PROFILE OF UNION BANK LIMITED

UNION BANK UNDER OLD MANAGEMENT:

Union Bank Limited is a locally incorporated private bank operating in Pakistan since 1991. In September 1999 the principal ownership of the bank was transferred from The Naseem Sehgal Group to a foreign investor from South Africa, who purchased 49% of the shares of the bank with remaining 51% shares held by the general public. A senior management team comprising of reputed professionals having prior managerial experience with premier multinational banks was placed to manage the bank.

 

 

UNION BANK LIMITED UNDER NEW MANAGEMENT:

 

Since the take over by the new management, in August 1999, Union Bank Limited, has been going through a series of structural & financial changes. The main objective behind those changes was to make the bank ready to face today’s dynamic economic environment & transforming Union Bank limited in to a major player in domestic financial industry.

 

 

ACCOMPLISHMENTS OF NEW MANAGEMENT:

 

 

FOCUS ON CORPORATE BANKING:

Under the new management, in August 1999, Union Bank Limited has expanded its services & restructured its functional basis by providing a wide array of financial services and products to large and medium sized blue chip corporate.

 

TAKE OVER FROM BANK OF AMERICA:

In order to take advantage of the paradigm shifts in the local banking industry and the operating strategies of foreign banks in Pakistan, Union Bank limited acquired Bank of America franchise in Pakistan. Due to this acquisition the bank has been able to attain experience & competent, staff state of the art technology, well-developed systems and procedures. The acquisition has added a new dimension to Union Bank’s business & has largely enhanced its corporate image in the market and expanded the customer base.

 

MISSION STATEMENT

“ To be the premier bank, responsive to the needs of our target market customers, recognized for consistently superior service quality & innovative products, thereby delivering superior value to our stock holders.”

 

According to the top management, an organization should be absolutely clear about the core values that constitute the foundation stories to the achievement of their mission.

 

The core values of Union Bank Limited are:

• Humanity
• Integrity
• Meritocracy
• Innovation
• Team work.

 

DEPARTMENTS

To achieve success in the banking industry and offer its customers superior quality service Union Bank Limited has been structured in to six departments namely:

• Corporate banking
• Consumer banking
• Risk management
• Treasury
• Financial institutions
• Human resource
• IT dept

 

THE NEW MANAGEMENT & FUTURE GOALS:

Since the take over by the new management the efficiency of union bank has been greatly enhanced and the management wants to focus essentially on the following key business segments,

• Corporate & leasing,
• Small & Medium enterprise,
• Consumer banking.

 

CORPORATE & LEASING:

In this critical segment the bank will be expanding the reach to book all major names and enhance their relationships with existing customers. The bank will also leverage its unique leasing company subsidiary capabilities by cross-selling and cementing their relationships.

 

SMALL & MEDIUM ENTERPRISE:

This segment holds a lot of potential for the bank and it is strategically placed because of its wide distribution to rapidly expand its presence amongst the small and medium enterprises. Union Bank also holds a strong enterprise base in this segment for the last decade.

 

CONSUMER BANKING:

General innovative products and services will be launched. Consumer assets, cards and liabilities while rapidly expanding the branch network and serving the clientele via remote banking initiatives. According to the top management state of the art technology and world class treasury and risk management will support all the above initiatives.

 

EMPLOYEE TRAINING AND DEVELOPMENT:

In order to facilitate employees learning of job related behaviors Union Bank, invests heavily in the training and development of its work force. It employs several training methods such as;

• Orientation training
• Class room training
• Programmed instruction
• Conferences

Training workshops and seminars related to employee performance are held at regular intervals to polish the work skills of the employees. Based on the performance of employees in their specific departments, individuals are sent for training programs, which facilitates their understanding of the work procedures in order to enable them to be more productive towards the organization.

Union Bank Limited sets aside a yearly training budget and experiments with a variety of training approaches so that it retains the best people. Amongst the new training approaches cross training and integrative learning are being used to reinforce effective team work habits and enable the organization to adjust quickly to change in staffing needs.

 

PERFORMANCE APPRAISAL:

The success of Union Bank Limited lies in its ability to recruit trained and keep first class employees. If the human resource management is not effective organization growth will be restricted and performance will continue to suffer. Another technique used by the human resource department for developing an effective work force is performance appraisal. During the appraisal process the managers gauge performance and provide feed back and praise/admonish the employees. Any areas that need improvement are signified to the employee so that they can use this information to change their job performance.

The performance appraisal system forms the basis of promotion and compensation as the employee gains higher level skills and intellect the monitory benefits provided to them increase.

 

COMPENSATION:

“The compensation and promotion of top performance will be clearly differentiated from the average performers there by creating the incentive for all staff to endeavor towards becoming top performers.”

