  years  earlier.  instalment  credit.  In some instances property developers had declared  Taught by Dino Ruta Cataldo.  foreign  exchange  facilities.    The  unit. The annual revenue of the organization in 2007  was €2. the small business lending unit dealt with loan applications with a  7    .    In  April  2010. international asset  financing.  Beechers  bank  was  particularly  exposed  in  the  banking  crisis  due  to  the  significant  amount  of  Usage permitted only within these parameters otherwise contact info@thecasecentre. Australia and the United States.  leasing.Managing People in Organizations. Ireland’s capital city and primarily serves the domestic market but also provides services in France.  Beechers  Bank’s  share  price  was  Copyright encoded A76HM-JUJ9K-PJMN9I running  at funding it had granted to property developers. from 13-Dec-2016 to 13-Jun-2017. 414-084-1 These include checking and deposit services.  especially  among  the  lower  ranking  staff.    The  bank  had  received  two  Order reference F286353 significant capital investment injections from the Irish government since November 2008. mortgages. term loans.   Purchased for use on the MBA42 . overdrafts.  interest  and  exchange  rate  hedging  instruments. Order ref F286353. the senior management team at  BB  remained  unchanged.  debt  financing. Their  job was to make the final decision on all loan applications which had been forwarded by the various  bank  branches  all  around  the  country. When it first opened.  executor  and  trustee  services. mainly underwriters.  dealt  with  loans  to  smaller  businesses.    All  salary  increases  and  performance bonuses were on hold until further notice.     Beechers Bank Small Business Lending Unit  The small business lending unit at Beechers employed around 40 people.  Beechers  had  also  issued  an  internal  recruitment  freeze  and  rumours  were  running  that  large  scale  redundancies  were  inevitable.  set  up  in  2002.    Lower  echelons  of  management  and  front  line  employees  were  disgruntled with the generous salaries that the directors continued to receive. Germany. at SDA Bocconi School of Management.5million but fell to just over €1million by 2010. The bank is headquartered in Dublin. themselves bankrupt and banks were left with empty newly built housing estates where no houses  were selling.  While many top executives in Irish banks  were being criticized for the role they played in the economic crisis.

      Pay and Reward  As  a  long  term  employee  at  the  bank. 414-084-1 ceiling of 50.  Caroline had always tried  her best to meet the group’s strategic lending targets. at SDA Bocconi School of Management.  saw this ceiling rise to 250. Caroline’s salary increases                                                               21  See appendix 1 for a brief career resumé  8    .    At  18.       Purchased for use on the MBA42 . Caroline Carr  Usage permitted only within these parameters otherwise contact info@thecasecentre.    The  bank  matched  her  monthly  pension  contributions (a regime available only to those who had been with the company for more 20 years).  Caroline  had  worked  her  way  up  from  an  entry  level  banking  clerk  to  her  current  position. 000euro.  Head  of  Small  Business  Banking. the success of the department and the advent of the Celtic Tiger.   After 25 years with the company. from 13-Dec-2016 to 13-Jun-2017.    She  advanced  through  the  ranks  at  branch  level  before  accepting a managerial position in the more centralized business banking services. Caroline was awarded a gold watch for her service and in 2006 was  rewarded for her team’s outstanding performance with a generous financial bonus.  Caroline  was  entitled  to  30  days  holiday  a  year  and  also  benefited  from  Beechers  Bank  generous  pensions  plan. However. Caroline Carr set up and became the Head of the Small Business Lending Unit at Beechers Bank in  2002.  a  senior  manager  at  middle  Educational material supplied by The Case Centre management  level21.  Her hard work has not gone unrecognized. She prided herself on integrity and hard‐work  and always went that extra mile to train and develop her subordinates.  and  worked  hard  during  the  day  while  Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F286353 studying  for  her  banking  exams  at  night.  In line with the traditional conservative nature of Ireland’s banking sector.   Small and medium sized businesses (SMEs) had been  particularly affected by the economic crisis.  Caroline always  tried to operate as a fair but target driven manager.  She  reported  to  Stephen  Dunne.  Many cash starved businesses were failing to make their  agreed loan repayments to the bank or were looking for top‐up loans to help them over this difficult Taught by Dino Ruta Cataldo. 000euro by 2008.Managing People in Organizations. Order ref F286353.  Caroline  Carr  joined  the  bank.

