CHAPTER THIRTEEN Sources Of Fee Income: Investment Banking, Security Trading, Insurance, Trust, And Other Revenue-Producing Services This chapter is designed.

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Presentation transcript:

CHAPTER THIRTEEN Sources Of Fee Income: Investment Banking, Security Trading, Insurance, Trust, And Other Revenue-Producing Services This chapter is designed to explore several of the most important non-deposit financial services banks have offered to the public in recent years, including investment banking, trust services, investments in stocks, bonds,and mutual funds, insurance policies, and annuities and examine their possible benefits.

Investment Banking Services Under The Authority Of The Gramm-Leach-Bliley-Act Many Banking Firms Have Either Acquired Or Formed Their Own Investment Banking Affiliates. The Primary Role Of Investment Bankers Is to Serve As Financial Advisers To Corporations, Governments, And Other Large Institutions.

Nondeposit Investment Products Stocks Bonds Proprietary Mutual Funds Nonproprietary Mutual Funds Fixed Annuities Variable Annuities

Mutual Funds Companies that Offer Shares in a Pool of Securities and Flow Through Any Earnings Generated to Shareholding Customers

Annuities A Savings Instrument in Which the Customer Makes Cash Payments to an Investment Manager Who Places Them Into Earning Assets and Where Later the Purchaser Receives a Stream of Income From Those Assets

Trust Services These Services are Centered on the Management of Property Owned By a Bank’s Customers, Such as Land, Buildings and Other Investments

Offerings of Insurance Related Products Life Insurance Policies Life Insurance Underwriters Property-Casualty Insurance Products Underwriting Property-Casualty Insurance Risks

Product-Line Diversification Effect Offering More Than One Product or Service Through the Same Company in Order to Reduce the Overall Risk of the Revenues Flows Through the Individual Firm

Risk and Return With Traditional and Nontraditional Services Where: NT is Nontraditional Services and T is Traditional Services and r is the Correlation Between Them

Economies of Scope Employing the Same Management, Staff and Facilities to Offer Multiple Products or Services, Thereby Helping to Reduce the Per Unit Cost of Production and Delivery of Goods or Services

Customer Privacy Protecting the Personal Information That Customers Supply to Their Financial-Service Providers So That Customers are Not Damaged By the Release of Their Private Data to Outside Parties