Introduction
In a country, people carry out their activities using money that thus they acquire the money from financial institutions such as banks, insurance companies in the mortgage institutions, and other financial institutions since they are a secure place to store the customer’s money and also they provide services such as loans, advances service’s, withdrawal and deposit services. The differences and similarities between the National Commercial Bank (NCB) and Toronto Dominion banks were:
Operating and Management structure
The National Commercial Bank (NCB) was a Saudi Joint Stock Company that was formed pursuant of the cabinets Resolution No. 186 on 22 Dhul Qida 1417 H on 21st March 1997. The bank started as a partnership business, but on 1st July 1997, the business was converted into a company that is now known as the National Commercial Bank (Saudi Joint Stock Company). The bank now operates 260 branches such as Saudi Arabia and overseas branches such as Lebanon and Bahrain. It had employed over 5,126 staff as of 31st December 206 and its head office was in King Abdul Aziz, Street of Saudi Arabia.
The Toronto Dominion (TD) bank had its headquarters in Toronto, Canada and it had its offices located in most cities of the world. The bank was formerly an independent company, but in the year 2000, it merged with Canada Trust and TD’s existing retail division. It had employed over 52,800 employees. The Toronto bank merged with the Dominion bank to form the Toronto-Dominion bank in the year 1955. The bank carried out its activities in retail businesses and transparent risk-reward oriented wholesale bank activities. The bank had over 58,000 employees who were qualified and they carried out their activities effectively since the bank had been experiencing high returns in the previous years. The management of the bank established organizational structures that would define the various responsibilities of the personnel in the company so that they could perform their assigned duties appropriately.
Board of directors
The Board of directors of a National Commercial Bank (Saudi Arabian Joint Stock Company) was charged with the responsibility of running the affairs of the company.. The powers and responsibilities of the directors of the companies were statutory and contractual in nature. They were conferred and governed by the Company Law as well as the Corporate By-Laws as the Memorandum of Association and the Articles of Association. The bank’s directors were also supposed to adhere to the Banking Control Law that stated that the Bank’s relationships with its directors’ conduct and their ultimate responsibility were not supposed to contravene the regulation of the bank. According to Article 66 of the Company’s Act, it stated that the Board of Directors was supposed to be appointed by the ordinary general assembly but it also had the power to terminate the membership of the directors if they didn’t perform their activities as stated in the Company’s Act. The shares were non-transferable that is they could not be transferred to other third parties without the permission of other members of the company. The directors were not supposed to reveal the secrets of a company to third parties as this would have tarnished the reputation of the company.
The Toronto Dominion bank’s boards of directors were responsible for establishing the appropriate policies and procedures that would enable the board committees and individual directors to perform their activities effectively and efficiently. The bank was headed by a board of directors, which elected a chairman to oversee the implementation of all the policies and strategies of the company. The chairman was appointed every year and he carried out his activities independently so that he didn’t give biased strategies that would suit his own interests. The boards of directors were responsible for setting the culture of integrity and compliance to the members of the board so that they could perform their duties and responsibilities under written charters. The board of directors would employ candidates that were experienced and they would deliver high-quality work to the organization and to the customers. The role of the chairman of the board was to facilitate the functioning of the board and to maintain and enhance the good governance of the company. The roles and responsibilities of the chairman were usually written in the company’s charter so that the chairmen did not perform tasks for their own interests, but for the welfare of the company.
The directors were supposed to follow the Banks code of conduct and ethics which stated that they should not reveal the bank’s secrets to third parties as that would tarnish the reputation of the bank. They were also to meet the ethical and fiduciary standards of a company; understand the board’s needs so as to implement them into the organization so as to avoid being biased. The directors were also expected to have knowledge of the operations of the company such as risk issues, performance evaluation, and compensation and financial reporting so that they could be in a position to handle the issues that occurred instead of waiting for the experts to solve the problems of the organizations for them. The directors were also expected to attend, prepare and participate in meetings of the company because the shareholders who attended the meetings could contribute views, opinions that could contribute to the success of the organization.
The Bank Risk Management Processes and Internal Controls
The banks of Toronto Dominion (T.D) risk management processes and internal controls were annual reports, it was reported that the companies of Ontario and the United States performed poorly because they had not installed information technology that would enhance the proper recording of the bank’s books of accounts so as to ensure the productivity in the company which was closely monitored so that it could achieve its goals and objectives. The Toronto Dominion (TD) Canada Trust risk analysts spent so much time developing data reports such as the monthly reports for the executives that would help them help them measure the credit approval ratios and the other report was to provide data on credit delinquents of the company’s reports. The problem with the reports was the management a lot of time to prepare the reports, thus the managers were not in a position to report the current status of the business appropriately and accurately. The management of the company installed powerful software and hardware into the company so that it would solve the slow processing of the reports as this would cut down the cost of the expenses of the company. The software that was adopted was the Microsoft SQL server 2005 as it could support 64 bits and it could handle large volumes of information with low maintenance requirements. The introduction of the information system into the Toronto Dominion (T.D) bank resulted in the recording of good performance of the bank because the bank could access a vast amount of data required to analyze the performance of the company using a short time and also the amount of money for maintaining the system was minimal since the software could handle all risks with ease.