  Caroline has a passion for outdoor life and organic  produce and was considering launching a small scale venture in ‘eco tourism’ off the Irish west coast  upon retirement. savings and pension to support herself. Caroline always chose to increase the amount of shares she  held  in  the  company. She considered taking a four day working week at the age of  Usage permitted only within these parameters otherwise contact info@thecasecentre. But the reason was simple: some loan  9    .  Caroline  has  not  received  a  salary  increase  since  2005.  despite  inflation. In 2005.    Her  performance  has  always  been  reviewed  on  an  annual  basis  by  way  of  formal  performance  appraisal  with  her  boss.   Educational material supplied by The Case Centre   Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F286353 In  April  2010  Caroline  is  48  years  of  age. top management at Beechers Bank set ambitious targets for  lending to small and medium sized enterprises (SMEs). Caroline  Purchased for use on the MBA42 .  Beechers  bank  have  instead  opted  to  lose  staff  through  natural  wastage  and  by  letting  larger  numbers  of  temporary and contract workers go.    Caroline  doesn’t  think  that  the  bank  will  offer  her  early  redundancy  as  she  thinks it would prove ‘too expensive’ for them to pay off long standing managers like her.  While  she  has  always  been  a  little  disappointed  with  her  salary.    Ultimately.  Beechers Bank wanted to build its reputation  as  the  first  port  of  call  for  small  business  lending.  By 2010. 55 and perhaps even retiring shortly afterwards.    Caroline  had  felt  under  increasing  pressure  to  justify why her department were not approving more loans.000euros. When given the opportunity. from 13-Dec-2016 to 13-Jun-2017. the value of Caroline’s shares had plummeted – while  she  once  held  a  potential  200.000euros  her  shares  were  now  reduced  to  about Taught by Dino Ruta Cataldo.  she  offset  this  disappointment  by  availing  of  the  banks  share  option  scheme.  Caroline  envisaged  using  these  shares  as  an  additional  ‘cushion’  which might allow her to retire early and pursue her passionate interest in sailing. rumours surfaced that the bank’s pension scheme was severely underfunded and more  employee contributions would be needed to shore up the short fall. Order ref F286353. at SDA Bocconi School of Management.  She planned to use her shares.Managing People in Organizations.  However.    Lending: Challenging work  In the boom years of the Irish economy. began thinking about her future plans.  Beechers  bank  is  implementing  a  pay  freeze  for  the  foreseeable  future.  In  March 2010. 414-084-1 over  the  years  have  been  between  1  and  5%.

