Research Articles Base: Banking Essay Samples

Strategic Marketing Management: The Case for UBS

The Case for UBS Implementing a New Marketing Strategy The sixth largest bank in the world-famous in investment banking, wealth and asset management is drastically degenerating tolow keys. Consequently, the imperative campaign to restructure branding management strategy for UBS is critical to its long term survival and stability in the face of stringent global competition.  Sifting through the troubling challenges from the remnant effects the recent, magnified fiasco have caused with US tax authorities in the tax evasion case against US investors on respective individual investments, by which the bank allegedly kept its tax haven niche on their behalf, links to cause the institution to resilience to regress its usually strong position in the markets. The challenge moreover underlies the flaws  bank secrecy effectuate to abide with integrity on international taxation compliance as a universal norm since Swiss laws do not find the need to disclose assets as  culture influence dictates this norm and is not regarded as a criminal act. However, nevertheless, the United States is a major superpower who wields the clout on a global scale and is a potential to divest the bank’s interests that may risk UBS to maintain global scale trust. Research by Morrison and Foerster (2011) reveal the bank’s involvement in other institutional disputes placing public trust at stake when US based Financial Industry Regulatory Authority (FINRA) filed a lawsuit against the conglomerate with large scale amounts in restitution and penalties to investors for producing misleading statements and omissions in connection to offerings on risk free principals through principal protected notes. Consequently, the large scale clout by media coverage globally blurred UBS in its overall global strategicposition among the investing public and a class action litigation resulting to rank demotion in global financial services in the face of stiff global competition. Furthermore to impose the following recommendations that will enable UBS from its current global market position is critical to repave into recovery: Reposition to Implement a Renewed Strategy:  While UBS hovers in the global realignment phase to recover public trust, it should reemphasize competitive position in the global financial industry not only focus to promote on more intensive and wider scale coverage of strengths on critical clientele based infrastructures in retail investment banking, wealth and asset management through massive campaigns on brand management  While the institution recognizes this expertise as a current deficiency, sheering to competitive positions and advantages over the financial services industry that places them to an edge to entail a strategic position in target markets is necessary. Brand communication is an alternative key to compensate with collective restitution to the investor public on institutional shortcomings from the scandals caused. One way to demonstrate this bears on the advantage in offering competitive and low interest rates as a promotion mechanism to various investment packages while its corporate position is blurred with clarity, impact, and focus on target markets (World Advertising Research, 2004, p.3). Positioning on this strategic stance renders the substantial advantage while target markets are not within reach the adversaries may cause a negative impact. The overall communication strategy should focus to implement a persuasive language in its propaganda as the key element to cohere to the public vital tenets in upbringing conviction on brand communication strategy incorporating the resolution to an extensive domain to cohesive corporate policy compliance to compensate past institutional flaws in its long term marketing portfolio. This strategy should communicate top down to lower hierarchies which partly function as the source niches involving the disputes. This is the most effective way to establish a unique brand identity in certain clientele segments that align the market (World Advertising Research, 2004, p. 3). To resort to an impartial corporate audit policy and compliance plan implementing down to departmental levels should pattern after this strategic marketing to assure policy assurance on all corners of the corporate structure. Incorporate Stakeholder Participation: The issue with the United States on taxation interests on the claims on investments US investors own violating the bank secrecy law may hold valid but calls the need to incorporate stakeholders or investors to stay informed on the any surfacing issue that impact investments on a periodical basis. This claim attributes to a complex network consequence inevitably wrought from an international marketing strategy approach deriving income dividends from these investments which become the object for national authorities to claim sovereign interest as a right rather an option. Should investors or the company either way initiate triad communication from the onset without jeopardizing not only the bank secrecy law but save an actively implemented marketing strategy with all parties informed to encourage investment flows without  penalty costs the lawsuit incurred and would have prevented to loom the dispute. Whether directly or indirectly such investors intend to conceal taxes through the secrecy law would enable stakeholders or investors to understand the complex consequences which pervasive risks may reach, to strategically devise and implement a plan to position to minimize or evade the risks involved while meeting shareholder expectations (Doole and Lowe, 2008, p.49). This is true especially on the implications the FINRA case may assert in other potential claims that may result to relevant consequences and beyond relating to Treasury Inflation Protection Securities (TIPS) by which profits from volatility action may reach beyond break-even levels even at-the-money levels within TIPS that interpret to be taking at premium, thus no actual profit is realized but claimable by tax to the United States.  UBS management should incorporate TIPS in shareholder discussions on this issue a misinterpretation to resolve since this may uphold otherwise the potential source for future disputes and attract inflation concerns among investors (Lupoli, 2010, p.8).         Credit:ivythesis.typepad.com

Strategic Marketing Management: The Case for UBS

The Case for UBS Implementing a New Marketing Strategy The sixth largest bank in the world-famous in investment banking, wealth and ass...

Organizational Structure and Culture in HSBC Bank

ORGANIZATIONAL STRUCTURE AND CULTURE IN HSBC BANK       HSBC “the world’s local bank” stands with their corporate sayings since they are truly one of the world’s largest banking and financial service company in the world. With over 220,000 stakeholders in 127 countries and providing quality services to it’s more than 95 million customers all over the world. The HSBC manages to deliver excellent performance in services in all its endeavor and dealings. Through its corporate banking system they are able to unlock the potentials of many of its customers and shareholders. The wide range of full business packages to choose from is definitely a must selection for new customers.       Their organizational structure comprises of business executives, dedicated manager and customer friendly bank personnel in a diversified community of different nationalities. This diversified multi-cultural rooster of employees gives them more balance and well rounded organization that makes them more adaptable in the changing phases in business. They aim to develop world class team members and leaders that will upheld the mission and vision of the company, they have learned to reach out and respect customers and employee at the same time. At the same time their employees have learned to leverage to multi-tasking environment to meet its standard in a professional manner. The way employees are treated here shows the continuous growth and success of the company.       Diverse organization structure includes varieties of employees of different nationalities, age, sex, personality, educational background, culture, religion, physical conditions and upbringing. They have found competitive advantage from their workforce in spite of differences. All of them deserved to be treated equally and professionally to be able to perform well and deliver the kind of service upon given task. They have treated and understand their employee that they have their own responsibilities to contribute. Maximize your time, inspire people every day create an image of importance is their motivating factor to succeed.        Most of all they have trained their employees to their full potentials, their suggestion and ideas especially viable one’s is given importance in their decision making process thus the culture of encouragement favors the group to perform. Their organizational structure and culture includes; ·         Accepting diversity and multi-cultural environment and workforce to gain competitive edge and worldwide recognition more than management and executive but in every level of organization. ·         World class management executives that delivers only the best potentials and solution to the ever changing needs of banking and financial system. They have gained respects in multi-cultural and diverse corporate structure and serves as a role model for employees. ·         Personality development training program that dignifies an individual to become world class customer service advocates.  ·         Flexibility in working condition that eliminates discrimination to people who belongs to different colors and nationalities. ·         Giving importance to different beliefs and condition are upheld and practiced to ensure respect for different individuals and employees. So that they will feel accepted in the group. ·         Employees receive more than industry standard salaries and wages plus bonuses and benefits. Medical and Dental services etc. ·         Ideas, comments, suggestion, are accepted no matter how big or small if it is viable to the business. Innovation and creativity is recognized and rewarded.       They are able to upheld high quality customer service and stakeholders division of share of information and in a systematic and fair approach for convenience and fair treatments. They are the priority of HSBC in all its endeavor and undertakings.       Unbelievable a corporate bank like HSBC has not tolerate discrimination in recruitment beyond difference and background is not an issue as long as you can adhere to the commitment and services that are valuable to the customer’s needs, you can work here. And they have treated them fairly and equally.        They are able to comply with international banking laws depending on demographic region they are operating. To promote awareness and tax generating income to the government that in return supplies the basic needs of the people in their communities. They have provided charity works to government and non government organization more than revenue outlook but a helping hand to that organization that are in need. They have shared voluntary works to help customers learn about financial sustainability management. All this and more are the usual scenario at the workplace of HSBC bank that is why employees and customers are guaranteed and satisfy at the results of combined effort to deliver world class banking and financial services to the world.                 Credit:ivythesis.typepad.com

Organizational Structure and Culture in HSBC Bank

ORGANIZATIONAL STRUCTURE AND CULTURE IN HSBC BANK HSBC “the world’s local bank” stands with their corporate sayings since they are t...

