Financial Risk Manager

Bank troubles continue and the industry turnaround is still over the horizon; troubled assets burden banks, while capital infusions and liquidation of assets remains difficult.The decline in the number of banks leaves less of a market for customers to move relationships if needed. Some believe that adding to the issue is the fact that there appears to be some disparity in how banks are handled by regulators. The reality is that many regulators have not seen times like this either; many of the seasoned examiners have moved on.

Some banks are unsure of what to do or how to do it. Some are taking a wait-and-see approach or are overwhelmed and don't see a way out. Realistically, there are only a few options if the bank's problems are highly concentrated in any industry or geography. Capital infusions, reducing troubled assets or shrinking the bank are all difficult in today's environment, but not impossible.

Banks in trouble have a challenge to balance the requirements of extra regulatory oversight and reporting while continuing to serve their solid customers. All banks must have a strong strategic and operating plan and troubled banks are no different. Priority must drive resource allocation. Key elements that cannot be overlooked are: