货币银行英文复习资料Chapter Six.ppt

Chapter Six The Commercial Banks&.Their Businesses,The Sketch of Chapter Six,Emergency and Develop-ment of Commercial Banks,Survey of commercial banks The essence of commercial banks,Types and Structure of Commercial Banks Commercial banks businesses,Types of commercial banks,Segregated banking,Structure of commercial banks,Unit banking,Branch banking,Correspondent,Bank-holding,Commercial banksbalance sheet Bank businesses,Balance-sheet Assets businesses,Liabilities,-,Commercial bank management,General concerns of Bank management,Theories of bank management,Cash,Loans,Securities,Other assets,Deposits,Capital,Liquidity,Asset,Liability,Capital adequacy,Theory of asset management,Theory of liability management,Theory of asset and liability management,Universal banking,Internal structure,External structure,banking,companies,Policy-making body,Executive body,Supervisory body,Off-balance-sheet,businesses,Intermediary services,Contingent assets&liabilities,1,2,3,5,1,The Sketch of Chapter Six,Bank risk,Risk management,Credit risk,Market risk,Liquidity risk,Operational risk,Legal risk,Country risk,Making strict investigation,Applying close supervision,Asking for sufficient collaterals,Loan diversification,Bank risk and risk management,4.,S.1.Survey of Commercial Banks,1.1.Definition Commercial banks refer to the financial institutions that take financial assets and liabilities as their business objects and play comprehensive functions with funds obtained from the public in order to make profit.,S.1.Survey of Commercial Banks,1.2.The functions of commercial banks 1.Intermediary function The essence of the function is that commercial banks gather idle funds on one hand,and make loans or invest through asset businesses on the other hand.2.Payment function Based on checking deposit accounts commercial banks are entrusted with making monetary payment and receiving,settling and clearing and transferring funds for their customers.3.Money creation function Through their deposit-taking and turning loans into depository money commercial banks create money that are manifold of the primary deposits.4.Service function Besides on-balance-sheet businesses commercial banks also provide various off-balance-sheet businesses.Commercial banks have really become“financial supermarket”.,S.2.Models and Structure of Commercial Banks,2.1.Models of commercial banks 1.Universal banking 2.Segregated banking 3.The trend toward the universal model2.2.Structure of commercial banks 1,External structure of commercial banks Unit banking Branch banking Corresponding banking Bank holding companies Chain banks,S.2.Models and Structure of Commercial Banks,2.2.Structure of commercial banks 1,External structure of commercial banks Chain banks:It refers to the bank structure in which several commercial banks hold each others stocks and become the shareholders of their counterparties mutually.Seemly chain banks are independent,but they usually coordinate and support each other in their business and meet each others demand for fund.,S.2.Models and Structure of Commercial Banks,2,Internal structure of commercial banks Internal structure of commercial banks can be divided into three parts:policy-making body;executive body and supervisory body.Policy-making body is composed of shareholder meeting,board of directors and various commissions(such as credit commission,risk management commission,etc.)Executive body includes the general manager or president of a commercial bank with deputy presidents,various business divisions,branches at the different levels and various functioning divisions.Supervisory body includes board of supervisors and the general auditor who is responsible to the board of directors.,The internal structure of commercial banks,Shareholders Meeting 股东大会 Board of Directors Board of Supervisors 董事会 监事会 Commissions General Manager General Auditor 各 委员会 总经理 总稽核Credit Deposit Investment Trust Intl Accounting Statistic Personnel Training R&DDivision Division Division Division Division Division Division Division Division Division 信 存 投 信 国 会 统 人 培 发 贷 款 资 托 际 计 计 事 训 展 部 部 部 部 部 部 部 部 部 部 Branches at different levels 各级分支行,S.3.Commercial Banks Businesses,3.1.Balance sheet of commercial banks Assets=Liabilities+Net worth Bank assets are the uses of bank funds Bank liabilities are the sources of bank funds or funds banks obtain and the debts they incur.Net worth is known as capital accounts,or simply capital,thats the owners equity in the banks.,Balance Sheet of Commercial Banks Assets(Uses of Funds)Liabilities(Sources of Funds)Cash:Deposits:Vault cash Demand deposits Deposits with the central bank Savings deposits Deposits with other banks Time deposits Cash items in float Borrowings:Loans:Borrowings from the central bank Real estate loans Interbank borrowing Business loans Other borrowings Consumer loans Capital accounts:Other loans Owners equitySecurities:Capital surplus Government Securities Retained earnings Corporate bonds All