Banc One Corporation: Asset and Liability Management

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Case

Reference no. 9-294-079

Subject category: Finance, Accounting and Control

Authors: Benjamin C Esty (Harvard Business School); Peter Tufano (Harvard Business School)

Published by: Harvard Business Publishing

Originally published in: 1994

Version: 1 July 2008

Length: 29 pages

Data source: Field research

Topics: Corporate governance; Financial statements; Fixed income securities; Interest rates; Legal liability; Portfolio management; Risk management

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Abstract

Banc One's share price has been falling recently due to analyst and investor concern over the bank's heavy use of interest rate derivatives. Dick Lodge, chief investment officer in charge of the bank's investment and derivative portfolio, must recommend to the CEO a course of action to allay investors' fears and communicate to the market the reasons for Banc One's use of derivatives. The bank uses interest rate swaps to manage the sensitivity of its earnings to changes in interest rates and as attractive investment alternatives to conventional securities.

Location:

Ohio

Industry:

Banking and investment industry

Size:

USD4.3 billion revenues, 33,000 employees

Other setting(s):

1993