 

This statement clearly highlights the compensation and promotion strategy of Union Bank Limited. Compensation is necessary for the maintenance of the work force and also for the effective employee performance. At Union Bank Limited pay for performance system are in vogue. These compensation tactics are designed to stimulate employee performance and use a merit pay system rather than a system based on seniority. Employees who achieve their stated goals with in the specified times are rewarded monetary and non monetary rewards so that they are motivated to excel in their specified fields.

Recently Union Bank Limited awarded one of its corporate vice presidents, with cash reward of Rs. 300,000 for achieving the target of bringing accounts amounting to Rs. 10 million. Another employee was given a membership of Creek Club as a reward for his high performance. The management at Union Bank Limited comprising of seasoned professionals in the fields of banking and finance encourage a culture of innovation. Their vision is to provide the clients with complete banking solutions. Realizing the mission, Union Bank Limited recently acquired Bank of America’s operations in Pakistan while enhancing its customer base and diversifying its portfolios.

 

Network Features:

• Several servers
• Star topology
• Input / output devices attached
• Each server connected with one printer one at serial port and another at parallel port
• Specialix DG Board installed
• Interface cards with 8 connectors
• Connectors consists of I/O slots
• Slots are connected to terminals

 

CHARACTERSTICS OF UNIBANK MIS SYSTEM:

 

Simple to Operate:

The UNION BANK System is simple to follow and operate. Wide use of screen displays enables the operator to process each step easily. Transactions are keyed in on terminals with the help of prompts and formats displayed on the screen.

 

Flexibility:

It can be installed in different financial institutions to meet varying requirements. It can be used in on-line as well as off-line mode.

 

Multi-screen Input & Inquiry:

The system allows data input and account inquiry from multiple terminals. The numbers of terminals are determined by the size of the branch. Terminals are usually placed in different departments of the branch to stagger transaction entry activity.

 

 

 

Environment:

Installation of UNION BANK system in mechanized branch results in saving of space, as the ledger card posting machines are no longer required. The computer terminals do not generate any noise and help improve the general branch environment.

 

Generation of Accounting Entries:

Many accounting entries are generated automatically by the System. This reduces the work to be done by the staff of the branch.

 

System Control:

UNIX shells incorporating operational commands have been devised in such a way that effective control can be exercised on the operation of the system. Back-office processing takes place with minimum intervention by the operator and also ensuring execution of various programs in their correct sequence and with proper files. In the event of computer or power failure, the operator is provided information necessary to recover files to their correct position.

 

Profit /Mark-up/Interest Computation:

The system looks after all requirements of the bank branch to ensure accurate computation and application of profit/mark-up/interest.

 

Exception Reporting:

Management reports highlighting exceptions of various kinds are incorporated in the System to enable the management to exercise effective control over the branch operation.

 

 

Security and Data Integrity:

The System uses security procedures such as identity codes; confidential passwords and authority levels to control access to the System and to maintain file security. Each security is allocated to a department of the branch and is normally allowed access to the data of that department only. Input data is validated at the time of entry that ensures that the data accepted by the system is correct. Certain transactions need to be authenticated by an officer with a high level of authority.

 

For additional data security, account balances are encrypted on computer files. For security the System allows pre-specified number of minutes, for complete a transaction on his/her workstation before logging him/her out. This protects the System from unauthorized access from an unattended workstation left in a signed on status mistakenly by a bonafide user.

 

Time Saving:

UNION BANK System introduces considerable efficiency in accounting and information processing activities of the branch. By taking over certain routine functions, it frees branch personnel to attend to more important activities. Implementation of the System usually enables the branch to expand its business without additional workforce.

 

Back-up Procedures:

The software design has taken into consideration the possibility of serious computer breakdown. Procedures have been devised to keep the latest summarized position of all accounts available in computer printed reports. In the unlikely event of a prolonged computer breakdown, the branch can continue its operations by using these printouts.

 

Usage according to levels:

One of the main characteristics of UNION BANK is that it is developed for all levels i.e. for:

 

Low level

For input of daily routine banking transactions below Rs15000.

 

Managerial level

For transactions above Rs10000 managerial level authorization is required and detailed customer information is also available at this level.

 

Strategic level

All sensitive data, which is password protected, is available at this level for strategic purposes.

• Using UNION BANK ; input from user initial
• Type in your login and password
• Use the UNIX command to determine the type of terminal you are using
• Get status of current of current events

 

Transaction entry during banking hours

Execute the start of day screens and enter the various requirements

Display ‘select transaction type’ screen for your transaction entry

• Enter transactions
• Open new accounts
• Addition/ amendments of customer records
• Display today’s transactions
• Display/print customer account statements
• Add/delete records
• Inactivate/reactivate record

 

Processing at the end of the day (after banking hours)

• Generation of automatic accounting entries
• Customer account file update
• General ledger file update
• Printing of Statement of affairs
• Printing of other reports
• Exit from the main menu
• Correctly log of the system

 

Main procedure:

For transaction entry, screen 1(Sample) SELECT TRANSACTION TYPE is displayed and the required function can be selected by entering the appropriate code displayed against each function.