The internal controls of Toronto Dominion (TD) bank were designed and maintained to provide reasonable assurance that the financial records were kept in an accurate and orderly manner. The internal control systems were also to ensure that the assets were protected against getting damaged, lost, misuse or disposition and were kept properly so that they would be used in the future to carry out other activities of the company. The other internal controls that were installed into the banks were that it recruited qualified staff that would run the affairs of the organization.. The Toronto Dominion (TD) banks Chief Internal Auditor was charged with the responsibility of overseeing that the books of accounts were kept properly according to the Company’s Act. The auditor was assisted by the Audit and Risk management Committee so that they could identify the problems that were hindering the performance of a company. The Superintendent of the financial institutions of Canada was also charged with the responsibility of examining and inquiring into the affairs of the bank and also to assess the financial soundness of the bank so that to ensure it complied with the Company’s Act and it prepared its books of accounts properly.
The Saudi Arabian Monetary Agency was given the responsibility of overseeing the operations of the Risk management and internal control departments. The Saudi Banks according to the Saudi Arabia Monetary Agency they were supposed to appoint two external auditors from the international audit firms. It was reported that there were material weaknesses in the internal control systems thus the financial statements did not show a true and fair view of the financial statements this was a result of competition for hiring qualified personnel for preparing and reporting the financial statements according to the International Financial Reporting Standards (IFRS) and the United States Generally Accepted Accounting Principles (GAAP) And Securities And Exchange Commission. The National Commercial Banks or (Saudi Joint Stock Company) risk management process, the management of the Bank hired the corporate risk advisory group that would train its staff on how to implement strategies that would enable it to detect fraud in the organization such as the risk management strategies.
The Toronto Dominion (TD) Bank operated two call centers that were in Markham, Ontario, and Edmonton. The employees of these bank call centers answered inbound phone calls from the customers who were resident in both United States and Canada so that they could be offered the necessary services that they required; such as customer service. The objective of the call centers was to extend its services to the customers by responding to their accounts inquires, account transactions and to offer the Toronto Domino Waterhouse (TDW) financial products and services.
The Market Penetration
The Toronto Dominion (TD) bank market penetration was quite high because the time they took over the ownership of Toronto Dominion (TD) Bank north by 100% and the TD Waterhouse of United States of America to the Toronto Dominion (TD) Ameritrade platform the bank recorded huge sums of money that contributed to the profitability of the bank. The management of Toronto Dominion (TD) bank was committed to meeting the needs of the customers so as to increase its market share against its competitors. The bank also expanded its market share by using the multi-language ABM network so that it would serve all the customers who came from different communities so that they would understand the operations of the bank and hence appreciate the operations of the bank and thus increase the market share of the company. The bank had securities whose objective was to deliver high-quality earnings at a lower risk level than other wholesale banks, thus it was in a position to gain a high level of sales volume than other banks. In the year 2007 the bank recorded double earnings growth this was as a result of implementing the low-risk strategies. The market penetration of Toronto Dominion (TD) bank as a result of creating strong businesses that would ensure they were working together in order to ensure that the company achieved its goals and objectives. The bank’s employees’ goal was to ensure that the customers received the services they required since they were the determining factors of the success of the business since they would opt to use other banks to offer them the banking services that they required. The bank’s growth was attributed to privatizing the Toronto Dominion (TD) bank north and it also bought the Commerce Bancorp. It also carried out investment in the Toronto Dominion (TD) Ameritrade. In the year 2007, the businesses recorded double-digit earnings since it had implemented strategies that were low risks related, highly integrated, and were customer-focused. The total dividends per share increased by 19% to $2.11 in the year 2006. The bank’s shareholder return was at 13% this was a good indicator of the company’s good performance (152nd Annual Report. TD Bank 2007.)
