Finalta Writing Exercise - Fless

Finalta Writing Exercise

A few of our students asked how to prepare for Finalta Writing Exercise. At their request we are publishing our take.

Disclaimer: we received these materials from one of our students, not from Finalta. We do not know if this version of the test is used currently or not, and, for that matter, if it was ever used at all.


Please read these instructions carefully before starting.

You have 45 minutes to complete the task. Please send back your answer before the time limit, otherwise it will not be considered.

As a first step, please save your answer file as writing_test_name_surname.doc

 Note that the purpose of this task is to assess your written communication skills. You will be graded on the strength and presentation of your arguments, not on your knowledge of retail banking.



You are Chief of Staff to the CEO of a large US retail bank. The bank’s management team are considering whether to acquire Delta Bank, a small regional retail bank with operations across three states on the West Coast.



 You have been asked to recommend whether or not to go ahead with the acquisition. To better inform your decision, you have interviewed three members of the bank’s management team; the transcripts of these interviews are provided on the next page.

Please prepare a management memo for the CEO outlining:

  • The potential pros and cons of the acquisition.
  • Your final recommendation.

Note that you are not expected to conduct any research or source other materials. All information needed to inform your recommendation is contained within the interview transcripts.


Interview Transcripts




You: Hi Susan, thanks for meeting with me. As you know we’re in the final stages of deciding whether to go ahead with the Delta Bank acquisition or not. What do you think?


Susan: Hi. It’s great to talk to you again. I’m very happy to share my opinion.


The West Coast is very attractive market. The younger average age means that customers have higher need for financial products, which in turn leads to a much higher revenue per customer; ~45% higher than the typical US customer. In order to meet our long term objectives we will need to expand our geographical footprint, and buying Delta Bank provides a great chance to do that.


One other thing to consider is that Delta Bank has a large number of branches concentrated in a small area. It is widely known that they have a very expensive model and have been trying to cut costs for years, with limited success. I’m not sure how we could help achieve that goal, given that we have faced similar challenges in our existing markets.


You: Is there anything else you would like to share which might help inform the final decision?


Susan: Yes. I’d also mention the strength of the Delta Bank brand. They have always been a leader in the market and customers are very loyal to Delta Bank. However, there is a feeling that this brand has been eroded over the past few years, in part due to the large number of mortgages which were mis-sold to customers on the West Coast. I think we need to understand the true impact that this will have on the bank before we go ahead with the purchase.


You: Thanks for your opinions Susan, this was very helpful. Have a good day.





You: Hi James, thanks for meeting with me. As you know we’re in the final stages of deciding whether to go ahead with the Delta Bank acquisition or not. What do you think?


James: Hi there, I’m glad we got the chance to discuss this as I’m worried that the bank is making a huge mistake.


Although the West Coast is a very attractive market and one that I think we can conquer, this is not the right time to make the move. We’ve still got lots of opportunities to expand within our existing markets… for example we don’t even have a branch in my home town yet.


Also, we don’t have the cash to make the purchase. Our systems are in desperate need of an overhaul, our branches are looking old and our employees are some of the lowest paid in the industry. The projected cost of the acquisition would take up 90% of our remaining budget for 2015, meaning we’d have to put all of these improvement projects on hold for the third year running.


You: Ok, but what if we could find a way to make the acquisition and protect the budget for the improvement projects, would that change your opinion?


Not at all, it’s not just about the money. Our management team is already too busy with the day-to-day responsibilities of running the bank. We simply won’t have the time to make the improvement projects and the West Coast acquisition a success. In fact, if we do go ahead then all we’ll achieve is to become a larger, less profitable bank.


You: Thanks for your opinions James, this was very helpful. Have a good day.





You: Hi Bob, thanks for meeting with me. As you know we’re in the final stages of deciding whether to go ahead with the Delta Bank acquisition or not. What do you think?


Bob: I’m tired of all of this messing around; we need to make the acquisition already!


The West Coast is booming. We’ve been talking about expanding to the region for more than 5 years, its key to our long term strategy. I can’t believe that we are risking to losing out to another bid, by delaying this decision.


The population of California is close to 40 million. That’s ten times higher than our 4 million customers, who are spread across 15 states currently. If we want to become more profitable, we need to move our business to growing cities where we can benefit from economies of scale.


Everyone is worried about technology and saying that the banking industry is changing. If we are truly worried about tech, then we need to get a presence on the West Coast and learn from the best. I’m personally committed to moving to San Francisco to make this happen.


You: Thanks Bob. Hearing the message loud and clear. Would you say there are any downsides to making the acquisition?


There’s always downsides, but nothing that we can’t handle. I know the CEO is very busy with 2015 improvement plans, so I’m not sure that he would have capacity to run all of our businesses. That’s why I’ve volunteered to lead the West Coast division when we make the acquisition.


The other downside is that we would have to swallow Delta Bank’s large mortgage book, which is full of low quality loans which are in need of writing off. Again, we can finance this and the agreed price for Delta Bank more than fairly accounts for this.


You: Thanks for your opinions Bob, this was very helpful. Have a good day.





Dear [First Name of the CEO],


Based on 3 management interviews, I believe we should not acquire Delta Bank until we investigate other growth options to meet our long term objectives.


Acquiring Delta Bank would likely result in higher revenues. The bank is located on the West Coast. With large (40M people) and affluent (revenue per customer ~45% above U.S. average) population, the region is worth entering.  The location also implies exposure to the booming tech industry, as Bob suggested.


However, the acquisition would hurt profits. Firstly, as Susan explained, the Delta Bank’s model is very expensive, with limited cost reduction potential. Secondly, Delta has a large mortgage book with lots of bad debt. Thirdly, as a result, its brand seems to be tarnished. Finally, the resulting acquisition cost would eat 90% of the remaining 2015 budget and lots of management team’s time. Current improvement projects would stumble.


Therefore, the current evidence suggests the acquisition would grow revenues but cut profits. This would likely hurt our shareholders and impede achieving long-term objectives.


To test this conclusion, I suggest the team do 3 things before our next meeting:

  • Build a high-level financial model to estimate the impact of acquisition on revenues and profits
  • Run a quick analysis of potential for cost structure improvements at Delta Bank
  • Run a market scan for other acquisition targets on the West Coast and model organic growth opportunities


Please let me know when you have time to for quick call to discuss findings and next steps. Thanks in advance.






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