IMPACT OF TRAINING AND DEVELOPMENT ON EMPLOYEE PERFORMANCE: A CASE STUDY OF ZENITH BANK, NIGERIA

IMPACT OF TRAINING AND DEVELOPMENT ON EMPLOYEE PERFORMANCE: A CASE STUDY OF ZENITH BANK, NIGERIA: CASE STUDY Human Resources: Lynchpin of an Organization             Human resource is the lynchpin of any organization non-profit or profit oriented. Without people, an organization cannot exist. Attention on the people and the meeting of their needs is important to achieve corporate objectives. (Yahaya, 2007) Training and development is a very important component of human resource administration and management. For most organizations, employee training and development takes a large chunk of their budget. In fact training and development is a human resource and organizational strategy to improve employee performance, retain employees, reduce the cost of employee turnover, and ultimately increase productivity and increase company’s profits. The Purpose of Training and Development             The purpose of training and development is extensive. Training and development builds a team of highly effective and efficient employees. Employees who are trained regularly are well motivated and have enhanced confidence and self-esteem. Training and development prepare and enhance employee’s knowledge and skills to enable them to adopt to new technology, the changes in the organization and the working environment. Training and development also creates a pool of employees for promotion or to replace employees who have left the organization.             Training and development enhances job satisfaction because the employees know what is expected of them as they are also equipped with the knowledge and tools to perform their job efficiently. Cross-training and multitasking of employees allows them to perform tasks other than what is relegated to them and gives them a sense of importance in the organization and feelings of security. The other purpose of training and development is for safety considerations, the handling of equipment, facility, and materials from the less risky to the very hazardous and the prevention of the cost of accidents. With training and development errors are reduced because employees are already well-equipped with the ways of the work (Mazin, n.d.)             No matter how expensive training and development is to organizations, the benefits are far-ranging and long-term for the individual employee and for the organization as well. Training and development is one of Zenith’s Bank competitive edge against other competing Nigerian Banks. With the total commitment of Zenith Bank to training and development it has enjoyed tremendous success in the banking business and also earned a good reputation in the country as a significant contributor to their GDP. Let’s take a look at how it is done in the bank. Zenith Company             The Zenith Bank in Nigeria employs training and development as an organizational strategy of retaining employees. In a study conducted by Gberevbie, (2010) over a five year period from 2000 to 2005, he found out, that strategies that target retention of employees brings more profit to the organization. He was referring to training and development as one of these strategies. Other strategies include the promotion of the organization’s image, participation of staff in the organizational decision-making, regular enhancement of salary and other benefits and fair and just treatment of employees. The need for the abovementioned strategies is imperative. Organizations that have succeed to establish appropriate and effective employee-retention strategies experience a lesser number of employee turnover.             Yahaya (2007) conducted a comparative study on Zenith Bank, Union Bank and First Bank. He found out that Zenith Bank generated more revenues by training its employees with the use of information technology. Although its number of employees is fewer compared to First Bank, Zenith gained more because of their effective and efficient employees.  Zenith bank met the most standard requirements. Employees were satisfied with the training and development opportunities that are available at Zenith Bank. The opportunities mentioned by the employees are, job training, employee orientation, skills enhancement training, learning and practicing of new skills, and the regular and periodic schedule of training and development in all the areas of the organization. In Zenith bank, employees attend both in-house and off-shore training and development courses on a regular basis. This is also complemented by regular on-the-job-training and incentive schemes such as scholarship grants to children and spouses. Further in this bank formal and informal modes of communication are utilized to communicate with the employees.             Over-all Zenith Bank enjoyed a huge success more than the other banks studied. Zenith Banks competitive strategy is the development and retention of its human resources through training and development. With training and development, employees are more motivated, more effective and more efficient, and more productive. In the end, Zenith Bank regained its training and development investment because of its large margin of revenues. REFERENCES Anonymous, n.d. Impact-Of-Training-And-Development-On-Employee’s-Performance-A-Study-Of-General-Employees. [online] Available at:< http://www.scribd.com/doc/38516457/IMPACT-OF-TRAINING-AND-DEVELOPMENT-ON-EMPLOYEE%E2%80%99S-PERFORMANCE-A-STUDY-OF-GENERAL-EMPLOYEES> [Accessed 26 May 2011] Gberevbie, DE, 2010. Organizational Retention Strategies and Employee Performance of Zenith Bank in Nigeria. Abstract only [online] Available at:< http://ideas.repec.org/a/eme/ajempp/v1y2010i1p61-74.html> [Accessed 26 May 2011]. Mazin, R., n.d. Effects of Training on Employee Performance. [online] Available at:< http://www.ehow.com/list_5919320_effects-training-employee-performance.html> [Accessed 26 May 2011]. Yahaya, K.A., 2007. Impact of Investment in Human Resource in Human Resource Training and Development on Employee Effectiveness in Nigerian Banks. [online] Available at:< http://yahayahmad.com/IMPACT-OF-INVESTMENT-IN-HUMAN-RESOURCE-TRAINING-BY-Dr%20YAHAYA%28MRS%29.pdf> [Accessed 26 May 2011]. Credit:ivythesis.typepad.com

