This case study focuses on the emergence of art finance, a way to provide liquidity to art collectors by structuring loans using works of art as collateral. Sayuri Ganepola, global managing director of Art Finance at Christie's, provides a view of art lending from Christie's perspective and describes Christie's competitive advantages in this new line of business. Ganepola has to decide whether to lend against a portfolio of art and what risks such a loan could entail, given her overall portfolio of art loans. Students receive information on the collateral and are asked to provide recommendations. The field-based case provides background on the history of Christie's, its businesses, and its art lending operations. The case also discusses the art market and its historical returns on investment. Students have the opportunity to consider art as collateral for a loan and to discuss the challenges of risk management in art lending. At the Darden School of Business, this case is taught in "Financial Institutions and Markets," a second-year MBA elective. It is ideally suited for a course on financial institutions, money and banking, and risk management.
The case describes the demise of Credit Suisse Group AG (Credit Suisse), along with Credit Suisse's history and its significance for global markets and Switzerland. The case examines key episodes during the past 15 years that point to risk-management lapses, weak corporate governance, and ineffective restructurings. The case also discusses Credit Suisse's financial performance, capital and liquidity metrics over time, and its CEOs' efforts to alter its course. Finally, the case describes the reaction of the Swiss regulators during the final hours, the forced merger of Credit Suisse with UBS Group AG (UBS), and the potential impact of a bankruptcy on global markets and Switzerland. Given Credit Suisse's status as one of 30 systemically important financial institutions (SIFIs) globally, its demise opens questions related to the efficacy of regulation after the global financial crisis (GFC), the role of regulators, and bank corporate governance. Ultimately, this case asks, "What are the lessons we can learn from Credit Suisse's demise?" in hopes that they won't be repeated.
On March 10, 2023, Silicon Valley Bank (SVB) went into receivership. At the time, it was the second-largest US bank failure in history. What happened? The case briefly describes the story of SVB, from its origin in the early 1980s to March 2023, and focuses on the events surrounding its demise. The case discusses in detail the issues that led to SVB's bankruptcy, in particular interest-rate risk, asset-liability management (ALM), inadequate stress testing, risk management more broadly, corporate governance, regulation, issues related to the bank's focus on venture capital (VC) and private equity (PE) loans, and its exposure to the technology sector. The case also describes the Fed's reaction after the bankruptcy. The SVB episode offers an important learning opportunity that touches many facets of a bank and its environment. It has several clear messages about bank management leadership. The case is well suited for a course on financial institutions, money and banking, and risk management. Ideally it would be positioned after credit, interest-rate, and liquidity risks have been covered, so that students have a better understanding of these concepts before they tackle this case; it could also be used as an introduction to the banking model, its key risks, and the role of the Federal Reserve. At Darden, it is taught in the second-year elective, "Financial Institutions and Markets."
This case examines a fictional hedge fund manager's decision about whether to maintain his fund's position in bitcoin. It provides an opportunity for students to develop an investment thesis for or against bitcoin, evaluate alternative ways to gain exposure to bitcoin, and consider bitcoin's economic function (e.g., as a currency or commodity). The case can be used in an MBA elective course on fintech, capital markets, or investments.
In July 2022, Celsius Network (Celsius), a cryptocurrency (crypto) network, filed for bankruptcy. Celsius was a "crypto bank" but often acted as a hedge fund. It was taking deposits in cryptos such as Bitcoin (BTC) and Ether (ETH), promising a sizeable yield to the depositors and then lending these out to institutional investors, or more aggressively to decentralized finance (DeFi) protocols which were promising an even higher yield (but with a higher risk, of course). The case examines the DeFi ecosystem, its key players, and discusses key building blocks such as stablecoins and their role in it. The case can be taught in a course on financial institutions, capital markets, or fintech.
On her first day as the new CEO of Citigroup Inc. (Citi), Jane Fraser announced Citi's commitment to net-zero greenhouse gas emissions (GHG) by 2050. The case examines the implications of such a decision, including the need to work both on Citi's own operations as well as help transition those of its clients. The case allows for an examination of the green bond market, and separately, the market of social bonds and sustainability-linked bonds. The case discusses the various principles and frameworks for green and social bonds and their potential benefits and risks.
