Omne tulit punctum, qui miscuit utile dulci—Quintus Horatius Flaccus 1
This chapter examines the way in which a Japanese main bank develops its managerial capacity, from a practitioner's point of view. The author hopes this will help the reader to understand how bankers endeavour to enhance the quality of staff in their management of credit-risk control and business growth, and their long-term relationship with clients.
A commercial bank, as a licensed financial intermediary, receives deposits from the general public and lends money to credit-worthy corporate borrowers at a profit. The bank is, therefore, dealing with multiple tiers of clients, and its credibility and standing with the public needs an appropriate infrastructure, both 'hard' and 'soft', for effective operation. The establishment of a branch network and a computerized accounting system may be the 'hard' aspects of banking infrastructure; the collection of information as well as the application of technology, know-how, credit appraisal and consulting are the 'soft' elements. All these resources—credibility, money, hard and soft features—need to be organized by bank management to meet the requirements of all clients and changes in the business environment. Banking is primarily a service industry and ultimately its resources or strengths depend solely on its employees. Indeed, accountability, quality, profitability and diversity in banking can be achieved and facilitated only by building up the competitive managerial capacity of bank staff.
Banking, as a licensed enterprise, must also comply with economic and social objectives on three dimensions. At the micro level, its business must be sustainable and competitive while maximizing profits, protecting depositors and fostering firms with good prospects. At the system level, its operational structure must ensure accountability in its functions, improve efficiency in resource allocation, minimize risks in its implementation, and promote credibility in its information services. At the macro level, it must be able to respond flexibly to changes of economic climate within professional rules, fulfilling social expectations, and conforming to economic policy targets.