商业银行管理全套配套课件英文PPT教师手册习题习题答案 Chap013.ppt 22页

ChapterThirteenManagingNondepositLiabilities KeyTopicsLiabilityManagementCustomerRelationshipDoctrineAlternativeNondepositFundsSourcesMeasuringtheFundsGapChoosingamongDifferentFundsSourcesDeterminingtheOverallCostofFunds IntroductionThetraditionalsourceoffundsformostdepositoryinstitutionsisthedepositaccountButwhatdoesmanagementdotofindnewmoneywhendepositvolumeisinadequatetosupportallloansandinvestmentstheseinstitutionswouldliketomake?Inthischapterweexploreyetanotherimportantnondepositsourceoffunding–sellingIOUsinthemoneyandcapitalmarketsforperiodsoftimethatmaystretchfromovernighttoseveralyears LiabilityManagementandtheCustomerRelationshipDoctrineTheCustomerRelationshipDoctrineThefirstpriorityofalendinginstitutionistomakeloanstoallthosecustomersfromwhomthelenderexpectstoreceivepositivenetearningsThus,lendingdecisionsoftenprecedefundingdecisionsAllloansandinvestmentswhosereturnsexceedtheircostandwhosequalitymeetsthelendinginstitution’screditstandardsshouldbemadeIfenoughdepositsarenotimmediatelyavailabletocovertheseloansandinvestments,thenmanagementshouldseekoutthelowest-costsourceofborrowedfundsavailabletomeetitscustomers’creditneedsDuringthecollapseofthesubprimemortgagemarketinthe2007-2009businessrecession,regulatorsfoundthatmanymortgagelenderswentoverboardinapprovingloans,fallingwellbelownormalindustrystandardswithlittleornodocumentation LiabilityManagementandtheCustomerRelationshipDoctrine(continued)LiabilityManagementDuringthe1960sand1970s,thecustomerrelationshipdoctrinespawnedtheliquiditymanagementstrategyknownasliabilitymanagementThebankbuysfundsinordertosatisfyloanrequestsandreserverequirementsItisaninterest-sensitiveapproachtoraisingbankfundsItisflexible–ThebankcandecideexactlyhowmuchtheyneedandforhowlongThecontrolmechanismtoregulateincomingfundsisthepriceoffunds TABLE13–1SampleUseofNondepositFundsSourcestoSupplementDepositsandMakeLoans AlternativeNondepositSourcesofFundsFederalFundsMarketRepurchaseAgreementsBorrowingfromFederalReserveBanksAdvancesfromtheFederalHomeLoanBankNegotiableCDsEurocurrencyDepositMarketCommercialPaperLong-TermNondepositFundsSourcesTheusageofnondepositsourcesoffundshasrisenLargerinstitutionsrelyonthenondepositfundsmarketasakeysourceofshort-termmoneytomeetloandemandandunexpectedcashemergencies TABLE13–2RecentGrowthinNondepositSourcesofBorrowedFundsatFDIC-InsuredBanksandThrifts TABLE13–3TheRelationshipbetweentheSizeofBanksandTheirUseofNondepositBorrowings(2007figuresforFDIC-insuredbanks) AlternativeNondepositSourcesofFunds(continued)FederalFundsMarketBorrowingfromFederalReserveBanksImmediatelyavailablereservesaretradedbetweenfinancialinstitutionsandusuallyreturnedwithin24hoursDepositswithcorrespondentbanksanddemanddepositbalancesofsecuritydealersandgovernmentscanbeusedforloanstoinstitutionsTypesofFedFundsLoanAgreementsOvernightLoansNegotiatedviawireortelephone,returnedthenextdayNormallynotsecuredbyspecificcollateralTermLoansLongertermFedfundscontracts(severaldays,weeks,ormonths)ContinuingContractsAutomaticallyrenewedeachdayNormallybetweensmallerrespondentinstitutionsandtheirlargercorrespondents AlternativeNondepositSourcesofFunds(continued)RepurchaseAgreements(RPs)asaSourceofFundsLesspopularthanFedfundsandmorecomplexViewedascollateralizedFedfundstransactionsWithRPs,thepurchaserofFedfundsprovidescollateralintheformofmarketablesecurities,reducingthecreditriskMostdomesticRPsaretransactedacrosstheFedWiresystemAnRPtransactionisoftenforovernightfundsItmaybeextendedfordays,weeks,orevenmonthsMajorinnovationintheRPmarketwastheinventionofGeneralCollateralFinance(GCF)RPs AlternativeNondepositSourcesofFunds(continued)BorrowingfromFederalReserveBanksTheFedwillmaketheloanthroughitsdiscountwindowbycreditingtheborrowinginstitution’sreserveaccountEachloanmadebytheFederalReservebanksmustbebackedbycollateralacceptabletotheFedSeveraltypesofloansareavailablefromtheFed’sdiscountwindowPrimaryCreditThisloanisavailableforshorttermsandtoinstitutionsinsoundfinancialconditionRateisslightlyhigherthanthefederalfundsrateSecondaryCreditTheseloansareavailableatahigherinterestratetoinstitutionsnotqualifyingforprimarycreditSeasonalCreditTheseloanscoverlongerperiodsthanprimarycreditforsmallandmediuminstitutionsexperiencingseasonalswingsindepositsandloans AlternativeNondepositSourcesofFunds(continued)AdvancesfromFederalHomeLoanBanksAllowsinstitutions(homemortgagelenders)tousehomemortgagesascollateralforadvancesAwaytoimprovetheliquidityofhomemortgagesandencouragemorelenderstoprovidecreditNumberofloanshasincreaseddramaticallyinrecentyearsMaturitiesrangefromovernighttomorethan20yearsFederalHomeLoanBank(FHLB)Systemhas12regionalbanksHasfederalcharterandcanborrowcheaplyandpasssavingsontoinstitutions