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 Chap004.ppt 26页

ChapterFourEstablishingNewBanks,Branches,ATMs,TelephoneServices,andWebsites KeyTopicsCharteringNewFinancial-ServiceInstitutionsThePerformanceofNewBanksEstablishingFull-ServiceBranchesandIn-StoreBranchingEstablishingLimited-ServiceFacilitiesATMsandTelephoneCentersTheInternetandOnlineBanking IntroductionFinancial-servicefacilitiesareusuallyestablishedtodayfortheconvenienceofcustomersFormostofthehistoryoffinancial-serviceproviders,conveniencehasmeantlocationCustomers’viewsaboutwhatisconvenientarechangingrapidlypartlyduetotechnologyIndecidinghowtheywillrespondtocustomers’changingdemands,financialfirmstodayhaveseveraloptions:Charteringnew(denovo)financialinstitutionsEstablishingnewfull-servicebranchofficesSettinguplimited-servicefacilities CharteringaNew(DeNovo)Financial-ServiceInstitutionNoonecanstartafinancialfirminmostcountrieswithouttheexpressapprovaloffederalorstateauthorities,sometimesbothInthecaseofbanks,thepublic’sneedforanew(denovo)bankinaparticularlocationmustbedemonstratedUsuallythefounderstockholdersmustsupplyenoughstart-upcapitaltocoverseveralyearsandshowthattheproposednewinstitutionwillachieveadequatelevelsofprofitabilityGovernmentcharteringagenciesbelievefinancial-serviceprovidersneedspecialscrutinyforseveralreasons:Theyholdthepublic’ssavingsManyfinancialfirmsareattheheartofthepaymentsprocesstosupporttradeandcommerce,sotheirfailurecoulddisruptbusinessactivityTheyhavetheabilitytocreatemoney(throughgrantingcredit)dingpower),whichsuggeststhatcharteringtoomanymight TheBankCharteringProcessintheUnitedStatesOnlythebankingcommissionsineachofthe50statesandtheOfficeoftheComptrolleroftheCurrency(OCC)canissueacharterofincorporationtostartanewU.S.bankGenerally,federalstandardsforreceivingabankcharteraremorerigorousthantherulesofstatebankingcommissionsOrganizersoftenseekafederalbankcharterfortheaddedprestigeitconveysinthemindsofcustomers,especiallylargedepositorsThechoicebetweenpursuingafederalorastatecharterusuallycomesdowntoweighingthebenefitsandcostsofeachfortheparticularbankanditslocation(s) TheBankCharteringProcessintheUnitedStates(continued)BenefitsofApplyingforaFederal(National)CharterItbringsaddedprestigeduetostricterregulatorystandardsthatmayattractlargerdepositsIntimesoftrouble,thetechnicalassistancesuppliedtoastrugglinginstitutionbynationalauthoritiesmaybeofbetterquality,givingthetroubledbankabetterchancetosurviveFederalrulescanpre-emptstatelawsBenefitsofApplyingforaStateCharterItisgenerallyeasierandlesscostlytosecureastatecharterandsupervisoryfeesareusuallylowerThebankneednotjointheFederalReserveSystemSomestatesallowabanktolendahigherpercentageofitscapitaltoasingleborrowerState-charteredbanksmaybeabletooffercertainservicesthatnationalbanksmaynotbeabletooffer QuestionsRegulatorsUsuallyAsktheOrganizersofaNew(DeNovo)BankWhatarethepopulationandgeographicboundariesoftheprimaryservicearea(PSA)fromwhichthenewfinancialfirmisexpectedtogeneratemostofitsaccountactivity?Howmanycompetingbanks,creditunions,financecompanies,andothercompetitorsarelocatedwithintheserviceareaoftheproposednewfinancialinstitution?Whatarecompetitors’services,hoursofoperation,anddistancesfromtheproposednewinstitution?Whatarethenumber,types,andsizesofbusinessesinthearea?Whatarethetrafficpatternsinthearea,adequacyofroads,andgeographicbarrierstotheflowoftraffic? QuestionsRegulatorsUsuallyAsktheOrganizersofaNew(DeNovo)Bank(continued)Whatishappeningtopopulationgrowth,incomes,typesofoccupationsrepresented,educationallevels,andtheagedistributionofresidentsintheproposedservicearea?Theorganizersoftenareaskedtodescribethefinancialhistoryofthecommunityserved,thefrequencywithwhichnewfinancialfirmshaveappearedandtheirtrackrecordWhoistoownanystockissued?Whatamountofstockwillbeheldbytheorganizers,directors,andofficers?Howexperiencedaretheorganizers,management,andboardofdirectorsofthenewinstitution?Whataretheorganizers’projectionsfordeposits,loans,revenues,operatingexpenses,andnetincomeforthefirstfewyears? FactorsWeighingontheDecisiontoSeekaNewCharterExternalfactorstheorganizersshouldconsiderinclude:ThelevelandgrowthofeconomicactivityTheneedforanewfinancialfirmThestrengthandcharacterofcompetitioninsupplyingfinancialservicesInternalfactorstheorganizersshouldconsiderinclude:QualificationsandcontactsoftheorganizersManagementqualityPledgingofcapitaltocoverthecostoffilingacharterapplicationandgettingunderway