IMPACT OF TRAINING AND DEVELOPMENT ON EMPLOYEE PERFORMANCE: A CASE STUDY OF ZENITH BANK, NIGERIA

IMPACT OF TRAINING AND DEVELOPMENT ON EMPLOYEE PERFORMANCE: A CASE STUDY OF ZENITH BANK, NIGERIA: CASE STUDY Human Resources: Lynchpin ...

Contributions of Excellent Customer Service to the Growth of Banking Industry ( history of banking in Ghana, quality of service in Ghanaian banks )

Contributions of Excellent Customer Service to the Growth of Banking Industry. ( history of banking in Ghana, quality of service in Ghanaian banks )         Excellent customer service is always an indispensable tool in all companies and in the corporate world.  In banking industry, such service holds a significant role so as to keep the customers or clients cling to their companies.  I remember one day, when I was about to withdraw money from a certain bank, the guard gave me a certain number, which means that I have to queue.  The number was loathsome because I got number 300.  Patience kept me a little bit to stay for about 45 minutes.  But lo and behold, the long line seemed stagnant and, the staff were somewhat confused by the unexpected throng of people.  I also became impatient and to my dismay, I returned the number to the guard and returned the next day.  I don’t know whether the bank has already changed its quality of service because I already opened up another bank account.      Some economic experts would say that the mirror of the nation’s economy is the quality of banking industry.  In attesting to this, there is no other banking history in the world that can be told with so much weight and richness of its own history, and which is so much cultivated in its political and story of freedom, than the roots of banking in Ghana.  The Bank of Ghana traces its origin to the Bank of the Gold Coast ( BCG ), where it was nurtured.  As soon as local politicians and economists saw political independence in sight in the mid 1950s, the agitation for a central bank was revived. (1) It was debated upon that a Central Bank was one powerful entity which would give wholesome color and inspiration to a country’s independence.  As history has it, Ghana had been under the British colony.  Hence, on the fourth of March 1957, just two days before political independence would be granted, the Bank of Ghana was formally established by the Bank of Ghana Ordinance (no.34) of 1957, passed by the British Parliament.  So in 1957, the Gold Coast became the independent state of Ghana within the commonwealth. (2) Almost 54 yrs ago, what have we been hearing from the economic status and especially the way the Ghanaian operate their banking systems?  The people of Ghana have been succeeding economically and, observers praise the banking system of that African nation which has been lording it over among African nations.  Such has been the accolades given to the quality of economy and the banking operation in the country.  Ghana banking offer high value and long term loans which are similar to the other banking techniques and promos.  However, there is a new system that proliferates in the economy of Ghana.  This new group of “reformers” poses a treat in the integrity and long foundation of banking system in Ghana.  The well-known group of SUSU (3) which has found some allies from the third world banking systems, has introduced a new kind of money-lending system which is a complete opposite of the banking operation of Ghana.  SUSU, penetrated the poor community and the majority of them embraced this new breed of “economic savior.”  In the light of Ghana’s banking system and the excellent customer service that Ghanaian offer to their country, why is it that there are still some groups which deviate from the original ones?  Perhaps the quality of customer service in the banks of Ghana have been declining in the recent years, and may be affected by the regression of the first world countries.  Or it may be surmised that, corruptions have already crept in the government and in the banking systems.  History shows us that no matter how long in existence an institution, groups or companies maybe, father time would always test their foundation and characters.  Maybe the Ghanaian have been fed up with the way the banking system has been “modernized” so as to cater only those who are well-to do families and individuals and thereby is of no service to the majority.  The quest of Susu and their “sympathizers” may maybe put into serious considerations.  Studies have to be made and focused on whether the quality of customer service is dwindling or not, and whether the system caters to the common goal of Ghana.  Excellent customer service can really contribute to the growth of banking industry once the ideal of the people and their common good is served and uphold.  Ghanaian have to reminisced the history on how their banking system was founded.  Of course, once they “relearned” that their political independence can never be separated from the foundation of their banking system, then they would all work out unanimously for the betterment of operating their monetary systems.  Once this is achieved, then for sure, excellent customer service would always be the integral part of their banking industry.  And ultimately of course, Ghanaian economy would always appear in the map of the developing and rich countries. Footnotes: 1.    WikiPedia-Ghana       2. The heritage of Man, p.818       3. WikiPedia-Ghana         Credit:ivythesis.typepad.com

Contributions of Excellent Customer Service to the Growth of Banking Industry ( history of banking in Ghana, quality of service in Ghanaian banks )

Contributions of Excellent Customer Service to the Growth of Banking Industry. ( history of banking in Ghana, quality of service in Ghan...

