Many banks have a formal or informal expectation that certain decisions need to be unanimous. We often see this in credit committees, strategic planning sessions, hiring decisions and operational moves. If you find your bank committees often achieving votes where 100% of the members agree, chances are you have a flawed system. While unanimity in decision making seems like a positive attribute, we will show you how it counterintuitively leads to more risk, not less.
Tag: Loan Approval
When it comes to loan authority structure, six banks will do it six different ways. Loan authority is granted from a bank’s Board of Directors and gives each credit line position a certain amount of lending authority to approve the loan. While a front-line loan officer may have $500k in authority, their boss, the Chief Credit Officer, may have $5 million. How your bank handles loan approvals can have a profound influence on your bank’s performance. Get the loan approval process wrong and find that your bank is not only taking on too much risk, but driving up costs.