Commercial and investment banking:General principles of bank management - Essay Example

Only on StudentShare

Extract of sample
Commercial and investment banking:General principles of bank management

A bank needs to hold enough excess reserves that can be able to meet all depositors need. This shield the bank from additional cost in meeting the depositors need. Such additional costs include the cost of borrowing from other banks, sale of securities, calling in loans and resulting in borrowing from federal bank. Asset management; a bank need to manage its asset is effectively so as to maximize its profits. This can mainly done through, acquiring liquid assets that have acceptable low level of risk such government securities, diversifying its asset holding portfolio as risk asset management strategy, issuing loans yielding higher interest to borrowers who are deemed safe, last the bank s meet to maintain enough reserve to meet its depositors need without resulting to borrowing in order to save on cost of borrowing. Liability management with the increased innovation and changes in operation of banks operation a banks need to ensure the cost of funds is minimized. This ensures a bank will be able to meet its obligation as the fall due. Capital adequacy management-the manager must decide the amount of capital the bank should maintain and then acquire the needed capital in consideration of the regulation existing in the market. Capital is essential in bank as is prevents failures and also influence returns on common stock holders. Q . ...
Download paper

Summary

Commercial and Investment Banking Date: Q 1. GENERAL PRINCIPLES OF BANK MANAGEMENT The general principles of bank management include; Liquidity management- involves maintaining asset that can be easily converted into cash…
Author : luettgensabina

Related Essays

Principles of Financial Investment
The effects of these agency problems create agency costs that work against the benefit of all stakeholders as well as for the company. This write up identifies those agency problems, its agency costs, and enumerate the ways to mitigate the agency costs in order to provide maximization of wealth of stakeholders as well as for the benefit of management and the company itself. Definition of agency problem The nature of conduct of business in respect of proprietorships, partnerships, and cooperative societies is that those are owner- managed organizations. But in case of companies the share...
10 pages (2510 words) Essay
Citigroup as an Investment bank
The purpose of this paper is to analyze Citigroup’s investment banking segment. Investment banks aid in the underwriting of security deals in the process of raising capital for their corporate clients. In addition, investment bankers provide a myriad of other financial services to make sure the deals meet the entire financial and legal requirements by handling transactional aspects of the deals. Citigroup is a reputable global financial institution with a very highly diverse financial services portfolio providing the services in investment banking in many countries in the world. While...
10 pages (2510 words) Research Paper
Finance Essay on Commercial and Investment Banking
Lending relationships, particularly those that are long term associations make it simpler for small sized organizations to have access to outside funds. Owing to the risky nature of the small firms, it becomes very difficult for them to borrow funds if they lack lending relationships with banks. However, such kind of organizations predictably attempt to get access to further diversified sources of funds, after they have formed long term lending associations with banks. Thus, it can be stated that the organization’s preceding lending association with a bank enables it to gain admission to the...
10 pages (2510 words) Essay
Investment and Fund Management
The current difficulty that the members of Fortunes are facing now is regarding the portfolio of pension provision. According to the current provisions, the members will be paid lump sum based upon individual contributions. But a careful analysis of the pension fund portfolio reveals that it was built up in an undisciplined manner. Hence, the current portfolio is considered inappropriate since the global markets are facing downturns. The objective of the study is to carefully analyse the current portfolio and recommend suitable adjustments so that Fortunes Inc. can meets its pension provision...
10 pages (2510 words) Essay
Barclays Bank: Viewing Principles of Finance at Work
The bank is also known for providing the public with the first Automated Teller Machine (ATM) service, nearly 40 years ago dated in 19671. Similar to every other large-sized organisation, Barclays has also diversified its investments in various sectors and different assets; thus, developing its portfolio in a diverse manner. In simple terms, a portfolio can be defined as the assortment of different assets owned by a company or an individual or any legal entity, in terms of stocks, mutual funds, cash equivalents, bonds and other funds. The main intention of holding a diverse portfolio, mainly...
10 pages (2510 words) Essay
Investment and Portfolio Management
ry 21 Infrastructural Sector 22 Automotive Sector 22 Estimation of Beta-Coefficient 22 Macro-Economic Analysis 23 Portfolio Management Strategies 24 Significance of Diversification 25 Portfolio Performance Analysis 26 Apple Inc 26 Citigroup 27 General Motors 28 Chicago Bridge & Iron 29 Pfizer 31 References 33 Appendices 34 Table 6 – Financial Statement Analysis of Apple (AAPL) 34 Table 7 – Financial Statement Analysis of Pfizer (PFE) 36 Table 8 – Financial Statement Analysis of General Motors (GM) 40 Table 9 – Financial Statement Analysis of Citigroup (C) 43 Table 10 – Financial
16 pages (4016 words) Assignment
Investment Risk Management
It was recorded as the biggest decline in financial market. With the real estate pricing bubble in 2003 and 2004, the company acquired mortgage lenders who were specialized in loans which were given to borrowers without proper documentation. The company secured $146 billion of mortgage securities in 2006 with a growth rate of 10% from 2005. It had earned record amount of profit from 2005-2007. In the year 2007 it had earned net income of $4.2 billion and in the month of February its stock reached a higher record of $86.18 and a market capitalization of $60 billion. With the rising house market...
5 pages (1255 words) Essay
Got a tricky question? Receive an answer from students like you! Try us!