MELLONS BANK

RESTRUCTURING

DESCRIBE THE BACKGROUND CONTEXT

ON THE NEED FOR STRATEGIC
TURNAROUND OF THE BANK
Rapid growth and concentration of credit portfolio in strained areas
of economy.
First ever loss of $65 million with future loss provision of $175
million
About to announce loss - $566 million with provisions of $533
million

DESCRIBE THE BACKGROUND CONTEXT

ON THE NEED FOR STRATEGIC
TURNAROUND OF THE BANK
Destabilizing credit losses
Excessive operating expenses with inadequate controls
Basic lack of focus on profitability and misunderstanding of what
the numbers actually meant
Management team not prepared to recognize or trained to manage
problems, especially problem credits.

WHAT ARE THE VARIOUS STAGES OF

MANAGEMENT ACTIONS TAKEN TO
ACHIEVE TURNAROUND ?
Primary Steps:
Stabilizing the bank by implementing a plan that consisted of basic
tools to control outflow.
Stop the credit losses by looking at the credit portfolio in minutiae.
Preserve cash flow by reducing operational expenses and improving
recovery.

WHAT ARE THE VARIOUS STAGES OF

MANAGEMENT ACTIONS TAKEN TO
ACHIEVE TURNAROUND ?
Bank Level Steps:
Change management group and culture
Empowering people
Encouraging employees to bring fresh and novel ideas
Improve internal processes
Dig deep into all bank operations to find areas of improvement

DISCUSS THE
RESTRUCTURING EXERCISE
TAKEN UP FOR
TURNAROUND
OF among
THE
BANK
Continuous and excellent communication
all involved
Raising Problems sooner than later
Frequent meetings and clear explanation of plan
Rebuild climate of trust and teamwork among senior management
Faster decisions with ability to rectify mistakes
Gain trust of board as well as regulators

DISCUSS THE
RESTRUCTURING EXERCISE
TAKEN UP FOR
TURNAROUND
OF THE BANK
Early reorganizing to send right message
Complete control over bank
New talent including human resources
Continuous performance reviews to ensure right direction
Focus on bottom line profitability
Monthly Budget reviews and rapid reporting using technology
Rigorous financial discipline

DISCUSS THE
RESTRUCTURING EXERCISE
TAKEN UP FOR
TURNAROUND
OF THE
No restrictive regulatory plan or intervention
based onBANK
trust
Refocusing bank for the future by resetting the vision and strategy
Publicly describing the new strategic direction
Moving from money-center bank to super-regional bank following a
balanced strategy, focusing on wholesale, middle-market and retail
banking and fee-service business
M&A of institutions aligned with core strength of Mellon i.e. a trust
and asset management company

DISCUSS THE
RESTRUCTURING EXERCISE
TAKEN UP FOR
TURNAROUND
OF aTHE
Recapitalizing the good bank by creating
bad bank BANK
Raise capital by issuing junk bonds by the GSNB
Transfer bad loans to GSNB and infuse capital into Mellon
Gave psychological lift to employees with the removal of the
distraction and time-intensive bad advances.

EVALUATE WHETHER THE PURSUED

RESTRUCTURING PLAN WOULD PUT THE
BANK IN SUSTAINABLE POSITION.
Bank has been put into a sustainable position after 5 years of
stabilizing
Significant growth following the restructuring
Bad bank fulfilled purpose ahead of time and returned all debt
Resetting of vision mission and goals aided in giving the bank new
direction
Lean performance and efficient bank
High focus on performance targets.

THANK YOU !