other capital reserve Other assets Other liabilitiesTotal assets Total liabilities(liabilities and capital),S.3.Commercial Banks Businesses 3.2.Balance sheet businesses 1,Asset businesses,1)Cash:A,Vault cash.A certain minimum of it is needed to meet the demand of customers cash withdrawals and daily expenses of commercial banks.B,Deposits with the central bank.Its the required reserve that commercial banks keep with the central bank according to the law.As the basis on which the central bank control commercial banks credit size,this asset is disposed and managed by the central banks.C,Deposits with other banks.Its the short-term funds deposited with other commercial banks in order to maintain the business relationship,such as currency exchange,borrowing and lending,etc.D,Cash in float(托收未达资金或在途资金).,S.3.Commercial BanksBusinesses 3.1.Balance sheet businesses 1,Asset businesses,2)Loans.Loans used to be the largest source of income,but now non-interest income has exceeded income from loans for international banks.Real estate loans Business loans A,Consumer loans Securities loans.Short-term loans provided to the securities dealers,brokers,etc.Discounts Call loans(通知放款)B,Loans with fixed maturity Overdraft Unsecured loans or loans on credit C,Secured loans or mortgage loans Guaranteed loans,S.3.Commercial Banks Businesses 3.1.Balance sheet businesses 1,Asset businesses,3)Securities.They account for one-fourth of bank assets and contributing around 15 percent of bank income.4)Other assets.They are mainly banks fixed asset.,S.3.Commercial Banks Businesses 3.2.Balance sheet businesses 2,Liability businesses,1,Deposits.Different types of deposits make up commercial banks principal liabilities.Demand deposits,savings deposits,and time deposits.Innovation of deposit business:Negotiable CDs,NOW accounts,ATS accounts,etc.2,Non-deposit borrowings Borrowing from the central bank(it may take two forms:discount&an advance or loan)Interbank borrowing Borrowing through RPs Borrowing from financial markets 3,Other liabilities Issuing bonds,payable bills,prepaid funds.,S.3.Commercial Banks Businesses 3.1.Balance sheet businesses 2,Liability businesses,NOW Accounts:A NOW account is essentially a savings account on which checks may be written,but such checks are called“Negotiable Order of Withdrawal”and such an account is not a demand deposit account.ATS Accounts(Automatic Transfer Service):With an ATS account the customer maintain a minimal checking account balance and holds additional funds in an interest-bearing savings account.As checks drawn on the checking account are presented for clearance,the banks computer automatically transfers sufficient funds from the individuals savings account to the checking account to permit checks to clear and maintian the minimum checking account balance.,S.3.Commercial Banks Businesses 3.2.Balance sheet businesses 2,Liability businesses,4,Capital accounts Capital adequacy ratio(资本充足率):the ratio of total capital base to the total risk-weighted assets(资本与风险加权资产的比率).1),The 1988 Basle Accord A.Formation of capital and the minimum capital adequacy ratio 8 total capital(tier one or core capital plus tier two or supplementary capital)in relation to risk-weighted assets.4%should be core capital or tier one capital which is equal to the sum of equity including common stocks,surplus,perpetual preferred stock and disclosed reserves that are created or maintained by appropriations of retained earnings.Tier two is comprised of loan loss reserves,subordinated debt,intermediate-term preferred stock and other forms of supplementary capital,e.g.revaluation reserves,general provisions,hidden reserves and certain hybrid debt/equity instruments(带有债务性质的资本工具）,S.3.Commercial Banks Businesses 3.1.Balance sheet businesses 2,Liability businesses 4,Capital accounts,B.The Accord assigns risk weights to on-and off-balance sheet exposures according to broad categories of relative riskiness.The weights used are:0,20%,50%and 100%The Minimum Capital Requirements for On-balance Sheet Risk-Weighted AssetsRisk-adjusted assets=risk weight x asset K=ratio 0.00(A1)+0.20(A2)+0.50(A3)+1.00(A4)The Minimum Capital Requirements for off-balance Sheet Risk-Weighted Assets Risk-adjusted assets of OBS=off-balance-sheet asset x conversion factor x risk weight,S.3.Commercial Banks Businesses 3.2.Balance sheet businesses 2,Liability businesses,2，The 1997 Basle Accord“List of Core Principles for Effective Banking Supervision”serves as an amendment of the 1988 Accord which only took into account of requirement of credit risk for capital,but overlooked market risk.The purpose of the document is to establish a more effective risk controlling mechanism.3,.In April 2003 the Basle committee published“New Basle Accord”which was intended to align regulatory capital requirements more closely with underlying risks.The New Accord is to be put into effect by the end of 2006.Its based on three mutually reinforcing pillars:A,Minimum capital requirements.B,Supervisory