Professional Documents
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Rcial Banking Management: Comme
Rcial Banking Management: Comme
Presenting by:
Yasin A. Aweis
MBA Finance & Banking
BBA Accounting
Professional Diploma of Islamic Banking
Certified instructor from University of Khartoum
University Lecturer
HRD Trainer
McGraw-Hill/Irwin
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Bank Management and Financial Services, 7/e
Chapter Three
The Organization and
Structure of Banking
and the Financial-
Services Industry
McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
3-3
Key Topics
11%
Assets Held By Large
Banks
Assets Held By Medium
Banks
Assets Held By Small Banks
87%
McGraw-Hill/Irwin
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Bank Management and Financial Services, 7/e
3-5
7%
McGraw-Hill/Irwin
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Bank Management and Financial Services, 7/e
3-6
McGraw-Hill/Irwin
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Bank Management and Financial Services, 7/e
3-7
McGraw-Hill/Irwin
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Bank Management and Financial Services, 7/e
3-8
Quick Quiz
• What are the general trends in the size
distribution and asset concentration of
American banking industry?
• Describe differences between a typical
organizational structure of smaller
community bank and a larger money-center
bank.
• What trends are affecting the way banks and
their competitors are organized today?
McGraw-Hill/Irwin
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Bank Management and Financial Services, 7/e
3-9
Not FDIC
2%
Insured
Unit Banks
McGraw-Hill/Irwin
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Bank Management and Financial Services, 7/e
3-12
Branch Banks
• Offer Full Range of Services from Several
Locations
• Senior Management at the Home Office
• Each Branch has its Own Management Team
with Limited Decision Making Ability
• Some Functions are Highly Centralized,
While Others are Decentralized
McGraw-Hill/Irwin
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Bank Management and Financial Services, 7/e
3-13
McGraw-Hill/Irwin
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Bank Management and Financial Services, 7/e
3-14
Electronic Branches
• Internet Banking Services
• Automated Teller Machines (ATMs)
• Point of Sale (POS) Terminals
McGraw-Hill/Irwin
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Bank Management and Financial Services, 7/e
3-16
Virtual Banks
McGraw-Hill/Irwin
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Bank Management and Financial Services, 7/e
3-17
McGraw-Hill/Irwin
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Bank Management and Financial Services, 7/e
3-18
Pa re nt Com pa ny
E a ch s ubs idia ry ha s a
Ba nk S ubs idia ry Nonba nk Subsidia rie s
pre s ide nt a nd line offic e rs
Ba nk Bra nc he s
The bottom four le ve ls ha ve the sa m e orga niza tiona l form a s the inde pe ndent ba nk.
Pa re nt Com pa ny
McGraw-Hill/Irwin
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Bank Management and
Ba nk Bra nc Financial Services, 7/e
hes Ba nk Bra nc he s
3-19
• Geographic Diversification
• Product Line Diversification
• Tax Sheltering
• Double Leveraging
• Source of Strength
• A Way Around Regulatory Restrictions
McGraw-Hill/Irwin
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Bank Management and Financial Services, 7/e
3-21
McGraw-Hill/Irwin
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Bank Management and Financial Services, 7/e
3-22
McGraw-Hill/Irwin
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Bank Management and Financial Services, 7/e
3-23
Proponents Opponents
• Efficient Use of Scarce • Increased Bank
Resources Concentration
• Lower Prices for Services • Less Competition
• Geographic Diversification • Higher Prices for Services
• Efficient Flow of Credit in • Drain Resources from
the System Community
McGraw-Hill/Irwin
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Bank Management and Financial Services, 7/e
3-24
McGraw-Hill/Irwin
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Bank Management and Financial Services, 7/e
3-25
Financial Holding
Company
Subsidiaries
Commercial Nonbank Thrift Company and Service
Banking Subsidiaries Companies
Company
McGraw-Hill/Irwin
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Bank Management and Financial Services, 7/e
3-26
Bank Subsidiaries
McGraw-Hill/Irwin
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Bank Management and Financial Services, 7/e
3-27
McGraw-Hill/Irwin
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Bank Management and Financial Services, 7/e
3-29
McGraw-Hill/Irwin
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Bank Management and Financial Services, 7/e
3-31
Quick Quiz
• Which type of corporations chartered for the
simple purpose of holding the stock of at least
one bank?
• What were the reasons for the Riegle Neal Act
of1994?
• When the banking industry moves toward
larger but fewer organizations, what is it
known as?
• What relationship appears to exist between
bank size, efficiency, and operating costs per
unit of service produced and delivered?
McGraw-Hill/Irwin
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
Bank Management and Financial Services, 7/e