商业银行管理Chap00课件4

1、Chapter FourEstablishing New Banks, Branches, ATMs, Telephone Services, and WebsitesChapter FourEstablishing New BKey TopicsChartering New Financial-Service Institutions The Performance of New Banks Establishing Full-Service Branches and In-Store Branching Establishing Limited-Service Facilities ATM

2、s and Telephone Centers The Internet and Online BankingKey TopicsChartering New FinanIntroductionFinancial-service facilities are usually established today for the convenience of customersFor most of the history of financial-service providers, convenience has meant locationCustomers views about what

3、 is convenient are changing rapidly partly due to technologyIn deciding how they will respond to customers changing demands, financial firms today have several options:Chartering new (de novo) financial institutionsEstablishing new full-service branch offices Setting up limited-service facilitiesInt

4、roductionFinancial-service Chartering a New (De Novo) Financial-Service InstitutionNo one can start a financial firm in most countries without the express approval of federal or state authorities, sometimes bothIn the case of banks, the publics need for a new (de novo) bank in a particular location

5、must be demonstratedUsually the founder stockholders must supply enough start-up capital to cover several years and show that the proposed new institution will achieve adequate levels of profitabilityGovernment chartering agencies believe financial-service providers need special scrutiny for several

6、 reasons:They hold the publics savingsMany financial firms are at the heart of the payments process to support trade and commerce, so their failure could disrupt business activityThey have the ability to create money (through granting credit)ding power), which suggests that chartering too many might

7、Chartering a New (De Novo) FinThe Bank Chartering Process in the United StatesOnly the banking commissions in each of the 50 states and the Office of the Comptroller of the Currency (OCC) can issue a charter of incorporation to start a new U.S. bankGenerally, federal standards for receiving a bank c

8、harter are more rigorous than the rules of state banking commissionsOrganizers often seek a federal bank charter for the added prestige it conveys in the minds of customers, especially large depositors The choice between pursuing a federal or a state charter usually comes down to weighing the benefi

9、ts and costs of each for the particular bank and its location(s)The Bank Chartering Process inThe Bank Chartering Process in the United States (continued)Benefits of Applying for a Federal (National) CharterIt brings added prestige due to stricter regulatory standards that may attract larger deposit

10、sIn times of trouble, the technical assistance supplied to a struggling institution by national authorities may be of better quality, giving the troubled bank a better chance to surviveFederal rules can pre-empt state lawsBenefits of Applying for a State CharterIt is generally easier and less costly

11、 to secure a state charter and supervisory fees are usually lowerThe bank need not join the Federal Reserve System Some states allow a bank to lend a higher percentage of its capital to a single borrowerState-chartered banks may be able to offer certain services that national banks may not be able t

12、o offerThe Bank Chartering Process inQuestions Regulators Usually Ask the Organizers of a New (De Novo) BankWhat are the population and geographic boundaries of the primary service area (PSA) from which the new financial firm is expected to generate most of its account activity? How many competing b

13、anks, credit unions, finance companies, and other competitors are located within the service area of the proposed new financial institution? What are competitors services, hours of operation, and distances from the proposed new institution? What are the number, types, and sizes of businesses in the

14、area?What are the traffic patterns in the area, adequacy of roads, and geographic barriers to the flow of traffic?Questions Regulators Usually AQuestions Regulators Usually Ask the Organizers of a New (De Novo) Bank (continued)What is happening to population growth, incomes, types of occupations rep

15、resented, educational levels, and the age distribution of residents in the proposed service area? The organizers often are asked to describe the financial history of the community served, the frequency with which new financial firms have appeared and their track recordWho is to own any stock issued?

16、 What amount of stock will be held by the organizers, directors, and officers? How experienced are the organizers, management, and board of directors of the new institution? What are the organizers projections for deposits, loans, revenues, operating expenses, and net income for the first few years?

17、Questions Regulators Usually AFactors Weighing on the Decision to Seek a New CharterExternal factors the organizers should consider include:The level and growth of economic activityThe need for a new financial firmThe strength and character of competition in supplying financial servicesInternal fact

18、ors the organizers should consider include:Qualifications and contacts of the organizersManagement qualityPledging of capital to cover the cost of filing a charter application and getting under wayFactors Weighing on the DecisiVolume and Characteristics of New ChartersThe number of new depository in

19、stitutions chartered in the United States annually has averaged over a hundred new banking firms in many recent yearsThere appears to be considerable public demand for more personalized service sometimes not available from large financial firmsAnalysis of charter approvals suggests that most new ban

20、ks are chartered in relatively large urban areasAs population increases relative to the number of financial firms operating in a given state, increased numbers of new charters are issuedThe great recession of 2007-2009 tended to reduce bank chartering activitySignificant increases in concentration r

21、atios tend to reduce chartering activity, as does the expansion of existing branch office networksVolume and Characteristics of How Well Do New Charters Perform? Launching a new financial firm entails riskMost new financial firms grow at a moderate to rapid rateDespite a track record of loan losses

22、that generally exceed those of established banks, most new banks are often profitable within two to three years after opening their doorsResearch also suggests that early performance is strongly tied to the experience, financial strength, and market contacts of those who put the organization togethe

23、rNew charterings have competitive effects that generally serve the public interestHow Well Do New Charters PerfoHow Well Do New Charters Perform? (continued) The most recently chartered banks show evidence of being “financially fragile” and more prone to failure than established banksNew banks tend