 

The main objective of the on-line program is to accept entry of the financial and non-financial transactions from the terminal. The selection menu displayed in screen 1

Includes codes for financial transactions and customer accounts maintenance transactions in addition to the to the account inquiry and transaction display features. As a general rule the on-line program uses the lower half of the screen for entry of transactions while the upper half is used for customer /GL information whenever a transaction is being entered into it.  Any system error or messages are displayed at the lower end of the screen.

 

In supervisory mode, screen 2 allows the supervisor to select the required function.

 

ONGOING OPERATION (During Business Day)

The daily processing of the UNION BANK System consists of two main segments:

• On –line Processing
• End –of –day processing
• On-Line-Program

 

The On-Line-Program updates all transactions entered in real time. As a result, on-line inquiries always reflect the latest position. This program remains available during the business hours of a bank. After that it is kept on till all the departments have completed their entries for the day. This program is used to:

• Enter all types of transactions
• Reverse/ correct erroneous transaction entries
• Open accounts
• Close / freeze accounts
• Re- open / reactivate accounts
• Mature term deposit accounts
• Record/ change overdraft limits and drawing power
• Issue/ cancel/ stop / release checks
• Record/release block amounts
• Supervise financial transactions(with option to verify by re-keying entries)
• Display account detail and balances
• Display or print transactions entered during the day
• Display grouped accounts
• Maintenance of customer account static data
• Display / print statement of accounts

 

Transaction balancing procedure

When the entry of the financial transactions for the day is complete, the transaction balancing procedure has to be undertaken, the transaction display/print feature of the on-line program is helpful in this activity especially for balancing cash, clearing and transfer delivery transactions.

 

Other on-line facilities

 

Customer and General Ledger Statements

These statements can be printed or displayed, from the beginning of the 12month period prior to the current half-year.

 

Password maintenance

Only those personnel with the proper clearance i.e. valid identification codes and passwords can use the system. The manager has the power to add, amend or delete users to the system. Users also change their passwords within a specified period to avoid being time-barred.

 

Manager supervision

As an additional security measure, when the computer system is shut down for the day, the system automatically captures the image of all UNION BANK files. The next day the contents of UNION BANK files are crosschecked against the image before the posting of transactions is initiated.

 

Head Office (H.O.) extract

All transactions entered in the branch at the H.O. can be printed to a report called the H.O. extract. Besides the usual transaction information additional information can also be entered using the Banking option.

 

Clearing/transfer delivery schedule

The system allows entry of the outward Clearing/ Transfer delivery transactions so that register and bank-wise schedule can be printed.

 

Salary posting

This option enables salary transactions (output of payroll systems) to be made available as on-line banking transactions for posting to their relevant accounts.

 

Alpha index

An alpha index is created by the system to be able to retrieve Customer Accounts on the basis of the first, middle and the last names. This option searches and displays all selected accounts.

 

FDD & Traveler Checks inquiry

An inquiry and update of all reported lost FDD’s and traveler Checks is available through this option.

 

 

Customer Account non-Financial Display prints

All non-financial information regarding the Customer Accounts can be displayed on the screen or printed for reference purposes.

 

End- of –day processing

End- of –day processing begins when the on-line program has been terminated and the operator has ensured that the transactions entered are complete, supervised and balanced and the manager ‘s supervision has been successfully completed. This option is simply selected through the Back- office menu and certain steps are run automatically which update various files with the day’s input, produce reports and perform other tasks. Some important steps/reports are listed below:

• Daily Customer/ General ledger accounts movements list
• Printing override reports
• Generation of contra and other accounting entries

 

• Accrual/ capitalization of interest
• Printing of exception reports
• Transfer register
• O. extract
• Clearing schedule
• Customer, General Ledger and History file update
• Printing of the Statement of Affairs
• General Ledger & Subsidiary ledger Printing ( Assets and Liabilities/ Income and Expenditures)
• Ledger of Month-To-Date Moved accounts
• Printing of Customer Account Statements

 

 

End- of-period processing

The end-of –period processing includes all steps run weekly, monthly, quarterly, half yearly and yearly depending upon the option selected by the user. The following major steps are run:

• Compulsory deduction of Zakat, excise duty and incidental charges
• Printing of customer account statement
• Capitalization \ accrual of interest
• Reports regarding interest
• Half yearly transaction ledger
• Product report
• Statement of loan and overdraft
• Statement of provisional income \ expenditure and profit \ loss
• Creation of files at half-yearly closing
• Creation and initialization of files at yearly closing
• Central bank reports

 

CONCLUSION:

The take over of Bank of America was a lever for the introduction of major changes in Union Bank Limited which brought significant business benefits to the organization. A new management style & culture was developed and the right people were put to the right job. The take over provided a rationale for performance, managing & measuring the performance of the business & the success of the integration process following the take over. Also it provided the opportunity of doing things differently while adding value to the business. Excellent services are being delivered to the clients while providing rewards to all the employees.