Customer Relationship Management: A Case Study of a Physical Brick and Mortar Bank (First Atlantic Merchant Bank)

CUSTOMER RELATIONSHIP MANAGEMENT: A CASE STUDY OF a Physical Brick and Mortar bank (First Atlantic Merchant Bank)   This study deals with the traditional banking business or otherwise known as “brick and mortar” banks. Furthermore, in this kind of banking system, clients can deal face to face with a banker or banking employee about their multifaceted banking and financial transactions. In a brick and mortar banking system, personal interaction between the clients and the banking specialists are common requirement in order to give clients the assurance and security upon handling large amount of money or cash between them.  In this   banking system, the local teller or bank manager who knows the client may be able to provide optional services such as reversing bank fees, offering a preferred investment or mortgage rate or offering portfolio management advice among others. Additionally, physical brick and mortar banks have 24-hour banking telephone services and internet banking available for the clients.  However, setting up an automatic savings or other electronic transfers are often involved a bank teller or telephone representative intervention.  Also, paperwork for transactions, as well as the receipts and bank statements are common business practices between the bank and the clients in order to monitor the status of the accounts of the clients. (http://www.associatedcontent.com/article/5853628/brick_and_mortar_banks_vs_internet.html) In contrast   this traditional banking system, these days, various  online banking options have been coming out in the banking industry that provide 24/7 online banking services  without  the traditional routine  banking practices  that are done in the physical brick and mortar banking.  In the contrary, the greatest advantage of internet banking is it has very low operational costs compare to physical brick and mortar banking. In this relation, internet banking has very low overhead expenditures, for internet-banks can reduce their employment scheme. Unlike in traditional brick and mortar banking where there is a standard requirement to hire banking employees in every area to serve banking clients effectively and efficiently.  As a result, internet-only banks   have the capacity to offer higher interest rates on savings and checking accounts to the clients; as well as it has unlimited free internet and online transactions.  These privileges are obviously can not be provided by a brick and mortar bank. (http://www.associatedcontent.com/article/5853628/brick_and_mortar_banks_vs_internet.html) Furthermore, this research also found out that the First Atlantic Merchant Bank of Ghana is a private banking sector that was established in August 1994 under the laws of the Republic of Ghana and has been started operations as a merchant bank in November 1995. This bank was founded by the chief executive of AIL, Mr. Sabah Bedwei Majdoub  started operations soon after. More than that, it has  wide range of services that include  merchant, corporate and private banking. The bank has brokerage and assets management subsidiaries  . Over the years, the bank has focused on the development of a niche market that provides   various valuable services to a wide range of clients in the banking industry.   The bank’s clienteles have been growing in size from various business sectors such as commerce, manufacturing, services and export.  Also, it is in good performance in managing well the medium and large business entities in the country. In the same manner, the bank has been also  engaged in brokerage operations that involve buying and selling huge blocks of share in public listed firms, as well as it is into the valuation of corporate clients, so as to sponsoring initial public offerings, handling mergers and acquisitions, and managing private  placements and capital raising for  corporate clients.  On the other side, the corporate finance of the bank deals with corporate banking and relationship banking. There are key banking specialists who are managing the portfolios of various corporations. Similarly, they also provide provisions of customized banking services like corporate finance advisory, trade finance and debt management services to diversified clients. (http://www.linkedin.com/company/first-atlantic-commerce)   Subsequently, it is reported that the Social Security and National Insurance Trust (SSNIT) has a plan to sell its 50 percent share in First Atlantic Merchant Bank to Kaderi Nominees Limited. This move resulted to the complaint of the International Monetary Fund of Ghana; saying that SSNIT is dominating the operations of the financial system in the First Atlantic Merchant Bank.  The Central Bank believes that SSNIT does not have a proper strategy in managing the banking institution which it holds the majority of its shares. Nevertheless, the banking sector is strongly confident that this issue will be resolved immediately; especially now that online banking has already been implemented.   The implementation and practices of an internet and mobile banking services by the said bank is a tremendous move from its traditional banking system.  Many banking analysts in Ghana stressed out that this   modification in the banking system will surely help the Ghana’s banking industry to achieve a fast commercial banking opportunities and benefits to their existing and new clients. (http://www.citifmonline.com/index.php?id=1.287148.1.583957) References: http://www.associatedcontent.com/article/5853628/brick_and_mortar_banks_vs_internet.html http://www.linkedin.com/company/first-atlantic-commerce http://www.citifmonline.com/index.php?id=1.287148.1.583957 Credit:ivythesis.typepad.com