24、to underperform established banks in profitability and efficiency until they reach maturity One reason for new banks tendency to underperform is that they appear to be more vulnerable to real estate crisesToday new banks are more closely supervised by government regulators than are established insti

25、tutions and tend to be examined more frequentlyHow Well Do New Charters PerfoEstablishing Full-Service Branch Offices: Choosing Locations and Designing New BranchesWhen an established financial institution wishes to enter new markets or when its valued customers move, an important vehicle for market

26、 entry is the creation of new branch officesEstablishing branches is usually much cheaper than chartering new financial-service corporationsThe branching leader in the United States, the Bank of America, has more than 6,000 U.S. offices of various kindsThe location, design, and services offered by a

27、 branch office depend upon the preferences of customers and the preferences of management and employeesEstablishing Full-Service BranEXHIBIT 41 Number of Insured Commercial Bank and Branch Offices, 1935-2009 (as of Year-End)EXHIBIT 41 Number of Insured Establishing Full-Service Branch Offices: Choos

28、ing Locations and Designing New Branches (continued)Desirable sites for full-service branch offices possess some of the following characteristicsHeavy traffic countLarge numbers of retail storesPopulations that are of above-average ageA surrounding area that encompasses substantial numbers of busine

29、ss owners, managers, and professional men and women at work or in residenceA steady or declining number of service facilities operated by financial-service competitorsAbove-average population growthAbove-average population densityA relatively high target ratio of population per branchAbove-average l

30、evels of household incomeEstablishing Full-Service BranEstablishing Full-Service Branch Offices: Choosing Locations and Designing New Branches (continued)To measure the target ratio of population per branch, the following equation is usedThe larger the population served by each office, the more fina

31、ncial services are likely to be purchased, expanding revenues and enhancing operating efficiencyEstablishing Full-Service BranEstablishing Full-Service Branch Offices: Choosing Locations and Designing New Branches (continued)The decision of whether or not to establish a branch office is a capital-bu

32、dgeting decisionRequires a large initial cash outflow to fund the purchase or lease of property and to begin operationsBranches are usually created with the expectation that future net cash inflows (NCF) will be large enough to guarantee the financial firm an acceptable return (E(r) on its invested

33、capitalEstablishing Full-Service BranEstablishing Full-Service Branch Offices: Choosing Locations and Designing New Branches (continued)Other considerations when considering possible locations for new branches:The variance around that expected return, which is due mainly to fluctuations in economic

34、conditions in the area served by the branchThe covariance of expected returns from the proposed new branch, existing branches, and other assets previously acquired by the offering institutionThe impact of a new branchs expected return (RB) on the offering institutions total return (RT) from its exis

35、ting branches and other assets (ROA) can be found fromW is the proportion of total resources to be invested in new branch B(1W) is the proportion of the offering institutions resources invested in all of its other assets (OA)Establishing Full-Service BranEstablishing Full-Service Branch Offices: Cho

36、osing Locations and Designing New Branches (continued)The marginal impact of a new branch on overall risk measured by the variance of total return (RT):whereB,OA represents the correlation coefficient between the expected return from the proposed new branch and the returns from other assets of the o

37、ffering institutionB represents the standard deviation of the proposed new branchs expected returnOA represents the standard deviation of return from other assets held by the financial firmGeographic diversification can reduce overall risk exposureEstablishing Full-Service BranEstablishing Full-Serv

38、ice Branch Offices: Choosing Locations and Designing New Branches (continued)Regulation in the United States recently has made it more difficult to close full-service branch offices of depository institutionsThe FDIC Improvement Act of 1991The Community Reinvestment Act of 1977Many analysts see the

39、roles played by branch offices evolving in new directions todaySales orientationCross-sellingBranches are coming to be viewed today less as mere deposit gatherers and more as sources of fee-generating service sales and for booking profitable assetsEstablishing Full-Service BranEstablishing Full-Serv

40、ice Branch Offices: Choosing Locations and Designing New Branches (continued)In-Store BranchingA significant portion of financial-service branches today are located inside supermarkets, shopping centers, and other retail establishmentsThese retail-oriented service facilities have only a few employee

41、sHighly sales orientedIn-store branches typically are much less costly to build and maintain and tend to become profitable about 12 months earlier than stand-alone facilitiesOperate for longer hoursCan experience more traffic flow than conventional branchesEstablishing Full-Service BranEstablishing

42、and Monitoring Automated Limited-Service Facilities (“Branchless Banking”) There has been a recent spike in branchless banking due to the high cost of chartering new financial firms and setting up full-service branch officesPoint-of-sale (POS) terminalsAutomated teller machines (ATMs)Telephone banki

43、ng Internet-supplied servicesEstablishing and Monitoring AuEstablishing and Monitoring Automated Limited-Service Facilities (“Branchless Banking”) (continued)The Decision to Install a New ATMSuppose ATMs cost $50,000 each and require $30,000 to installA bank estimates that it will save $1.00 for eac

44、h check that is not written because customers will use the machine insteadLife expectancy is 10 years and it will handle 30,000 cash transactions/yearCost of capital to finance the ATMs purchase is 14%Establishing and Monitoring AuBanking in Homes, Offices, Stores, and on the StreetTelephone Banking

45、 and Call CentersThe telephone remains among the most popular channels for putting customers in touch with financial-service providers todayInternet BankingFeatures includeVerify in real time account balances at any time and from any locationMove funds instantly from one account to anotherConfirm that deposits of funds have been received, checks have cleared, and online transactions have been completedView and print images of che