How Do You Learn to Run a Bank? Practice, Practice

On a sweltering midsummer day, five bankers huddle around a conference table mopping their brows and planning a response to a friendly takeover bid.

This isn't your average managerial powwow.

The bankers - in polo shirts, shorts, and sandals - are students at a management training school run by the Consumer Bankers Association, and the takeover is being launched by another group of students.

Real Life, Simulated

As hard times press the banking industry, the focus of management training is shifting. Student bankers at the CBA school and elsewhere are snubbing schoolbooks and seminars in favor of "action learning," tackling simulated real life problems, sometimes fed to them by computer.

The proponents of action learning say it yields quick results, enhances decision-making capabilities, and forces trainees to learn how to work with their peers.

"One student told me: |I don't know if I'm ever going to be in a position to pull the trigger on a merger or acquisition,'" recalled Antigoni Ladd, senior vice president at the CBA and academic director at its Graduate School of Bank Management. "|But next time my department is hit by staff cutbacks,' he said, |at least I'll understand why.'"

Plugged In

Teams of students at the CBA school in their third, or senior, year are placed at the helm of an imaginary bank with $250 million in assets and turned loose. The teams set interest rates, juggle pricing strategies, and wield the hatchet on layoffs in response to computer-generated changes in market conditions.

The decisions are fed back into the computer, which then spits out a list of winners and losers, complete with stock prices and returns on equity and assets. By the end of a two-week period, the most successful banks have gobbled up their competition.

"Top ROEs are around 22% to 24%," said Brad S. Leyhe, an instructor and former student at the CBA school and group vice president at Georgia Federal Bank in Atlanta.

The software for the bank simulation program is produced by the American Bankers Association.

These days - mindful of the bleak climate outside the CBA boot camp - competitors sport a sense of gallows humor. For example, the team managing a hypothetical takeover candidate dubbed it NDNB Bank. "The acronym," said team member Cleveland Moutry Jr., assistant vice president at First National Bank of Ohio in Akron, "stands for |Need Deposits National Bank.'"

Most of the students and teachers come from banks with retail operations, including Citibank; CoreStates Financial Corp., Philadelphia; Fleet/Norstar Financial Group, Providence, R.I.; and Wells Fargo & Co., San Francisco. Before engaging in bank simulations, the students take classes in finance, human resources, marketing and economics.

The school launched a computer program in the mid-1970s but has emphasized it more strongly in recent years, in response to student demand. The CBA began to work with more sophisticated ABA software in 1983.

"Bankers who come in for management training nowadays are saying: We want to know how to make decisions," said the school's Mr. Leyhe. "With this type of training they feel the impact of their decisions, and the lessons stick."

The CBA school offers the bank simulation course during a two-week summer residency at the University of Virginia's McIntire School of Commerce in Charlottesville. Students also are asked to tackle readings and other conventional homework assignments during the year.

The training regimen is much the same at the ABA's Business of Banking School at the University of Colorado, Boulder. There, computerized bank simulation classes run one week. But the ABA also offers banks three-day, on-site training sessions.

During the past three years, an ABA spokesman said, 272 people have attended the Boulder school and an estimated 1,000 people have trained by computer under the shorter program.

On-site, the ABA has worked with NCNB Texas; First Interstate Bancorp, Los Angeles; Banc One Corp., Columbus, Ohio; and National City Corp., Cleveland, as well as with non-banks including International Business Machines Corp.

|Let's See What You've Got'

Strategic Management Group Inc. a management training firm in Philadelphia, also has developed bank simulation software. Participants set rates on loan products, assess credit risk, create budgets, issue stocks and bonds, and purchase equipment.

"This style of training reinforces classroom learning," said SMG's Jerome L. Roderick, senior vice president, banking and financial services. "In effect, it says to the student: If you think you can run a bank, let's see what you've got."

Next week SMG will begin training a group of commercial bankers from the Soviet Union. The company translated its instruction manuals into Russian and will provide translators for all classroom sessions.

SMG also has worked with Chase Manhattan; Chemical Bank; Citibank; National Westminster Bancorp, New York Norwest Corp., Minneapolis and Bank of America, San Francisco, as well as with the National Council of Saving Institutions.

Proponents of action learning say teamwork is one reason for its success.

"The trainees work in groups under pressure," Mr. Roderick said. "Under those circumstances, you learn a lot about other people and how to work with them. That's an element of life in the real world that you can't get out of books."

Thomas E. Fleming, who attended the CBA school, also cited the teamwork factor.

In one group session, said Mr. Fleming, national credit manager at Volvo Finance in Montvale, N.J., participants were asked to decide whether the chairman of a bank had acted properly in firing a subordinate.

The team decided that he should have worked harder to accumulate supporting evidence for the firing and to forge a consensus about it on the board.

|Human Dynamics Made It Real'

"My opinion of the process was completely changed by working with other people," Mr. Fleming said. "I read the case and thought the executive had acted correctly. But once we got into it, people were pointing things out that I missed."

"The human dynamics made it real," said teammate Donna P. Bailey, a Mellon Bank assistant vice president in Wilmington, Del. "We were forced to come up with a consensus that was acceptable to all.

"When you study from a book, it's one-dimensional. It's flat."

PHOTO : ACTION LEARNING: Brainstorming at the Consumer Bankers Association management school in Virginia. From left, David R. Sipari, Ameritrust Corp.; Stephanie McLaughlin, HomeFed Bank; Michael W. Olague, Bank of America; Cleveland Moutry Jr., First National Bank of Ohio; and Sharon A. Ritchey, Citibank FSB.

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