This case follows a fictional hedge fund manager as she works to finalize an investment thesis on Comerica Incorporated to present to her manager, who is undecided as to whether the fund should buy (go long) or sell (short) the stock. Assessing Comerica's value and outlook is complex. She needs to have a view on Comerica's future earnings, which are clearly linked to the gravity and duration of the COVID-19 pandemic and the resiliency of the banking sector as a whole. This case is taught at Darden in a course on "Artificial Intelligence and the Future of Work"; it would also be well suited for in-person or online MBA courses in banking and financial markets, new technologies, or communication and crisis response.
Cyberattacks on corporations are an increasingly common phenomenon that imposes significant costs on shareholders, customers, and management. It is instrumental for corporations to both invest in appropriate precautionary security measures and have a comprehensive cybersecurity incident response plan (IRP), led by a skilled incident response team, that defines what procedures to follow. This fictional case is framed from the perspective of Ida Inglewood, the chief information security officer (CISO) of Abank, a midsized financial institution that has experienced a massive and unprecedented cyberattack in which $450 million of customer funds were stolen. The case begins with a 2:00 a.m. phone call in which the CISO informs Abank's CEO of the incident. Abank's IRP is activated, and the CISO provides a detailed report to the bank's management team, explaining the legal, regulatory, and financial implications of the cyberattack. The case culminates in the following critical decision: whether to restore full access to the deposits of Abank's customers at the beginning of the business day, or to keep operations closed until a full investigation of the cyberattack has been completed. This case is taught at Darden in a course on "Artificial Intelligence and the Future of Work"; it would also be well suited for in-person or online MBA courses in banking and financial markets, new technologies, or communication and crisis response.
In late October 2020, hedge fund analyst Maya Botti was evaluating the decision to vote for the proposed merger of Forum Merger IIa special purpose acquisition company (SPAC), with Ittella International, a plant-based food company; if the SPAC shareholders voted in favor of the merger, Botti also had to recommend that the hedge fund's leadership redeem the hedge fund's shares in Forum II, sell the shares in the open market, or continue as shareholders of the merged company. The case provides an opportunity to discuss SPACs, including their structure; key players and participants in them; and their risks, rewards, and potential pitfalls. The case also provides an opportunity to discuss differences between regular IPOs and to compare and contrast IPOs to SPACs. This case can be taught in a second-year elective course on capital markets, financial institutions, and markets or capital raising. It can fit in a module that explores financial engineering and instruments such as collateralized debt obligations or that discusses ways of going public and contrasting them with regular IPOs.
In early June 2020, several months into the COVID-19 pandemic, a business analyst was evaluating how COVID-19 had changed business and markets and whether these changes would be permanent. Already, a part of the business world had shifted to a working-from-home mode, while executives were evaluating financial strategies to help cope with the changes caused by the pandemic and assessing supply chains that had been disrupted. This case provides an opportunity to discuss key themes such as risk management, globalization, lessons from previous crises such as the global financial crisis (GFC), and the role of banks during the pandemic, as well as the role of the Federal Reserve in mitigating the economic destruction that COVID-19 had inflicted.
This case examines the key issues facing MetLife, a major company in life and annuity (L&A) and-to a lesser extent-property and casualty (P&C) insurance. The case provides an opportunity to analyze the business models of insurance companies, the main risks they face, and the broad investment strategies they pursue. The case also discusses how technology (including insurtech), regulation, and risk affect MetLife and insurance companies in general, and describes MetLife's history and recent developments. Finally, the case presents an opportunity for a simple valuation of an insurance company using multiples.
