solution

The Jones Bank Ltd has two departments.

a) a pension fund department,
which invests money on behalf of clients and customers, by investing in
bonds, shares and so on.

b) a merchant bank department, one of whose
clients is the prestigious and dynamic Sampson and Brown Ltd, which is
to offer a new tranche of shares to the investment community.

Required:

Identify the potential conflict of interest.

DISCUSSION

In times of
recession, it is the banks who ultimately decide whether a particular
business survives or fails. There is a widespread view that banks should
support small businesses come what may, as not to do so would be
socially irresponsible. Give reasons for and against this view.