review of capital adequacy and internal assessment process.C,Market discipline.,S.3.Commercial Banks Businesses 3.3.Off-balance sheet businesses,Off-balance sheet businesses,Intermediary services,Settlement services,Agency services,Consultative service,Contingent assets&liabilities,Loan commitment,Guarantee service,Derivative transactions,Investment banking activities,Other intermediary services,S.3.Commercial Banks Businesses 3.2.Off-balance sheet businesses,1,Off-balance sheet businesses in narrow sense-Contingent assets&liabilities Contingent assets&liabilities:They refer to financial obligation of a bank that is dependent on future events or actions of another party or possible assets&liabilities that will be incurred only in the event of some specific occurrence.1)Loan commitment LC usually are given in three forms:line of credit,revolving credit and Note Issuance Facilities,NIFs.,S.3.Commercial Banks Businesses 3.3.Off-balance sheet businesses,2)Guarantee services The major types of bank guarantee business is bankers acceptance,stand-by letters of credit or bonds and commercial letters of credit.,Principal Applicant(委托人),Beneficiary(受益人),Guarantor(担保人),1.Contract,2.Applicating for a bond,3.Issuing a,4.Claiming for indemnity,bond,5.Paying to beneficiary,6.Asking for and obtain reimbursement,Procedure for direct bonds,S.3.Commercial Banks Businesses 3.3.Off-balance sheet businesses2)Guarantee services,Procedure of commercial letters of credit,Exporter or benefi-ciary(受益人),Importer,Shipping company,Exporters bankAdvising bank,Importers bankIssuing bank,1,Signing a trade contract,3,Sending L/C,5,Shipping goods and getting B/L,7.Reimbursement(索偿),9.Delivery of goods,2.Application of L/C,8.Delivery of B/E and B/L on D/P or D/A(付款交单或承兑交单),4.Advising L/C(通知信用证),6.Submitting B/E&B/L(递交单据),S.3.Commercial Banks Businesses 3.3.Off-balance sheet businesses,3)Derivative transactions 4)Investment banking activities2.Intermediary businesses 1)Payment system A.Settlement service(支付清算类业务).It involves transfer of funds from a payers account to a payees account at a bank with a certain settling instrument.The major instruments used in settlement mainly are checks,drafts,promissory notes,collection,credit cards,etc.,Domestic clearing,Intradistrict settlement,Interdistrict settlement,collection,Remittance,International settlement,RemittanceCollectionLetter of credit,S.3.Commercial Banks Businesses 3.3.Off-balance sheet businesses 2.Intermediary businesses,B.Electronic Fund Transfer System SIC:Swiss Interbank Clearing System:Its a continious gross settlement without overdraft set by Swiss central bank.FEDWIRE(联邦电子资金汇划系统):Its a continious gross settlement with limited overdraft set by FED in the US.BOJ-NET(Bank of Japan Financial Network System（日本银行金融网络系统).Its a designated-time net settlement.CHIPS,CHAPS,SWIFT.CHIPS for Clearing House Interbank Payments System in US;CHAPS for Clearing House Automatic Payments System in UK;SWIFT For Society of the Worldwide Interbank Financial Telecommunications.,S.3.Commercial Banks Businesses 3.3.Off-balance sheet businesses 2.Intermediary businesses,C.Bank card service Credit card Debit card,S.3.Commercial Banks Businesses 3.3.Off-balance sheet businesses 2.Intermediary businesses,2)Agency service(代理类业务).In such businesses commercial banks execute their customers order as agents to deal with some economic affaire predetermined,such as brokerage of securities,financing,cash management,safekeeping,securi-tization of assets(资产证券化).etc.Securitization of assets:It refers to a new way to make loans liquid.In such a busi-ness banks put loans in a package to sell as a security to the third party.3)Consultative service(信息咨询类业务).It refers to the business that commercial banks make full use of their own sources to provide their customers with various paid information on such matters as credit investigation,credit grading,capital appraisal.market investigation and forecast of macro-economy and finance,etc.4)Other intermediary businesses.Besides those mentioned above there are trust,leasing and insurance businesses among intermediary businesses.,S.3.Commercial Banks Businesses3.4.The trend of commercial banks businesses,1.Globlization of banking business 2.Securitization of banking business3,The wild use of high and new technology.4,The expansion of banking business 5,The increased risk of banking business,S.4.Commercial banksrisk and risk management 4.1.Banks risks,Risk is the potentia1 that an event may have an adverse impact on thebanks capital or earnings.1.Credit risk It refers to the possibility that a creditor has to suffer from losses if a borrower can not make repayment of principal plus interest at maturity.It is caused by two factors:Asymmetric information and uncertainty in economic life 2.Market risk It refers to the case in which bank on-and off-balance sheet position suffer from losses because of movement of market prices.It includes interest rate risk and exchange rate risk.3.Liquidity risk It ar