This public-sourced case describes the latest restructuring efforts by Deutsche Bank (DB) and gives a short history of prior restructuring efforts from the decade before. In July 2019, Christian Sewing, the new CEO of DB, announced a series of measures that included, among others, the elimination of global equity trading, the layoff of 18,000 employees, the creation of a "bad bank" to transfer noncore assets, and the suspension of dividends until 2022. The case describes key decisions a bank CEO makes when a bank needs to change course to return to profitability and growth. The case offers an opportunity to debate these key decisions, as well as discuss some of the prior ones during earlier restructuring efforts, and put the students in the CEO's shoes: What would you do and why? The case also describes key banking performance metrics (e.g., ROE, ROA) and other critical variables such as those reflecting capital health (Tier 1 ratio), as well as gives an overview of the bank business model and factors impacting bank profitability and value.
This technical note discusses the various financial services segments in which technology solutions have been used to solve problems, including lending, payments, wealth/investment management, insurance, and regulation. For each of the segments, the note identifies key issues facing the segment, why and how fintech might provide an answer to the challenges faced, and the potential difficulties fintech may experience in doing so. For example, in lending, fintechs could solve issues related to access and convenience-without the need for costly infrastructure. The note also discusses the potential advantages/disadvantages of traditional banks over fintechs. Finally, the note describes influential technologies that are used in fintech such as application program interface (API), artificial intelligence (AI), and machine learning.
This case is used in Darden's second-year "Financial Institutions and Capital Markets," elective. Using Invesco Ltd. (Invesco) as an example, the case examines the strategic challenges facing the asset management industry. Marty Flanagan, Invesco's CEO, must position Invesco to compete in an industry undergoing systemic change, including active and passive products and flows, lower levels of organic growth, fee compression, softening revenues and profitability, shifting profit pools, channel dynamics and preferences, and legacy operating models.
The case discusses the decision of a hypothetical London-based hedge fund manager, Greg Rubin, who manages a fund primarily investing in emerging and frontier markets to decide whether to buy (or short) Safaricom, a Kenya-based telecom and financial services company that became globally known more than a decade ago (2007) for its use of technology to facilitate payments via mobile phones. There was a real need in Kenya for a different system of payments and money transfers, given the large underbanked population (almost 80% lacking a formal bank account) and the widespread use of cash. M-Pesa, the system introduced by Safaricom was an astounding success and quickly achieved a dominant position in the Kenyan marketplace. Kenyans embraced the use of mobile phones to transfer money and pay bills. More than 10 years later, at the time of the case (March 2018), Safaricom's dominance is challenged by a series of missteps expanding abroad (e.g., to South Africa), increased competition at home, as well as the introduction of 3G and advanced smartphone technology. The case allows for an examination of the investment thesis for Safaricom and its valuation. This requires the analysis of payment systems and their evolution in frontier markets as well as the analysis of country/political risk, among others. It is the combination of an innovative company from a frontier market and the introduction of new technologies that make this case interesting (and challenging) to analyze-by no means an obvious decision for Rubin.
The case describes a hypothetical hedge fund manager who is examining whether to invest in bitcoin or not. The case discusses potential risks and rewards for investing in bitcoin, the role of bitcoin and digital currencies more broadly, as well as financial innovation in the space, such as ICOs. The case can be taught as part of a second-year MBA elective course in investments, financial institutions/capital markets, or fintech.
In March 2009, Ulrich Bez, CEO of British carmaker Aston Martin Lagonda Ltd., found himself grappling with some tough news from Switzerland. The company had just debuted a novel car concept, its first crossover model under its rarely used historic Lagonda brand, at the Geneva Motor Show, but the negative press criticizing the four-wheel drive, four-seater car's design and concept was troubling and unexpected.
This technical note explains what blockchain is, what it allows, as well as discusses its advantages and potential issues to consider further. It also provides an example of an application in which blockchain technology is used and describes regulatory and governance considerations. It can be used in a financial institutions or fintech course along with a case on digital currencies.
This case invites students to assess the impact that Brexit, the withdrawal of the United Kingdom from the European Union, might have on a New York-based hedge fund's portfolio and, specifically, its UK assets. The case is designed to prompt students to make market assumptions and investment hypotheses based on a combination of numerical data and qualitative information. It requires no numerical computations; instead, it asks the student to interpret both markets' short-term reactions to the Brexit vote and strategy shifts from UK and European business leaders in order to evaluate longer-term implications for the economies of the United Kingdom, Europe, and the world.