The Regulatory Supervision and Reporting
The reporting system provides timely financial data and reports for all the departments of a company as well as for addressing the regulatory requirements of a company. When the Toronto Dominion (TD) bank and the Canada Trust merged to form the Toronto Dominion (TD) Canada Trust they both possessed their own reporting systems but after the merger, they formed a reporting system that would serve the interests of both companies. The reporting system was a simple functional structure that had three pillars that would enhance the good operation of the bank’s activities. The Toronto Dominion (TD) bank prepared its financial statement according to the Canadian Generally Accepted Accounting Principles (GAAP). The management of the company compared all the results of the company with those of the Generally Accepted Accounting Principles so that in case of any differences between the two, then the company reviewed its operations because it would be violating the Company’s Act if it did not follow the accounting procedures when preparing its books of accounts. The bank also used the Non-GAAP financial measures to assess the results of the business and its performance these are referred to as adjustable measures. The adjusted results were derived by removing the items of note net of income taxes from the reported results. The items of note were banks’ amortization of intangible assets that related to Canada Trust acquisitions, Toronto Dominion (TD) Banknorth Inc and Toronto Dominion (TD) Banknorth of Hudson United Bancorp, Interchange Financial services corporation amortization. The importance of the adjusted results was to provide a reader with a better understanding of how the management carried out the bank’s performance. The adjusted results and the Generally Accepted Accounting Principles (GAAP) would sometimes give totally different answers therefore it was important for the management to use one method in its preparation of its financial statements so that it would be in a position to determine the performance of the company over different financial periods and also determine the trend analysis of the company.
The Saudi Joint Stock Company prepared its financial statements according to the Accounting Standards of the statement institutions that were promulgated by the Saudi Arabian Monetary Agency (SAMA) and the International Financial Reporting Standards (IFRS). The bank also prepared its financial statements according to the Banking Control Law and the regulation for companies in the Kingdom of Saudi Arabia. The historical cost convention was used to measure the financial statement except for items such as financial assets and the liabilities that are held for trading, derivatives held at fair value through the income statement, and also for all the items of the banks in the financial statements that were held for sale. The Saudi Arabian currency was called Saudi Riyals (SR) and the financial information that was presented using this currency were usually rounded off to the nearest thousand so as to enhance the proper recording of the transactions of the company since the approximations enabled the management of the company to carry out their activities effectively.
The Banks Market Strategies
The Toronto Dominion (TD) banking strategy was that it wanted to develop strategies that would enable it to the biggest bank in the world that would provide services to the customers of Canada at affordable rates, the other strategy was for the bank to create a conducive environment for its operations, to sustain deliver top performance through doubling of earnings over a long period of time. The management of the bank also developed a strategy that would focus on ensuring that the bank grew in providing chequing services, account services, provide reasonable commercial and small business loans so that the volume of trade would increase and be in a better position to compete with its competitors. It also planned to acquire good-quality assets that would serve the services of the bank at a better level. The management of the bank also carried out market research of how it carried out its activities, in case there were any processes that were not properly implemented it would improve on them so as to increase the market share of the company.
The Saudi Joint Stock Company carried out trading activities that related to sales, positioning, and arbitrage. The bank carried out its sale activities by offering products to the customers so that they could transfer, modify, or reduce the current and future risks. The positioning activities involved managing the market risk positions with the objective of attaining profits using prices, rates or indices. The arbitrage activity involved setting price differentials between markets or products so as to record profits for the company.
The Products of the Bank
Toronto Dominion (TD) banks’ key products were personal banking, business banking, and insurance. The bank offered investment products such as the TD Waterhouse, TD mutual funds.TD Asset Management Inc (TDAM). The TD Ameritrade provided a full spectrum of services such as the leading active trader and long-term investor solutions It also offered discount brokerage, financial planning, and private client services so as to meet the needs of the retail customers through all stages of their investing lifecycles. The Canadian housing scheme was stable in the year 2007 because the demand for houses was high and their prices increased and this led to the growth of the housing sector.
The other product of Toronto Dominion (TD) bank was business banking which consisted of small business banking and merchant services. The bank also extended its operations to the rural areas where the managers served the customers of agri-business with banking needs. The insurance products were home and automobile coverage, life, and health insurance products, credit protection coverage on the Toronto Dominion products. Currently, the bank offers insurance cover to 500,000 customers using the TD life group cover and it only serves critically ill patients.
The Saudi Joint Stock Company offered a wide range of treasury products and services such as money market products and foreign exchange to the bank’s clients. The bank also offered deposit-taking products that were applied according to the Shariah rules and approved by the Shariah board. The bank offered a wide range of financial products and services through the following banks Canadian Personal and Commercial Banking, Wealth Management, Wholesale Banking and the United States, Personal and Commercial Banking.
