PART A · QUESTION 1
A bank pays 3% on deposits and lends them out at 6%. Its running costs are 1.5% of its loans, and it expects to lose 0.3% of them a year.
// EXAM HALL24 QUESTIONS · 30 MINUTES
Bank Procurement Practice Test
How a bank earns, one launch and its supplier, three bids to compare, and the calls procurement makes when a supplier can take the bank down with it.
BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED
// THE SHORT ANSWER
A bank procurement practice test asks whether you can see past the price on a bid, and what a regulated buyer owes its customers when a supplier fails. This paper has four parts: how a bank earns and why it is regulated; one launch brief and its supplier; three bids for a contact centre, set on an exhibit, with total cost, viability and exit; and calls on conflicts, single-sourcing and concentration. Every question is original, and none comes from any bank's test. Sit it against a thirty-minute clock, or take it as practice.
BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.
// HOW TO SIT IT
Answer below as practice, and each read opens as you go. Or sit it as a test: 30 minutes, with every read held back until you finish.
PART A
The business of a bank
What you are joining, whichever seat you sit in.
PART A · QUESTION 2
A bank has US$100 of assets and US$8 of capital. A retailer with the same assets might have US$40 of capital.
What does a 5% fall in the value of its assets do to the bank's capital?
PART A · QUESTION 3
A friend asks why a bank has so many rules compared with a supermarket. Both have customers, suppliers and shareholders.
What is the best short answer?
PART A · QUESTION 4
Two loans earn the same margin. One is a company loan that needs three times the capital of the other, a well-secured home loan.
Which earns the bank more on its capital?
PART A · QUESTION 5
A bank's loans reprice every five years on average; its deposits reprice within one. Rates rise by one percentage point tomorrow.
What happens to its net interest income next year?
PART A · QUESTION 6
A bank's deposits have been steady for years. This month, after a rival's failure made the news, online withdrawals doubled in two days.
Signal or noise?
PART B
The launch
The launch brief every function in the bank sees. These are the parts that land on procurement's desk.
EXHIBIT M · THE LAUNCH BRIEF
A retail bank plans a home loan offer. This brief has reached your desk, whichever seat you sit in. It launches on Friday week.
| Area | What the brief says |
|---|---|
| Offer | US$3,000 cashback on new home loans over US$300,000, at 5.49% fixed for the first year. |
| Advert | Headline: 'The lowest home loan rate in town. Guaranteed approval in 24 hours.' Below it, 5.49% in large type. On the website only, in small print: after year one the rate reverts to 7.29%. |
| Terms | The whole cashback must be repaid if the loan ends within three years, for any reason. |
| Sales | Bankers earn US$150 for each loan written. The scheme has no measure of file quality or complaints. |
| Supplier | A call centre abroad will take enquiries and hold 400,000 customer records. Its price is 18% below the next bid. The contract runs five years, renews itself, and gives the bank no right to leave. |
PART B · QUESTION 7
You are in procurement. In Exhibit M, the call centre's price is 18% below the next bid, and it will hold 400,000 customers' records abroad.
What do you look at first?
PART B · QUESTION 8
Exhibit M's supplier contract runs five years, renews itself, and gives the bank no way out.
What do you change?
PART B · QUESTION 9
In Exhibit M, four teams have concerns: marketing's claim, legal's term, the incentive and the supplier. The launch is a week off, and the product head says: 'Nobody has said no.'
What should happen?
PART C
The three bids
Three bids, nine questions. Add up each one before you read the price.
EXHIBIT U · THE THREE BIDS
Three bids to run the bank's customer contact centre on a five-year contract. The panel meets on Thursday.
| Bid A | Bid B | Bid C | |
|---|---|---|---|
| Price, five years, US$m | 10.0 | 8.2 | 9.4 |
| Moving in, US$m | 0.5 | 1.2 | 0.6 |
| Bank's oversight a year, US$m | 0.1 | 0.4 | 0.1 |
| Data held | Onshore | Abroad | Onshore |
| Right to leave | 90 days | None | 180 days |
| Subcontractors | None | Not named | Two, named |
| Last two years | Profit | Profit | Losses |
PART C · QUESTION 10
From Exhibit U. Add moving in and five years of oversight to each price.
Which bid costs least over the five years?
PART C · QUESTION 11
In Exhibit U, bid B's price is US$1.8m below bid A's.
What happens to that gap once you count everything?
PART C · QUESTION 12
Exhibit U's bid C is the cheapest overall, and has made losses for two years.
What do you ask?
PART C · QUESTION 13
Exhibit U's bid B will not name its subcontractors. It says: 'We use the best partners, and you contract only with us.'
Signal or noise?
PART C · QUESTION 14
The business head wants Exhibit U's bid B. 'It has the lowest price, and my budget only shows the contract price.'
What do you do?
PART C · QUESTION 15
All three bids in Exhibit U would hold customer data, and the bank's service depends on the winner.
What do you check before signing?
PART C · QUESTION 16
During the tender in Exhibit U, bid C's account manager offers to take the evaluation panel to a rugby final.
What do you do?
PART C · QUESTION 17
Exhibit U's bid A pays a credit of 5% of the monthly fee if service misses its target. The fee is about US$167,000, and a day's outage costs the bank about US$300,000.
What does the credit cover?
PART C · QUESTION 18
Exhibit U's bid A lets the bank leave on 90 days' notice. Moving a contact centre in or out takes about six months.
What is missing from that right?
PART D
The calls
Suppliers, panels and the people who want to skip them.
PART D · QUESTION 19
Your bank's core payments vendor is one of only two in the market. It has just raised its renewal price by 30%, and says the terms are standard.
As procurement lead, what do you do?
PART D · QUESTION 20
The press reports that a critical software supplier is short of cash. Its service runs your mortgage platform. Your contract is in good order, and its support is still fine.
What do you do?
PART D · QUESTION 21
A colleague on your evaluation panel mentions that their brother works for one of the bidders. 'He is in a different division. It does not matter.'
What do you do?
PART D · QUESTION 22
A business head says there is no time to tender. They have chosen a supplier run by a friend from a previous job, and want the contract this week.
What do you do?
PART D · QUESTION 23
Four teams have each bought services from one cloud provider. Each contract passed its own review, and each is small.
Signal or noise?
PART D · QUESTION 24
A supplier's subcontractor reports a breach that may include your customers. The supplier says: 'That is not us. It is not your problem.'
What do you do?
0 OF 24 ANSWERED · 0 WITH THE SENIOR READ · 0 STANDS UP · 0 OFF THE LINE
// THE REST OF THE ROUND
Every question here is original; none is any bank's real test. Written for: Procurement manager.
- Procurement manager: the interview questions, against a two-minute clock.
- Situational judgement, for any seat.
- The assessment centre: a whole case in forty-five minutes.
// SUBSCRIBE
The Lab.
One case file and one question, in your inbox every Tuesday morning, New Zealand time. The senior banker's read opens only after you answer.
FREE WITH IT · 10-PAGE PDF
Case 01 of the interview case pack — Northmark Engineering, in full.
No spam. Unsubscribe anytime. Educational content only.