Customer Relationship Management: A Case Study of a Physical Brick and Mortar Bank (First Atlantic Merchant Bank)

CUSTOMER RELATIONSHIP MANAGEMENT: A CASE STUDY OF a Physical Brick and Mortar bank (First Atlantic Merchant Bank) This study deals wi...

Identify a Problem in Bank and Prepare a Research Proposal

Identify a Problem in Bank and Prepare a Research Proposal    In the United States of America, there have been numerous bank problems and failures that Federal Deposit Insurance Corporation is experiencing today. Based on this research, there are 416 banks with mixed assets of $ 299.8 billion do not passed in the FDIC’s grading system in terms of liquidity, asset value and revenues since year 1994.  The U.S. government has been taken over 81 banks that include the Guaranty Financial Group Inc. located in Texas. Similarly, Colonial Banc Group Inc. in Alabama is also experiencing extreme financial predicament at present.  Regulators are charging banks an emergency fee that raised up to $ 5.6 billion for its insurance fund.  And there has been a $ 11.6 billion loss provisions for bank failures that resulted to the downfall of the reserve fund of the clients.  According to FDIC, if the funds are exhausted, it has the option to tap a line credit at the treasury line credit.  This is   an effort from the Treasury Department of Congress that provides $ 100 billion for each problem bank, with this; the bank is allowed to borrow $ 500 billion until the last quarter of 2010.  According to FDIC chairman, Sheila Bair, problem banks and failures are being cleaned up through close monitoring of their balance sheets.  Many business analysts believe that the difficult and necessary process of recognizing loan losses are being verified and cleaned up.  According to FDIC-insured banks has an insured loss of S 3.7 billion during the second quarter, as to compare to what they gain in the first quarter that went up to 5.5 billion. The bad loans even drove many banks to significant bankruptcy.  Funds set aside by banks to cover loan losses rose to .9 billion in the second quarter from .9 billion in the first quarter.   Furthermore, there are 150 plus banks that have nonperforming loans that amounting to 5 percent of the value of the bank’s holdings. The FDIC is a state bank regulator that protects depositors  money; as well as it takes charge of finding buyers for failing banks and helps banks who have  already collapsed.  In view thereof, various studies and proposals have been analyzed and studied in order to resolve various bank issues  and failures  as well as to maintain the full  bank protection of the depositors  through deposit insurance in Federal Deposit Insurance Corporation (FDIC), the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF).  Relatively, the US government should study comprehensively the accounting area of federal deposit insurance programs through its Congressional Budget Office.  And, as mandated by US government, insurance programs, loan guarantees among others must be on a cash basis system.  This proposal has been designed in order to examine the primary factors that caused failures during bank operation. Subsequently, a thorough review of the compilation of the deposit insurance problems is very crucial in determining the causes and effects of the relevant issues or problems. Besides, the Deposit Insurance Options Paper is needed to initiate discussion and review about the process of pricing risks, funding of insurance losses; as well as the establishment of coverage limits of insurances.  And, after evaluating the main cause of prevalent identified bank problems, the concerned agencies must recommend guidelines for total reform or re-organization.  Various strategies for bank reformation are the most effective way in changing the present condition of many bankrupt banks today. Equally important, is to propose modification on the existing of deposit insurance system. The banking problems of various countries in the world magnify more to the economic depression that the whole world is experiencing right now.  FDIC researchers and banking analysts must study deeply the regulatory and supervisory response in order to eliminate bank problems and failures not only in the USA, but in the rest of the world. At this time and age, the modern evolution of innovative approaches   and methods are essential elements of changing financial marketplace. Again, the strict FDIC supervisory and monitoring system   must be always ready for the restructuring of the banking industry. But, how it will it happen? Recommendations for Deposit Insurance Reform In April, 2001, after a completing a comprehensive review, the FDIC issued recommendations for strengthening the deposit insurance system. These recommendations included merging the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF), and adopting a more risk-based system for charging insurance premiums. http://www.fdic.gov/deposit/insurance/initiative/index.html Report to the Congress on the Findings and Recommendations Concerning the “Two-Window” Deposit System Proposal. Washington, 1992. Mandated by FDICIA, a “two-window” structure would allow banking organizations to compete in non-bank markets without exposing the deposit insurance fund to undue risk. Resolutions