thejournal.  It  seemed  to  Caroline  that  she  was  continually  defending  her  department’s  lending  decisions  while  the  actions  of  those  in  the  senior  ranks  –  those  who  had  relentlessly promoted ambitious lending targets during the boom times ‐ went unquestioned. Order ref F286353.                                                                   22 The Taught by Dino Ruta Cataldo.  However  the  Government  continued  to  push  top  management  to  support  and  help  Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F286353 small business.  When  Caroline  approached  her  own  immediate  boss.    No  senior  management  changes  were  made  in  Caroline’s  bank  subsequent  to  the  banking  crisis.  Caroline’s  motivation  levels  were  at  a  record  low.Managing People in Organizations.  Caroline and her team were under pressure from top management to approve loans  that  they  viewed  as  unviable  and  were  stressed  as  a  result.  They  were  witness  to  the  dire  financial  straits  of  individuals  and  businesses ‘over their heads’ in debt.  Newspaper publications revealed how some of the Irish Banking’s top managers continued to  receive  generous  bonuses22. business‐related  debt. 414-084-1 applications were just not     With the advent of the economic crisis.  to  discuss  the  situation  she  felt  like  she  was  being  fobbed‐off. at SDA Bocconi School of Management. December 2010. Non‐viable loan applications from the branches were growing  Educational material supplied by The Case Centre exponentially.  Caroline’s  department  dealt  with  more  and  more  struggling  businesses  on  a  day  to  day‐anglo‐irish‐staff‐were‐awarded‐bonuses‐in‐2010‐56359‐Dec2010/ 10    .    Caroline  has  always  tried  to  engage in responsible lending and advised her under‐writers to exercise good judgement and not be  swayed by branch managers’ sometimes persuasive arguments on behalf of their clients. many SMEs in Ireland struggle to repay loans which they had  Purchased for use on the MBA42 .  questionable  pricing  strategies  and  unrealistic  market  projections. committed  to  during  the  boom  years. Loan managers from the branches forwarded through applications  with  “strongly  recommend”  stamps  of  approval  which  were  based  on  semi‐secure  capital.    In  2010. ‘Five Anglo Irish staff were awarded bonuses in 2010’ accessed at  http://www.   Stephen  was  only  two  years  away  from  retirement  and  Caroline  suspected  that  he  didn’t  want  to  oppose  top management  policy  so  late  in  his  career.  Stephen  Dunne.    Business  people  were  experiencing  personal  as  well  as  Usage permitted only within these parameters otherwise contact info@thecasecentre. from 13-Dec-2016 to 13-Jun-2017.

themselves the victim of public insults.  The  entrepreneur  had  some  experience  in  the  tourism  industry  and  hoped  to  employ  a  staff  of  ten  individuals  to  help  run  the‐irish‐bank‐bailout‐cost  11    . ‘Anglo irish bailout to hit 30bn’.theguardian.  an  outraged  small  business  loan  applicant  went  public  with  a  loan  refusal  which Caroline’s unit had issued.  The entrepreneur.    Press  reports  of  the  failing  banking  sector  compounded  her  staff’s  fear  of  losing  their  jobs. a leading national newspaper. at SDA Bocconi School of Management.  Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F286353     The April 16th 2010 Newspaper Article  On  Friday  16th  2010. from 13-Dec-2016 to 13-Jun-2017. had proposed a business plan  to  open  a  new  boutique  style  hotel  in  the  heart  of  Dublin  city. 2010.    Whereas  Caroline’s  peers  previously  viewed  her  as  a  successful  business woman.  had  concluded.  she  immediately  pulled  the  lending  file  which  Barry. now she was often the butt of social jokes about the ‘mess’ that her ‘type’ had ‘got  Educational material supplied by The Case Centre the country into’. mixer  truck  with the words ‘Toxic Bank’ printed on its side being driven into the  gates of the Irish  Parliament23  (see  appendix  4).  000euros  had  been  refused  despite  his  collateral  of  over  150.Managing People in Organizations. accessed at  http://www.  The Irish Independent.  Caroline’s department had had the last word on the loan application: no.  One major high profile public protest resulted in a cement  Usage permitted only within these parameters otherwise contact info@thecasecentre.  Caroline’s team were all too aware of the lack of job opportunities in the financial sector in  Ireland due to the banking crisis and keenly felt the government pressure on Beechers bank to cut  costs. Order ref F286353.  ‘Bank‐bashing’  was  also  a  favorite  media  pastime  and  even  lower  level  bank  employees  found  Purchased for use on the MBA42 . 414-084-1 Caroline’s daily work had become a mixture of ‘firefighting’ – dealing with struggling small business  owners  .  Caroline  wholeheartedly  agreed  with  Barry’s  “decline”                                                               23 The Guardian. published a  damaging  article  outlining  how  an  entrepreneur’s  request  for  a  loan  of  300.000  euros  and  his  significant  previous  work  experience  related to the venture.  responding  to  harassed  branch  managers  who  were  questioning  one  of  her  team’s  decisions– and ‘handholding’ which consisted of reassuring and comforting stressed and overworked  staff.  one  of  her  most  experienced Taught by Dino Ruta Cataldo. a local Irish businessman. When Caroline saw  the  newspaper  article.

