CFO Alert

An Excerpt From:

Economic Value: A Better Way to View the Bank
By Eleanor Bloxham

Published in CFO Alert July 14, 1997

"What are the benefits to a bank in implementing an Economic Value management system? One major benefit is the financial discipline Economic Value instills across the organization."

"The Economic Value management system provides a rigorous financial toolkit that can be used to assess the impact of decisions before and after the fact." 
"Economic Value provides a single measure which can be used in both the loan and deposit gathering units and the "off balance sheet" trust and insurance units."

"Economic Value provides a focus on capital and its utilization."

"Implementation of an Economic Value management system can help the bank's bottom line immediately."

"Economic Value management systems also help to address human resource and Board of Directors issues of fairness - as managers are compensated under an Economic Value management system by more objective standards, which are in alignment with shareholder interests."

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