The Banks Asset /Liability Management
TD bank asset/Liability diversification the usage of the assets of the bank increased by 6% due to the increased customer services by the bank. The bank was ranked as the second-largest asset manager because it had personnel who managed the resources of the company effectively hence enabling the company to perform its activities as was expected of it. The value of the assets also increased in the year 2007 because of the strengthening of the Canadian dollar. The management of the company followed the new financial instrument of the standards, which required the banks to diversify their investments in non-trading derivative market value; this factor contributed to the value of assets in the company. The assets that appreciated with time were goodwill, receivable, and other intangible assets, the privatization of the TD Bank North contributed to the increase in value of the assets of the company.
In Saudi Joint Stock Company the financial assets were recognized as impaired when the bank recorded losses and the losses had impacted the estimated cash flows of the financial asset. The assets of the company were sold at fair market values to the customers of the bank. The fair values of the assets recorded in the balance sheet were not different from the carrying values of the assets in the financial statements. The Saudi Joint Stock company provided products such as the non-interest-based banking product, which were approved and supervised by an independent Shariah Board that was established by the bank. The bank used International Accounting Standards 39 to classify the non-derivative financial assets that were fixed or that had determinable payments and the fixed maturity assets that were held to mature after a longer given period of time. The financial assets and liabilities were usually offset in the balance sheet as net value when there was a right to set off the assets and when the bank intended to settle the assets using net basis or realizable basis.
Loan/loss provisions and policies
The management of Toronto Dominion (TD) bank had invested in so many assets and it had borrowed so much money from the investment banks thus it had the problem of writing off the loans, the loans were later offset by the creditors because the Canadian dollar improved with time. The bank offered allowances for credit losses on the consolidated balance sheet so that they could manage the losses that were a result of specific and general allowance. The specific allowance was used to record the impaired loans that resulted from a loss that had been recorded at a lesser value than the recorded value it recorded using the discounting expected future cash flows. The allowances were used to reduce the book value of loans to the estimated realizable amounts in the business. The general allowance was used to recognize losses that the management estimated could occur during the preparation of the balance sheet and were not recorded as impaired costs.
The Saudi Joint Stock Company the loans were measured at a cost but as the value of the loans increased then they have measured them at fair values. The loans were not quoted in the active market at fair value but were recorded at a cost less the amount of loan that was written off and the provisions for impairments of the loans.
Competitive analysis
The Toronto Dominion (TD) bank faced stiff competition from the Canadian banks thus in order for it to compete effectively with its rivals it offered a complete package of solutions and its products were of high quality. It also offered its customers credit facilities so as to have a high market base and to retain the customer. The management of the company also sought professional advice so as to ensure it performed its activities effectively since the international expertise provided innovative solutions and ideas that would enhance the good performance of the company. The Saudi Joint Stock Company imposed risk management strategies into its system so as to avoid all types of risks that would affect the company’s performance such as credit risk which was a risk that occurred when one party did not perform their activities effectively, liquidity risk occurs when a bank does not meet funding requirements. The bank solved this problem by maintaining the appropriate, balance of cash equivalents and readily marketability securities.
In the businesses, banks were exposed to the challenges of risk as they tried to carry out their activities. The risks were strategic and legal risk, reputation risk and liquidity risk. The board of directors and the risk committees were the members of the department in the organization who were charged with the responsibility of managing risk in the organization. The risk departments monitored and reported on the risks that effected the operation and management of the company so that corrective actions would be taken to overcome the risks.
Off-balance sheet management
The management of the banks was involved in recording so many financial transactions that were not recorded on the consolidated balance sheet and were not recorded in amounts that differed from the contract or notional amounts. The good performance of the banks was as a result of good leadership position whereby the employees managed the banking hours properly by offering the customers the services that they required such as saving, withdrawing and depositing at convenient time and this led to the productivity of the company. The banks were also incurring heavy expenditure because they had invested in so many infrastructures which would serve the interests of customers so that the market base would increase.
According to the analysis of the performance of Toronto Dominion (TD) bank and National Commercial Bank (NCB) (Saudi Joint Stock Company) banks it was noted that the Toronto Dominion (TD) bank had set up good strategies than its competitor, it also had employed qualified personnel who ensured that the bank operated effectively and effectively so that the objectives of the bank would be achieved thus it performed since it recorded higher returns than the Saudi Joint Stock Company.
Works cited
152nd Annual Report. TD Bank 2007. (PDF).
Christopher M. Blanchard and Alfred B. Prados. Saudi Arabia: Terrorist Financing Issues. 2007. Web.
TD Canada Trust. TD Canada Trust Invests in Microsoft SQL Server 2005. Web.
Wlson, Rodney. Economic development in the Middle East. London; New York: Routledge, 1995.
National Commercial Bank (NCB) (Saudi Joint Stock Company) Annual Report 2006. (PDF).