     John  told  Caroline  that  he  would  get  in  touch  with  the  communications  department  to  let  them  know top management’s position on this article.  meet  once  more  with  the  prospective  applicants  to  explain the reasons for the decision. Caroline received the call from the communications Taught by Dino Ruta Cataldo.  The  individual  had  almost  100.  The applicants’ previous experience consisted of having set up  and run a  Purchased for use on the MBA42 .  a  luxury  product  at  a  time  of  economic  hardship.   John insisted that Caroline’s  personnel  revisit  the  issue  and. 414-084-1 decision  and  noted  that  some  of  the  newspaper  facts  were  inaccurate. Caroline got a call from the Business Banking director.  The banks PR and  communication’s  arm  concurred  with  top  management  that  it  was  in  the  best  interest  of  the  company not to retaliate for fear of further negative publicity.    Caroline  calmly  and  clearly  explained  the  reasoning  for  the  loan  refusal  (insufficient  experience  in  the  particular  domain.  if  necessary. from 13-Dec-2016 to 13-Jun-2017.  The  venture was classified as an up‐market option.Managing People in Organizations. similar operation in Thailand  – a completely different customer profile and market scenario!  Usage permitted only within these parameters otherwise contact info@thecasecentre.  and  considerable doubts over the security of the entrepreneur’s capital). John Duffy.     Several hours later. at SDA Bocconi School of Management.     Monday April 19th 2010  On Monday April 19th. Caroline pressed the need to defend the “decline”  decision to the newspaper and present the bank’s point of view. John was a  Educational material supplied by The Case Centre member  of  the  top  management  team  and  he  demanded  that  she  explain  her  department’s  Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F286353 decision. Order ref F286353.  John Duffy rung off saying  that the  Head of Communications would be in touch with her later that morning.000euros  in  capital  but  the  capital  was  what  the  bank  termed  as  ‘insecure’  and  depended  on  property  leasing  –  an  extremely  volatile  income  source  given  the  current  economic  situation.   Caroline felt that her department’s  12    . where guests would pay premium prices for a luxury  hotel room in central Dublin ‐ something which the underwriter doubted would succeed in recession  time  Ireland  where  room  occupancy  rates  among  established  hotels  had  considerably  fallen  since  the economic downturn.

Usage permitted only within these parameters otherwise contact info@thecasecentre.  Caroline wonders what she should do…  Purchased for use on the MBA42 .  She now reflects on her current position and recognizes  that she no longer enjoys her job. as well as herself has become increasingly  difficult. Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F286353 13    .Managing People in Organizations. from 13-Dec-2016 to 13-Jun-2017. Order ref F286353.  Motivating her Taught by Dino Ruta Cataldo. 414-084-1 position  –  and  staff  morale  ‐  had  been  considerably  weakened  by  the  affair  and  she  felt  that  organizational support was severely lacking. at SDA Bocconi School of Management.

