Bank Management

Dr. Mohammad Samir Mahmoud

:Learning Outcomes

By the end of this lecture, students will be able to:

• Understand a comprehensive and up to date coverage of the financial services and products delivered by modern commercial banks

and their role in financial markets.

• Compare different commercial banking services with those delivered by different depository and non-depository financial

institutions, and its relative importance as an income source for these commercial banks.

• Practice the empirical foundations upon which practices in depository financial institutions are based and the factors that influence

decision making within these contexts.

Lecture 2
:Inventing Money and Banks )2/1(

(1) Barter:

(2) Merchandise Money:

e.g. Animal Skins .. Etc.

(3) Metal Money: Gold & Silver

:Inventing Money and Banks )2/1(

(4) Paper Money:

Emergence of Banking Industry

(5) Plastic Money:

(6) Digital Money: e.g. Bit coin.

 (2/2) Banking Services
Safekeeping

01
Currency Exchange Savings & Demand Deposits.
08 02

07 03 Business & Consumer Loans

Discounting Commercial Papers

Security Brokerage 06 04
Supporting Government

05

Investment & Merchant Banking Services

 (2/2) Banking Services
Trust Services

01
Managing Cash
Venture Capital Loans
08 02

Equipment Leasing
07 03 Financial Advising

06 04
Mutual Funds
Insurance Polices Retirement Plans Annuities

05

Risk Management and Hedging Services

: Banking Services )2/2(

(1) Safekeeping of Valuables and Certification of Value: (Traditional / Service Fees Income)

Holding gold and other valuables owned by their customers inside secured vaults, thus assuring customers of their safekeeping, as well

as evaluating its market value.

(2) Offering Savings Deposits: (Traditional / Interest-Bearing Expense)

Offering interest-bearing savings deposits left with the bank for a period of time. The bank uses these funds in making loans.

(3) Offering Demand Deposits (Checking Accounts): (Traditional / Service Fees Income)

A checking account that permitted depositors to write drafts in payment for goods and services that the bank or other service provider

had to honor immediately.

: Banking Services (Cont.) )2/2(

(4) Making Business Loans : (Traditional / Interest Income)

Making loans for business sector.

(5) Making Consumer Loans : (Modern – Saving Institutions / Interest Income)

Making loans for households sector, due to heavy competition in business loans, in addition to the emerging of Saving Institutions as a

new competitor providing this service to households sector.

(6) Supporting Government Activities with Credit : (Traditional / Interest Income)

Purchasing government (Treasury) bonds / bills to finance long-term and short-term activities (such as financing budget deficit).
: Banking Services (Cont.) )2/2(

(7) Offering Merchant Banking Services : (Modern - Securities Firms / Service Fees Income)

Temporary purchase of corporate stock to aid the launching of a new business venture or to support the expansion of an existing company. The

merchant banker becomes a temporary stockholder and bears the risk that the stock purchased may decline in value.

(8) Offering Security Brokerage Services : (Modern - Securities Firms / Service Fees Income)

Executing buy and sell orders for security trading customers (Security Brokerage), competing securities firms.

(9) Offering Investment Banking Services : (Modern – Inv. Banks / Service Fees Income)

Marketing new securities to raise funds for corporations and other institutions (Security underwriting) competing Investment Banks.
: Banking Services (Cont.) )2/2(

(10) Discounting Commercial Papers : (Traditional / Service Fees Income)

Making loans to local merchants through buying their debts (Accounts / Notes Receivables) against their customers at a discount to raise cash quickly.

Discounting Buying & Selling

(11) Carrying out Foreign Currency Exchange : (Traditional / Service Fees Income)

Trading one form of currency (such as dollars) for another (such as euros) in return for a service fee.
:Banking Services (Cont.) )2/2(

(12) Offering Trust Services : (Traditional / Service Fees Income)

Managing the financial affairs and property (assets) of individuals and business firms in return for a fee.

(13) Managing Cash : (Modern / Service Fees Income)

Handling cash collection disbursements for a business firm and invest any temporary cash surplus in interest-bearing assets until cash is

needed to pay bills.

(14) Financial Advising: (Modern - Securities Firms / Service Fees Income)

Ranging from helping to prepare financial plans for individuals to consulting about marketing opportunities at home and abroad for

businesses.
:Banking Services (Cont.) )2/2(

(15) Offering Mutual Funds: (Modern – Mutual Funds / Service Fees Income)

Mutual Funds are professionally managed investment programs that acquire stocks, bonds, and other assets.

(16) Offering Risk Management and Hedging Services: (Modern – Hedging Funds / Service Fees Income)

Providing customers with financial tools to combat risk exposure in return for substantial fees.
:Banking Services (Cont.) )2/2(

(17) Selling Insurance Polices : (Modern – Insurance Companies / Service Fees Income)

As the U.S. legislation allowing banking companies to acquire control of insurance companies and vise versa.

(18) Selling and Managing Retirement Plans & Annuities: (Modern – Insurance Companies / Service Fees Income)

Investing incoming funds and dispensing payments to qualified recipient who have reached retirement or become disabled.

Annuities consists of long-term savings plans that promise the payment of a stream of income to the annuity holder beginning on a

designated future date (e.g. retirement).

:Banking Services (Cont.) )2/2(

(19) Offering Equipment Leasing : (Modern / Rental Income)

Purchase equipment and rent it to the customer through a lease arrangement.

(20) Making Venture Capital Loans : (Modern / Profit Income)

Financing the start-up costs for new firms and SMEs which usually involves added risks, in the hope of turning a profit.
Questions
 Thank You

Ibn.khaldun.1976@gmail.com + (2)
Dr. Mohammad Samir