First presentation: CASE 1

Bill Ramsey is marketing director of a small public company which banks with you. He is 38 years old, married with two sons aged seven and nine. His current income is $140,000 per annum. When Bill took up his present job two years ago he moved his account to your branch. At that time he purchased a new house for $1,120,000 and as an exceptional matter in view of the connection, you granted him a mortgage of $800,000 which included the consolidation of a $75,000 line of credit he had run at his previous bank. You agreed this arrangement partly because he had received a large salary increase on starting the new job and on the basis that he kept his account in credit in future. Subsequently you agreed a line of credit limit of $20,000 to cover delays in receipt of his business expenses.

Bill's line of credit has been showing a steadily increasing trend and just before his last month's salary was received it stood at $36,000. You now receive a status enquiry on Bill which appears to relate to a Platinum Card with another bank, one of your competitors. You phone Bill and ask him to call to see you to discuss matters.

At the meeting Bill tells you he has applied for a $15,000 card limit at the other bank as he needs some leeway to meet school fees of $7,000 per scholastic year for his younger son who will shortly be joining his brother at a private school. In addition to this, Bill tells you that he and his wife have run up debts on various cards over the past two years totaling $30,000. His job is going well and he hopes to receive a 20% increase in the near future but, in view of his previous arrangement to keep his account in credit, he feels that you would be unsympathetic to a request to a request for increased facilities.

However as he banked with you for nearly two years, he would prefer to confine his borrowing to your bank. Bill therefore asks if you would be prepared to increase his line of credit to $100,000 (from $75,000), although he would prefer to top up his mortgage, ideally by $30,000. He believes his house is now worth $1,300,000. You are required to decide whether to roll over his existing banking facilities. Before the meeting, you carried out a brief check on Bill's account, which revealed:

(a)his net monthly salary is just over $10,000

(b)regular monthly payments: mortgage $5,000

(c)interest payments for last quarter amounted to $12,000

CASE 1 Recommended solution

Please follow this structure as this is what will be expected in the presentation.

FACTS OF THE CASE

Do not list any concerns here, that is in the next section and this is designed to be short not more than a couple of lines maximum.

CONCERNS

In this section unless it is a concern, do not list it here.

DECISION

As a self check ask students to go over CAMPARI as see whether they addressed all the issues. There is no particular order or where you are supposed to include every single letter on the mnemonic CAMPARI but they need to address each letter by the end of their answer. It is evident that the marks are in the Decision section, so they are allowed to use bullet points.