Bank management summary .

Chapter one.
Financial service sector is divided ;
I. In terms of license registration.
1. Bank.
2. Non-bank.
II. In terms of services.
1. Depository institution.
2. Non-depository institution.
What Is a Bank?
• A bank can be defined in terms of:
1. The economic functions it performs.
2. The services it offers its customers.
3. The legal basis for its existence.
Bank service menus are expanding rapidly today to include investment banking, insurance
protection, financial planning, advice for merging companies, the sale of risk-management
services to businesses and consumers, and numerous other innovative financial products.
Many kind of banks.
1. Central bank
2. Commercial bank
3. Investment bank
4. Mortgage bank
5. Limited bank purpose bank.

Security features of note currency.

1. Physical features
2. Fluorescence features
3. Machine features
4. Micro lettering

Commercial banks.
 1. Money central banks
2. Community banks
Investment bank. Or merchant banks.
1. Bulge bracket.
2. Middle market.
3. Boutique.
Investment bank can also be divided into;
1. Public investment bank
2. Private investment bank
Mortgage banks.
1. Mortgage lenders.
2. Mortgage brokers.
Limited purpose banks.
1. Co-operate banks.
2. Minority banks.
3. Fringe banks.

The Legal Basis for Banking.

A bank is any business offering deposits subject to withdrawal on demand and making loans of a
commercial or business nature.

Competitors with Banks are;

1. Savings Associations.
2. Credit Unions.
3. Fringe Banks.
4. Mutual Funds (Investment Companies).
5. Hedge Funds.
6. Security Brokers and Dealers.
7. Investment Banks.
8. Finance Companies.
 9. Financial Holding Companies.
10. Life and Property/Casualty Insurance Companies.
Mutual Funds (Investment Companies) include;
a. Private equity fund.
b. Pension fund.
c. Provident fund.
Two groups of assets;
a. Financial assets.
b. Real assets.

Sovereign wealth funds;

Sources of SWF are;
➢ Budget excess.
➢ Government trade surplus.
➢ Returns from natural resource.
➢ Returns from foreign currency.
➢ Return from privatization.
Uses of SWF.

• Investment in real and financial asset.

• Budget deficit.
• Social welfare.
• Subsidies.
Services Banks Have Offered for Centuries.
✓ Carrying Out Currency Exchange.
✓ Discounting Commercial Notes and Making Business Loans.
✓ Offering Savings Deposits.
✓ Safekeeping of Valuables and Certification of Value.
✓ Supporting Government Activities with Credit.
✓ Offering Checking Accounts (Demand Deposits).
✓ Offering Trust Services.
Services Banks and Many of Their Financial-Service Competitors Began Offering in the Past
Century;
➢ Granting Consumer Loans
➢ Financial Advising
➢ Managing Cash
➢ Offering Equipment Leasing
➢ Making Venture Capital Loans
➢ Selling Insurance Policies
➢ Selling and Managing Retirement Plans
➢ Dealing in Securities: Offering Security Brokerage and Investment Banking
Services
➢ Offering Mutual Funds, Annuities, and Other Investment Products
➢ Offering Merchant Banking Service
➢ Offering Risk Management and Hedging Services
Key Trends Affecting All Financial-Service Firms – Crisis, Reform, and Change .
❖ Service Proliferation.
❖ Rising Competition
❖ Government Deregulation and then Reregulation
❖ Crisis, Reform, and Change in Banking and Financial Services
❖ An Increasingly Interest-Sensitive Mix of Funds
❖ Technological Change and Automation
❖ Consolidation and Geographic Expansion
❖ Convergence
❖ Globalization

Chapter two.

Why are banks closely regulated?

❖ Banks are among the leading repositories of the public’s savings.
 ❖ Banks are closely watched because of their power to create money in the form of
readily spendable deposits by making loans and investments.
❖ Banks have a long history of involvement with federal, state, and local
governments.
Rules enforced by federal and state agencies govern.
1. Banking Operations
2. Service Offerings
3. Performance of Financial Firms
4. The manner in which financial firms grow and expand their facilities to better serve the
public.
The Banking’s Principal Regulatory Agencies and Their Responsibilities;

Federal reserve system.

Comptroller of the currency.
Federal deposit insurance corporation.
Department of justice.
Security and exchange commission.
Commodities futures trade commission.
State boards or commission
The Principal Reasons Banks are Subject To Government Regulations.
1. To protect the safety of public saving
2. To control the supply of money and credit in order to achieve a nations broad
economic goals (i.e High employment)
3. To ensure equal opportunities and fairness in the public access to credit and
other vital financial services
4. To promote public confidence in the financial system, so that savings flow
smoothly into productive investment and payment for goods and services are
made speedily and efficiently
5. To avoid concentration of financial power in the hands of a few individuals and
institutions
6. To help sectors of the economy that have special credit needs (small businesses,
agriculture, etc).
Key services that the Federal Reserve banks offer to depository institutions in their districts:
1. Issuing wire transfers of funds between depository institutions
2. Safe-keeping securities owned by depository institutions and their
customers
3. Issuing new securities from the U.S. Treasury and selected other federal
agencies
4. Making loans to qualified depository institutions through the “Discount
Window”
5. Dispensing supplies of currency and coin
6. Clearing and collecting checks and other cash items
7. Providing information to keep financial-firm managers and the public
informed about developments affecting the welfare of their institutions.