Evaluate your client company’s contingency plan
When I first read through the response given from Bank of New
Hampshire I was impressed. It’s smart of them to stress test their own
loan portfolios, and balance sheets. Bank of New Hampshire said, “We run
stress tests… to see how the bank would perform in various economic
scenarios”. I think they have the advantage in situations like this
compared to Graponne and Comptus because they can evaluate how the job
market is and run some numbers that could be similar to a downturn
trend. Also, when looking at their response we see the CAR ratio
scattered throughout. The loan loss reserves are a good example. What
Bank of New Hampshire is trying to do is cut costs. The week 7 and week
8 responses to the questions asked share very similar points, and it
showcases how Bank of New Hampshire is cautious about the future with a
supposed backup plan. I have nothing to add to the already existing
contingency plan, the only thing I would’ve added if it weren’t there
would be to run some sort of tests. But, Bank of New Hampshire has made
it clear that they run stress tests. I also think that Bank of New
Hampshire has it easier when it comes to building a contingency plan
when compared to Graponne and Comptus. # Business response to the
questionnaire {.tabset .tabset-fade}
Graponne
| Please, discuss your contingency plan for dealing with recession, if
you have one. |
Our contingency plan include:
- Tighter control of our inventory levels
- Managing our cash. Making sure we have enough liquid reserves to get
us through the downturn
- Limiting discretionary expenses. Including delaying intensive
capital type projects.
- Keeping our team members fully engaged
- Making sure we have available credit (to finance cars that are not
selling as well as lines to draw down for working capital).
|
Bank of New Hampshire
| Please, discuss your contingency plan for dealing with recession, if
you have one. |
As previously mentioned, we build loan loss reserves and carefully
monitor for signs of economic stress that may impact our business. We
have sources of emergency liquidity available, and other similar tools
to ensure the viability of the bank through a very severe downturn.
Furthermore, we stress test our loan portfolios and entire balance sheet
to determine how the bank would perform in various economic scenarios.
This allows us to determine is additional reserves, liquidity, etc. are
needed. |
Comptus
| Please, discuss your contingency plan for dealing with recession, if
you have one. |
We do not have a contingency plan for an extended recession. |