VolumeandCharacteristicsofNewChartersThenumberofnewdepositoryinstitutionscharteredintheUnitedStatesannuallyhasaveragedoverahundrednewbankingfirmsinmanyrecentyearsThereappearstobeconsiderablepublicdemandformorepersonalizedservicesometimesnotavailablefromlargefinancialfirmsAnalysisofcharterapprovalssuggeststhatmostnewbanksarecharteredinrelativelylargeurbanareasAspopulationincreasesrelativetothenumberoffinancialfirmsoperatinginagivenstate,increasednumbersofnewchartersareissuedThegreatrecessionof2007-2009tendedtoreducebankcharteringactivitySignificantincreasesinconcentrationratiostendtoreducecharteringactivity,asdoestheexpansionofexistingbranchofficenetworks HowWellDoNewChartersPerform?LaunchinganewfinancialfirmentailsriskMostnewfinancialfirmsgrowatamoderatetorapidrateDespiteatrackrecordofloanlossesthatgenerallyexceedthoseofestablishedbanks,mostnewbanksareoftenprofitablewithintwotothreeyearsafteropeningtheirdoorsResearchalsosuggeststhatearlyperformanceisstronglytiedtotheexperience,financialstrength,andmarketcontactsofthosewhoputtheorganizationtogetherNewcharteringshavecompetitiveeffectsthatgenerallyservethepublicinterest HowWellDoNewChartersPerform?(continued)Themostrecentlycharteredbanksshowevidenceofbeing“financiallyfragile”andmorepronetofailurethanestablishedbanksNewbankstendtounderperformestablishedbanksinprofitabilityandefficiencyuntiltheyreachmaturityOnereasonfornewbanks’tendencytounderperformisthattheyappeartobemorevulnerabletorealestatecrisesTodaynewbanksaremorecloselysupervisedbygovernmentregulatorsthanareestablishedinstitutionsandtendtobeexaminedmorefrequently EstablishingFull-ServiceBranchOffices:ChoosingLocationsandDesigningNewBranchesWhenanestablishedfinancialinstitutionwishestoenternewmarketsorwhenitsvaluedcustomersmove,animportantvehicleformarketentryisthecreationofnewbranchofficesEstablishingbranchesisusuallymuchcheaperthancharteringnewfinancial-servicecorporationsThebranchingleaderintheUnitedStates,theBankofAmerica,hasmorethan6,000U.S.officesofvariouskindsThelocation,design,andservicesofferedbyabranchofficedependuponthepreferencesofcustomersandthepreferencesofmanagementandemployees EXHIBIT4–1NumberofInsuredCommercialBankandBranchOffices,1935-2009(asofYear-End) EstablishingFull-ServiceBranchOffices:ChoosingLocationsandDesigningNewBranches(continued)Desirablesitesforfull-servicebranchofficespossesssomeofthefollowingcharacteristicsHeavytrafficcountLargenumbersofretailstoresPopulationsthatareofabove-averageageAsurroundingareathatencompassessubstantialnumbersofbusinessowners,managers,andprofessionalmenandwomenatworkorinresidenceAsteadyordecliningnumberofservicefacilitiesoperatedbyfinancial-servicecompetitorsAbove-averagepopulationgrowthAbove-averagepopulationdensityArelativelyhightargetratioofpopulationperbranchAbove-averagelevelsofhouseholdincome EstablishingFull-ServiceBranchOffices:ChoosingLocationsandDesigningNewBranches(continued)Tomeasurethetargetratioofpopulationperbranch,thefollowingequationisusedThelargerthepopulationservedbyeachoffice,themorefinancialservicesarelikelytobepurchased,expandingrevenuesandenhancingoperatingefficiency EstablishingFull-ServiceBranchOffices:ChoosingLocationsandDesigningNewBranches(continued)Thedecisionofwhetherornottoestablishabranchofficeisacapital-budgetingdecisionRequiresalargeinitialcashoutflowtofundthepurchaseorleaseofpropertyandtobeginoperationsBranchesareusuallycreatedwiththeexpectationthatfuturenetcashinflows(NCF)willbelargeenoughtoguaranteethefinancialfirmanacceptablereturn(E(r))onitsinvestedcapital