5902 signment final.pdf - Executive summary 2 Introduction 3 1 Overview 3 2 External and Internal Factor Analysis of BAC and WFC 4 2.1 Strategic focus

5902 signment final.pdf - Executive summary 2 Introduction...

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Executive summary .................................................................................................................... 2 Introduction ............................................................................................................................... 3 1. Overview ............................................................................................................................ 3 2. External and Internal Factor Analysis of BAC and WFC ..................................................... 4 2.1. Strategic focus and primary objectives for BAC ............................................................. 4 2. 2. Strategy focus and primary objectives for WFC ............................................................ 5 2.3. Major stakeholders and their key objectives for BAC .................................................... 5 2.4. Major stakeholders and their objectives for WFC ......................................................... 5 2.5. Internal and external factors analysis ............................................................................ 6 2.5.1. Internal analysis for BAC .......................................................................................... 6 2.5.2. External analysis for BAC ......................................................................................... 6 2.5.3. Internal analysis for WFC ......................................................................................... 7 2.5.4. External analysis for WFC ......................................................................................... 7 2.6. Comparison between the two companies ..................................................................... 7 3. Risk taxonomy and risk analysis of BAC and WFC ............................................................. 7 3.1 Risk taxonomy .................................................................................................................. 7 3.2 Comparison of two companies ........................................................................................ 8 3.3 The nature of the credit risk ............................................................................................ 9 3.4 Bow tie analysis .............................................................................................................. 10 3.5 The recommendation of credit risk management process ........................................... 10 (i) Establishing a sound credit risk management framework .......................................... 10 (ii) Identifying the risk ...................................................................................................... 10 (iii) Establishing credit assessment models and monitoring debtors’ credit scores ....... 11 Conclusion ................................................................................................................................ 13 Reference ................................................................................................................................. 14
2 Executive summary With the development of economy and technology, banking industry is also changing and developing with different challenges and opportunities. Moreover, banking industry plays an important role in people daily life. Therefore, this report provides an analysis and evaluation of the banking business operations, especially the external and internal factor analysis, risk taxonomy and risk analysis of the Bank of America Corporation (BAC) and the Wells Fargo & Company (WFC), which are two selected US exchange-listed companies in banking industry. Methods of analysis include accessing the corporate web pages, published analysis for companies’ annual report, specialist industry consultants such as Deloitte Risk Advisory and the findings under 10-K and 10-Q results. The research draws attention to how Bank of America Corporation and the Wells Fargo & Company participate in the banking industry and their performance including the business and geographic segments contribute to their profitability. In addition, this paper uses SWOT analytic method to identify the external and internal factors of two companies. According to the 10-K reports of these two corporations, a Risk Taxonomy and risk analysis is illustrated such as strategic, operational, financial and regulator risks. Further investigations of the risk analysis, the paper also compare the similarities and differences between the risk taxonomies in two companies and analysis credit risk in details. Based on the annual reports (2018) of companies, the report evaluates and concludes that both two companies are a major participant in banking industry which provides financial services in different strategies. The BAC is focusing on environmental, social and governance leadership while the WFC is mainly concentrate on customers’ service and stuff training to maximize profits. Besides, despite the different internal environment in two companies, they are all facing the similar external opportunities and threats. Particularly, credit risk is common between two companies and the recommendation discussed include:

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