The Drawdown That Went Out Early
A construction drawdown released before its certificate, what it cost, and the question every panel in these seats asks: one person's mistake, or a control that does not work?
Banking Seat File No. 1 — Lending operations · Operational risk · Internal audit
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// THE CASE
A joinery manufacturer is building a new factory on a US$7.5M construction loan, drawn in stages against a quantity surveyor's certificate. The third drawdown, US$1.6M, goes out on a Friday on the relationship manager's email — certificate to follow. When the certificate comes in, the work is worth US$0.9M, and six weeks later the builder goes into administration.
THE QUESTION
Was it one officer's mistake, or a control that does not work — and how would you find out?
WHAT EACH SEAT IS ASKED
- Lending operations: What should have happened on the Friday, and what do you do today?
- Operational risk: How do you record the event, and what caused it?
- Internal audit: Was it one officer's error? How would you test that?
The worked answer — and the ninety seconds you would say out loud — are in the file.
// WHAT THE TEN PAGES CARRY
- What these panels are testingThe one instinct the seats' interviews listen for, and the three signals they grade.
- The caseThe file as it lands on your desk: the setup, the numbers, and the question each seat is asked.
- The worked readThree pages: what actually happened, how each seat records and answers it, and what not to accept.
- What you would sayThe answer in ninety seconds, spoken in the order a senior person in the seat speaks it.
- Three curveballsWhere the interviewer goes when the obvious case is answered, and how to respond.
// WRITTEN FOR THESE SEATS
Each seat’s page says what the job is, who arrives in it, and what its interview asks. Its practice paper is in the Exam Hall.
The businesses, the people and the figures in this file are composite and fictional; they do not describe a real business, transaction or bank’s policy. Practice, law and regulation vary by institution and jurisdiction.