Handbook: Methods for Resolving Troubled Financial Institutions in the United States. Washington, 1998 The report details the processes available to the FDIC for the resolution of problem banks and savings institutions. http://www.fdic.gov/bank/historical/reshandbook/index.html A Study of the Desirability and Feasibility of a Risk-Based Deposit Insurance Premium System.Washington, 1990. Another FIRREA-mandated report, the FDIC reviewed the framework for deposit insurance pricing methods and recommended procedures and an implementation strategy. Federal Home Loan Bank Board Agenda for Reform: A Report on Deposit Insurance Reform. Washington, 1983. Mandated by the Garn-St. Germain Act, the report recommended a variety of improvements in the deposit insurance system. National Commission on Financial Institution Reform, Recovery and Enforcement Origins and Causes of the S&L Debacle: A Blueprint for Reform. Washington, 1993. The Commission’s report was based on months of study, public hearings, recorded interviews and original research on the causes of the savings-and-loan crisis of the 1980s and early 1990s. The Commission focused on the major forces that led to the crisis and/or contributed to its magnitude. The report also recommended policy changes that would reduce the chances for a similar, future crisis. Office of the Comptroller of the Currency Bank Failure: An Evaluation of the Factors Contributing to the Failure of National Banks.Washington, 1988. The OCC found that in most cases of failure, specific factors and patterns of practice within the bank itself were the chief determinants of failure, although economic problems in the local market served by the bank often played a contributing role.http://www.occ.treas.gov/bankfailure.pdf Problem Bank Identification, Rehabilitation, and Resolution: a Guide for Examiners. Washington, 2001. A detailed guide to the early detection and rehabilitation of problem banks and the advanced supervision and resolution of these institutions when conditions are more serious. Considerable discussion is offered on early warning systems for examiners, the supervision strategies designed to rehabilitate problem institutions, resolution management and the bank closing process. http://www.occ.treas.gov/prbbnkgd.pdf Resolution Trust Corporation Open-Bank Assistance: A Study of Government Assistance to Troubled Banks from the RFC to the Present. Washington, 1990. This RTC research study describes four major types of open-bank assistance; the loan and investment program of the Reconstruction Finance Corporation; the FDIC’s net worth certificate program; the FDIC’s capital forbearance program; and direct open-bank assistance transactions. U.S. Congress, House Committee on Banking, Finance and Urban Affairs Banking Industry in Turmoil: A Report on the Condition of the U.S. Banking Industry and the Bank Insurance Fund. Washington, 1990. Three private-sector economists, James Barth, Dan Brumbaugh and Robert Litan, presented this study to the Subcommittee on Financial Institutions. In addition to providing an overview of the banking industry’s travails, the authors recommended a variety of reforms to the deposit insurance system, as well as legislative changes that in their view would reduce the deposit insurance liabilities of the government. Briefing Paper on Deposit Insurance: How it Originated and How it Works. Washington, 1990. The report was intended as a guide for members as the House of Representatives debated various deposit insurance reform proposals. U.S. General Accounting Office Deposit Insurance: Analysis of Reform Proposals. Washington, 1986. The report recommended strengthened supervisory and financial reporting requirements by financial institutions. Deposit Insurance: A Strategy for Reform. Washington, 1991. Mandated by FIRREA, the report outlined changes to the deposit insurance system that in the GAO’s view would promote a safe, sound and stable banking industry. Among the GAO’s many recommendations were heightened supervision of bank and thrifts and an increase in the regulatory authority of the FDIC. U.S. Office of Management and Budget Budgeting for Federal Deposit Insurance. Washington, 1991. The OMB found that the then-present system of cash accounting for deposit insurance had delayed recognition of the growing costs of the program. U.S. Department of the Treasury Modernizing the Financial System: Recommendations for Safer, More Competitive Banks.Washington, 1991. Mandated by FIRREA, this lengthy report recommended introducing a risk-based system for pricing federal deposit insurance. Many of the recommendations were incorporated into the FDICIA legislation of 1991. Recommendations for Change in the Federal Deposit Insurance System. Washington. The Working Group of the Cabinet Council on Economic Affairs, January, 1985. The report recommended risk-related pricing of deposit insurance, increasing the size of the bank and thrift funds, increasing capital requirements and improving regulatory procedures. http://www.fdic.gov/bank/historical/govstudy/ Credit:ivythesis.typepad.com

Identify a Problem in Bank and Prepare a Research Proposal

Identify a Problem in Bank and Prepare a Research Proposal In the United States of America, there have been numerous bank problem...

