Financial Institutions and Markets Winter 2009 – FIN 304 Dr. Andrew L. H. Parkes Day 15 “How do financial markets work?” 卜安吉.

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Financial Institutions and Markets Winter 2009 – FIN 304 Dr. Andrew L. H. Parkes Day 15 “How do financial markets work?” 卜安吉

Jan. 19, 2010Financial Institutions & Markets, Day 152 Chapter 15: Bank Management Which is worth more? By Deposits … RankNameHeadquarters Deposits (billions) 1Bank of AmericaCharlotte, NC$683 2CiticorpNew York, NY$628 3JP Morgan ChaseNew York, NY$584 4WachoviaCharlotte, NC$330 5Wells Fargo San Francisco, CA $308 6Washington MutualSeattle, WA$204 7HSBC HoldingLondon$127 8SunTrust BankAtlanta, GA$122 9U.S. Bancorp Minneapolis, MN $ Royal Bank of Scotland Edinburgh$99

Jan. 19, 2010Financial Institutions & Markets, Day 153 Chapter 15: Bank Management Which is worth more? By Deposits … Financial Assets of ALL Banks in the USA $ 10,792,690,613,000 Financial Assets of ALL FDIC insured institutions: $ 12,707,112,393,000

Jan. 19, 2010Financial Institutions & Markets, Day 154 Chapter 15: Bank Management What are they? Deposits are … List the four major Assets and Liabilities of any Bank/Savings or Credit Union Institution

Jan. 19, 2010Financial Institutions & Markets, Day 155 Chapter 15: Bank Management What are they? Deposits are … Two types of deposits Borrowing Loans Reserves – two types Bank Capital – Equity or Net Worth

Jan. 19, 2010Financial Institutions & Markets, Day 156 Chapter 15: Bank Management Show the balance sheet of the Third Savings Bank. The bank has $120,000 in checkable deposits, $250,000 in time deposits, is borrowing $30,000, has $45,000 in bank capital, a 12 % required reserve ratio as well as $340,000 in loans and $80,000 in securities. What is the amount of excess reserves?

Jan. 19, 2010Financial Institutions & Markets, Day 157 Chapter 15: Bank Management How to use more reserves? By Deposits … ? b) Now using with a balance sheet show what happens to this bank if there is a deposit outflow of $5,000.

Jan. 19, 2010Financial Institutions & Markets, Day 158 Chapter 15: Bank Management c) Now using a balance sheet show what happens to this bank if there is an additional deposit outflow of $8,000, make sure to explain how you, as the bank account manager, would deal with any issues!

Jan. 19, 2010Financial Institutions & Markets, Day 159 Chapter 15: Bank Management What is the correct level of ownership? More owners – more capital and larger potential assets. The more owners, the more conflicts the smaller ROE! … ? d) What is the percentage of bank capital? What is the requirement?

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