 cooking. overseeing a team of 25 loan  underwriters. at SDA Bocconi School of Management. 414-084-1 Appendix 1 Curriculum Vitae Caroline Carr   Education  1980 Leaving Certificate   1985 Banking Certificate  Purchased for use on the MBA42 . Work Experience  1980: Joined Beechers Bank: worked in all areas of branch banking. 1990 Banking Diploma    Usage permitted only within these parameters otherwise contact Taught by Dino Ruta Cataldo. gardening and outdoor activities. from 13-Dec-2016 to 13-Jun-2017.               14    . Order ref F286353. this ceiling has now  grown to 250k    Hobbies and Interests:  Sailing. cash keeping. customer service.  This  included  intensive  formal  training  as  well  as  work  experience  in  Beechers  credit  department which at the time approved/declined high value loan applications from branch network    1998 to 2001: Worked in city centre branches managing portfolios of high value business customers     2002: Set up Beechers centralised underwriting unit for business loan applications coming from  branch network    2002 to present: Head of Small Business Lending at Beechers Bank.Managing People in Organizations.  personal lending. foreign exchange    Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I 1995 to 1998: Selected to take part in pilot programme within Beechers to develop business lending  Order reference F286353 skills. The unit initially dealt with loan applications with a ceiling of 50k.

 Most of the remaining losses were incurred by two of the nation’s older  banks*.8bn. The  cost  to  the  taxpayers  of  bank  recapitalization  was  eventually  estimated  at  approximately  Usage permitted only within these parameters otherwise contact info@thecasecentre. assumed to be one of the older Irish banks which a) experienced  Educational material supplied by The Case Centre significant government intervention and b) was jointly responsible for half the losses €62. (along  with  another  of  the  top  six  lending  institutions)  was  re‐titled  as  the  Irish  Bank  Resolution  Corporation Limited (IBRC).  Anglo  Irish  Bank.  Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F286353 15    . Order ref F286353. *Beechers Bank is a fictive entity. from 13-Dec-2016 to 13-Jun-2017. 414-084-1 Appendix 2 Ireland’s Six Main Financial Institutions  Bank of Ireland  Allied Irish Banks  Anglo Irish Bank (‘Anglo’)  Irish Nationwide Building Society  Irish Life and Permanent  Educational Building Society Purchased for use on the MBA42 .  which  Taught by Dino Ruta Cataldo.  Almost  half  of  these  losses  were  attributable  to  a  single  bank.Managing People in Organizations. at SDA Bocconi School of Management.

Lenihan announces the creation of a "bad bank" to deal with the risky property loans of financial institutions. It manages to more than treble that record within two years. Amid international banking turmoil. ready to take assets worth a nominal €77bn at an average discount of 30pc. 29th May Ireland is forced to inject up to €4bn into Anglo after its loan book sours and drags the bank to a half-year loss of €4.html  http://news. It gets a Order reference F286353 25pc indirect stake in both at SDA Bocconi School of Management. September The cost of bailing out Ireland's stricken banking system rises to 45bn euro (£39bn).5bn. executive pay and mortgage arrears. December Government recapitalises Anglo Irish with €1. The National Asset Management Agency (NAMA) is established six months later.5bn into both AIB and Bank of Ireland. 414-084-1 Appendix 3 Ireland’s Banking Crisis: A Timeline24 Year Date Event 2008 30 September Ireland becomes the first eurozone country to slide into into third largest bank Anglo Irish Bank and nationalises the commercial lender amid fears it could collapse. Unemployment rate reaches 11% . 7th April The government unveils its second budget in six months to deal with a rapidly contracting economy. the Irish government announces a €400bn guarantee scheme covering the country's six main banks. Order ref F286353.                                                              24  Adapted from timelines compiled by The‐banking‐crisis‐timeline.   http://www.000 people take part in Dublin protest rally against government's handling of economic crisis. March Ireland loses its AAA debt rating as public finances deteriorate amid a deep recession. of €3. 10 February Irish Life & Permanent confirms it deposited €7bn in Anglo Irish in September 2008 to boost the balance sheet. Some BBC news and the People in Organizations.the highest since 1996. Anglo Irish shares plummet to just 12 cents Purchased for use on the MBA42 .uk/business/2012/aug/07/credit‐crunch‐boom‐bust‐timeline    16    . from 13-Dec-2016 to 13-Jun-2017. 2009 15 January Ireland abandons plans to inject € forcing IL&P's chief executive and two directors to resign Educational material supplied by The Case Centre 11 February Irish Government says it will inject €7bn into Bank of Ireland and Allied Irish in Copyright encoded A76HM-JUJ9K-PJMN9I return for guarantees on lending. pushing the country's budget deficit up to around a third of GDP. at the time the worst loss in Irish bank history.telegraph. The nationalisation of Anglo Irish Bank is followed by the State's first cash injections Usage permitted only within these parameters otherwise contact info@thecasecentre.stm Taught by Dino Ruta Cataldo.