THE IMPACT OF CAPITAL STRUCTURE ON BANK PERFORMANCE

THE IMPACT OF CAPITAL STRUCTURE ON BANK PERFORMANCE         Capital Structure of a bank refers to their volatile financial liquidity standing. Most bank capital, especially during start-up came from combinations of various debts and equity proportion coming from shareholders to finance the company’s needs this will balance their leverage that signifies a good standing of the bank. Debts can be acquired in the form of bonds and long term credit while equity can be acquired through the participation of stakeholders or common stocks and retained earnings. A combination and proportion of such acquisition of funds can be used as a working capital.       It is also a common belief that the impact of Capital Structure can be determined to be strong if through the estimation of capital on hand is less their debt just like most business and this is the best conditions of a Capital Structured Banks although this may not mean that a bank will be stable in their future conditions but most likely they will if they have learned to maintain their good capital structure. Business may change depending on operation and eliminating the risk of liquidity is hard to determine but a good capital structure can prevent the bank from imbalance debt and equity proportion. This does not mean that the bank structure will hold their capital in this stagnant position. Most banks will play-up with basic restructuring let’s say that a certain bank start-up in good capacity and they have already acquired such balance.       Banks will need to engage in various investments or asset building business opportunities and they will naturally use the capital to this engagement and it is only through this participation they are going to earn and grow their capital. In particular they will need to leverage their capital in acquisition of land, machineries and buildings. With the increased amount of asset and decrease in the capital the question would be do they have a good return in their investment that can compensate to the equity or to their debt? This is remain to be seen in their future operation if they have a good investment and the return of investment is quiet doing well they have established a good capital structure but if their investments turns out to be non soluble this means that their liquidity is at risk it can affect their capital structure up to the extent of bankruptcy.          In a situation like this, banks should not overspend through acquisition and business participation but they need to budget their money in various investment if they want to keep their liquidity beyond risk. Putting all eggs in one basket is a major risk in capital re structuring therefore banks can divide their investment from various business engagements until they found the right one to invest their largest shares. To be able to safe-keep their hard earn capital they may choose to engage in a low risk business but it can also acquire only a lower earning opportunity so they have an option to also engage themselves to high risk but high profit margin.       It is up to them to decide if they want to participate in high risk but high income business but the capital restructuring with this thing in mind promotes a  high risk investments and banks should be ready to prepare themselves with a lot re-structuring. In a simple term the impact of capital restructuring depends on their allocation and business distribution. The stakeholders as a capital provider of equity and debt capital will also be affected through risk so they should also be kept in mind during this time since they are highly involved in such decisions. As a stakeholder they may want to know if such engagement is secure so they may feel comfortable that their investment is protected. The right choice of capital restructuring is what they want.       Capital Structure in a simple understanding should benefit the bank positively and should not be the reasons for their downfall. Another impact of Capital Structure is capital scarcity; this happens in Argentina, Argentine Domestic Retail Banks that most of these banks have gone through several periods of changes including Capital Restructuring during 1994. They are able to manage the changes and they have reduced asset risk brought about by foreign banks Mexican devaluation. They have adjusted immediately in their situations and able to cope up with such situations. They may have used excess assets from retained earnings as an emergency source of funds but if a certain bank does not have this kind of Capital Structure the impact can be as damaging as insolvency or bankruptcy that can also result in total sales or prohibition of the bank to act as a balance of payment for their equity and debt.      References: http://www.casact.org/library/astin/vol38no1/341.pdf                        http://www.imf.org/external/pubs/ft/wp/wp98121.pdf  http://www.ecb.int/pub/pdf/scpwps/ecbwp1096.pdf     Credit:ivythesis.typepad.com

THE IMPACT OF CAPITAL STRUCTURE ON BANK PERFORMANCE

THE IMPACT OF CAPITAL STRUCTURE ON BANK PERFORMANCE Capital Structure of a bank refers to their volatile financial liquidity sta...

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