AlternativeNondepositSourcesofFunds(continued)DevelopmentandSaleofLargeNegotiableCDsAninterest-bearingreceiptevidencingthedepositoffundsinthebankforaspecifiedperiodoftimeforaspecifiedinterestrateItisconsideredahybridaccountsinceitislegallyadepositTypesofNegotiableCDsDomesticCDs.EuroCDsYankeeCDsThriftCDsFixed-rateCDsVariable-rateCDs AlternativeNondepositSourcesofFunds(continued)DevelopmentandSaleofLargeNegotiableCDsInterestratesonfixed-rateCDsarequotedonaninterest-bearingbasisandtherateiscomputedassuminga360-dayyearRepresentthemajorityofalllargenegotiableCDsissuedExampleSupposeadepositoryinstitutionpromisesan8percentannualinterestratetothebuyerofa$100,000six-month(180-day)CDThedepositorwillhavethefollowingattheendofsixmonths AlternativeNondepositSourcesofFunds(continued)TheEurocurrencyDepositMarketEurocurrencydepositsweredevelopedoriginallyinWesternEuropetoprovideliquidfundsthatcouldbeswappedamongmultinationalbanksorloanedtothebanks’largestcustomersEurodollarsaredollar-denominateddepositsplacedinbankofficesoutsidetheUnitedStatesBecausetheyaredenominatedonthereceivingbanks’booksindollarsratherthaninthecurrencyofthehomecountryandconsistofaccountingentriesintheformoftimedeposits,theyarenotspendableonthestreetlikecurrencyMostEurodollardepositsarefixed-ratetimedepositsFloating-rateCDs(FRCDs)andfloating-ratenotes(FRNs)wereintroducedinanefforttoprotectbanksandtheirEurodepositorsfromtheriskoffluctuatinginterestratesTheEurocurrencymarketisthelargestunregulatedfinancialmarketplaceintheworld AlternativeNondepositSourcesofFunds(continued)CommercialPaperMarketCommercialpaperconsistsofshort-termnotes,withmaturitiesnormallyrangingfromthreeorfourdaystoninemonths,issuedbywell-knowncompaniestoraiseworkingcapitalIndustrialPaper–purchaseinventoriesFinancePaper–IssuedbyfinancecompaniesandfinancialholdingcompaniesThenotesaregenerallysoldatadiscountfromfacevaluethroughsecuritydealersorthroughdirectcontactwiththeissuingcompanyThisfundssourcetendstobehighinvolumeandmoderateincostbutalsovolatileinavailablecapacityandsubjecttocreditriskRecentlyforeignbankshaveacceleratedtheirminingofbothEuropeanandAmericanpapermarketsdespitethepressuresoftheGreatRecession AlternativeNondepositSourcesofFunds(continued)Long-TermNondepositFundsSourcesThenondepositsourcesoffundsdiscussedtothispointaremainlyshort-termborrowingsHowever,manyfinancialfirmsalsotaplonger-termnondepositfundsstretchingwellbeyondoneyearExamplesincludemortgagesissuedtofundtheconstructionofbuildingsandcapitalnotesanddebenturesTheselonger-termnondepositfundssourceshaveremainedrelativelymodestovertheyearsduetoregulatoryrestrictionsandtheaugmentedrisksassociatedwithlong-termborrowingAlso,becausemostassetsandliabilitiesheldbydepositoryinstitutionsareshort-tomedium-term,issuinglong-termindebtednesscreatesasignificantmaturitymismatch ChoosingamongAlternativeNondepositSourcesThedemandfornondepositfundsisdeterminedbasicallybythesizeofthegapbetweentheinstitution’stotalcreditdemandsanditsdepositsandotheravailablemoniesGapisbasedon:CurrentandprojecteddemandandinvestmentsthebankdesirestomakeCurrentandexpecteddepositinflowsandotheravailablefundsSizeofthisgapdeterminestheneedfornondepositfunds ChoosingamongAlternativeNondepositSources(continued)NondepositFundingSources:FactorstoConsiderTherelativecostsofraisingfundsfromeachsourceTherisk(volatilityanddependability)ofeachfundingsourceThelengthoftime(maturityorterm)forwhichfundsareneededThesizeoftheinstitutionthatrequiresmorefundsRegulationslimitingtheuseofalternativefundssources ChoosingamongAlternativeNondepositSources(continued)Agoodformulafordoingcostcomparisonsamongalternativesourcesoffunds QuickQuizWhatisliabilitymanagement?Whatadvantagesandrisksdoesthepursuitofliabilitymanagementbringtoaborrowinginstitution?Whatisthecustomerrelationshipdoctrine,andwhatareitsimplicationsforfund-raisingbylendinginstitutions?WhataretheprincipaladvantagestotheborroweroffundsunderanRPagreement?WhataretheadvantagesofborrowingfromtheFederalReservebanksorothercentralbank?Arethereanydisadvantages?HowisadiscountwindowloanfromtheFederalReservesecured?Iscollateralreallynecessaryforthesekindsofloans?WhywerenegotiableCDsdeveloped?Whatistheavailablefundsgap?Whatfactorsmustthemanagerofafinancialinstitutionweighinchoosingamongthevariousnondepositsourcesoffundingavailabletoday?