NAMA buys a first batch of loans at an average discount of 47pc – requiring 30 March lenders to raise more capital to absorb losses than previously envisaged. doubling its state aid. as public anger builds with calls to "burn the bondholders". The central bank also demands that lenders hold a minimum 8pc of core Tier 1 Purchased for use on the MBA42 . December The government tops up an earlier €350m capital injection into EBS by pouring an extra €525m into the building society. This intensifies the austerity programme in the country. is Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I prohibited by an EU ruling from settling a coupon payment on the government's €3. Dublin puts another €2. in a bid to tackle a huge hole in Ireland's public finance. December A budget delivers savings of over €4bn.1bn of core tier 1 capital     17    . Order reference F286353 9th June The state's Bank of Ireland stake rises to 36pc after a €3bn capital raising. Ireland ruled out forcing holders of bank senior debt to take a hit. up from €22. 414-084-1 October Ireland votes in favour of the European Union's Lisbon Treaty in a new referendum. Dublin pumps another €8. As part of the package. It says it will take a majority stake in AIB November The government agrees an 85bn euro rescue package with the EU and the IMF. at SDA Bocconi School of Management. It sees Ireland take control of Irish Nationwide building society with a promised capital injection of €2. Prime Minister Brian Cowen signals junior bondholders at Ireland's top two banks should expect to share some of the pain.7bn capital injection. and tells AIB. the central bank estimates the final bill could be as high as €34. EBS and Bank of Ireland they need to raise even more capital. capital by the end of the year. and says it may need another €10bn. reaching the central bank's capital ratio target with six months to spare 30 September After weeks of speculation over how much Anglo will cost the state.5bn preference shareholding in cash. Greece is bailed out for the first time. after Eurozone finance ministers agree loans worth €110bn. from 13-Dec-2016 to 13-Jun-2017. the bank still needs a further €6.7bn into Irish Nationwide. taking over 16pc of the lender in lieu of a payment due on the 25pc indirect stake it held. Usage permitted only within these parameters otherwise contact info@thecasecentre. helping push Irish borrowing costs to euro lifetime highs. the government drafts an austerity programme entailing four years of tax rises and spending cuts. 2 May In a move that signals the start of the Eurozone crisis. Order ref F286353.7bn. having rejected it in a vote a year earlier.3bn into Anglo.3bn.Managing People in Organizations. Ireland effectively nationalises AIB with a €3. and sends hundreds of thousands of protesters to the streets 13th May The government takes an 18pc stake in AIB after it. As part of Ireland's €85bn IMF- EU bailout.3bn. The public service pension age rises to 66 from 65 2010 19 Feb The government takes its first direct stake in Bank of Ireland. giving it a 93pc holding once the bank completes the sale of its Polish interests to Spanish group Santander. like Bank of Taught by Dino Ruta Cataldo.

Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F286353     Appendix 4 parliament building in Dublin with "Toxic Bank Anglo" written on it.  Public Anger and ‘bank bashing’ : The cement mixer which was driven into the gate of Ireland's  414-084-1   18  Purchased for use on the MBA42 . from 13-Dec-2016 to . Usage permitted only within these parameters otherwise contact info@thecasecentre. Taught by Dino Ruta Cataldo. at SDA Bocconi School of Management. Order ref F286353.Managing People in Organizations.