EstablishingFull-ServiceBranchOffices:ChoosingLocationsandDesigningNewBranches(continued)Otherconsiderationswhenconsideringpossiblelocationsfornewbranches:Thevariancearoundthatexpectedreturn,whichisduemainlytofluctuationsineconomicconditionsintheareaservedbythebranchThecovarianceofexpectedreturnsfromtheproposednewbranch,existingbranches,andotherassetspreviouslyacquiredbytheofferinginstitutionTheimpactofanewbranch’sexpectedreturn(RB)ontheofferinginstitution’stotalreturn(RT)fromitsexistingbranchesandotherassets(ROA)canbefoundfromWistheproportionoftotalresourcestobeinvestedinnewbranchB(1–W)istheproportionoftheofferinginstitution’sresourcesinvestedinallofitsotherassets(OA) EstablishingFull-ServiceBranchOffices:ChoosingLocationsandDesigningNewBranches(continued)Themarginalimpactofanewbranchonoverallriskmeasuredbythevarianceoftotalreturn(RT):whereρB,OArepresentsthecorrelationcoefficientbetweentheexpectedreturnfromtheproposednewbranchandthereturnsfromotherassetsoftheofferinginstitutionσBrepresentsthestandarddeviationoftheproposednewbranch’sexpectedreturnσOArepresentsthestandarddeviationofreturnfromotherassetsheldbythefinancialfirmGeographicdiversificationcanreduceoverallriskexposure EstablishingFull-ServiceBranchOffices:ChoosingLocationsandDesigningNewBranches(continued)RegulationintheUnitedStatesrecentlyhasmadeitmoredifficulttoclosefull-servicebranchofficesofdepositoryinstitutionsTheFDICImprovementActof1991TheCommunityReinvestmentActof1977ManyanalystsseetherolesplayedbybranchofficesevolvinginnewdirectionstodaySalesorientationCross-sellingBranchesarecomingtobeviewedtodaylessasmeredepositgatherersandmoreassourcesoffee-generatingservicesalesandforbookingprofitableassets EstablishingFull-ServiceBranchOffices:ChoosingLocationsandDesigningNewBranches(continued)In-StoreBranchingAsignificantportionoffinancial-servicebranchestodayarelocatedinsidesupermarkets,shoppingcenters,andotherretailestablishmentsTheseretail-orientedservicefacilitieshaveonlyafewemployeesHighlysalesorientedIn-storebranchestypicallyaremuchlesscostlytobuildandmaintainandtendtobecomeprofitableabout12monthsearlierthanstand-alonefacilitiesOperateforlongerhoursCanexperiencemoretrafficflowthanconventionalbranches EstablishingandMonitoringAutomatedLimited-ServiceFacilities(“BranchlessBanking”)Therehasbeenarecentspikeinbranchlessbankingduetothehighcostofcharteringnewfinancialfirmsandsettingupfull-servicebranchofficesPoint-of-sale(POS)terminalsAutomatedtellermachines(ATMs)TelephonebankingInternet-suppliedservices EstablishingandMonitoringAutomatedLimited-ServiceFacilities(“BranchlessBanking”)(continued)TheDecisiontoInstallaNewATMSupposeATMscost$50,000eachandrequire$30,000toinstallAbankestimatesthatitwillsave$1.00foreachcheckthatisnotwrittenbecausecustomerswillusethemachineinsteadLifeexpectancyis10yearsanditwillhandle30,000cashtransactions/yearCostofcapitaltofinancetheATM’spurchaseis14% BankinginHomes,Offices,Stores,andontheStreetTelephoneBankingandCallCentersThetelephoneremainsamongthemostpopularchannelsforputtingcustomersintouchwithfinancial-serviceproviderstodayInternetBankingFeaturesincludeVerifyinrealtimeaccountbalancesatanytimeandfromanylocationMovefundsinstantlyfromoneaccounttoanotherConfirmthatdepositsoffundshavebeenreceived,checkshavecleared,andonlinetransactionshavebeencompletedViewandprintimagesofchecksthathavepassedthroughacustomer’saccountSubmitanapplicationforloansandcreditcardsCarryoutonlinebillpaying Financial-ServiceFacilitiesoftheFutureDespitecontinuallyadvancingtechnology,mostexpertsseemtoagreethatthetotalnumberoffinancial-serviceoutletsindustrywidemaynotdeclinesignificantlyforatimeTheuseof“digitalcash”willpermitcustomerstobetheirownfinancial-servicebranchesforcertaintransactionsServiceprovidersarelikelytoevaluatethesuccessoftheirbranchofficesandlimited-servicefacilitiesintermsofprofitsandcostspersquarefootOutsourcingoffinancialservicedeliveryislikelytogrow QuickQuizWhyisthephysicalpresenceofabankstillimportanttomanycustomersdespiterecentadvancesinlong-distancecommunicationstechnology?WhochartersnewbanksintheUnitedStates?Whataretheadvantagesofhavinganationalbankcharter?Astatebankcharter?WhatkindsofinformationmusttheorganizersofnewnationalbanksprovidetheComptrolleroftheCurrencyinordertogetacharter?Whymightthisrequiredinformationbeimportant?Whatarethekeyfactorstheorganizersofanewfinancialfirmshouldconsiderbeforedecidingtoseekacharter?WhatarePOSterminals,andwherearetheyusuallylocated?WhatservicesdoATMsprovide?WhataretheprincipallimitationsofATMsasaserviceprovider?ShouldATMscarryfees?Why?