FIN4320_Lecture_6_Bank_Relationships(42p)

FIN4320_Lecture_6_Bank_Relationships(42p) - Bank...

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Bank Relationship, Balance, and Compensation Management
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Objectives of Relationship Management Ensure The Company's Banking Services are Provided Reliably at a Reasonable Cost Developing a Relationship/Partnership Developing a Partnership Approach Maintaining Access to Credit Developing Service Relationships Non-Credit Services Managing Costs and Quality Monitoring Financial Institutions Risk
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Service Provider Selection Selection Process Informal Request for Information (RFI) Narrow list of potential providers Request for Proposal (RFP) More formal, outlines objectives and service requirements
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Service Provider Selection Selection Criteria Products Pricing Service Quality Location RFP/RFI Etiquette
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Issues in Financial Institution Relationship Management Creditworthiness CAMELS Ratings Issued by regulators using the Uniform Financial Institutions Rating system Capital Asset Quality Management Quality Earnings Liquidity Sensitivity to Market Risk Rating Agencies
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Issues in Financial Institution Relationship Management Number of Relationships Optimize the number of relationships since each has costs and benefits. Accessibility to Credit Costs Collection/Concentration System Global Banking Business Strategy Where does the bank fit in the firm’s business strategy Bank Strength and Capabilities Services Provided
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Issues in Financial Institution Relationship Management Negotiation and Pricing Relationship Documentation Account Resolution Authorization from the board on who can do what Signature Cards Terms and Conditions Details responsibilities of the bank and the customer Service Agreements Performance standards, operating procedures, liability, etc.
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Issues in Financial Institution Relationship Management Audit and Control Need to reconcile accounts on a regular basis Separation of duties
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Issues in Financial Institution Relationship Management Performance Measurement and Evaluation Report Cards Errors in service, reporting times, etc. May be done monthly, quarterly or annually Relationship Review More formal, usually on a quarterly or annual basis Standards established by Banking Administration Institute (BAI)
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Bank Compensation and Account Analysis Relationship Approach Relationship should be beneficial to both the bank and the customer Account Analysis AFP standard account analysis AFP Service Codes 05 Lockbox 10 Depository Services 15 Paper Disbursement Services 25 General ACH Services
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Bank Compensation and Account Analysis Account Analysis ASC X12 822 Account Analysis Format Can incorporate AFP service codes Account Analysis Terminology Service Charges
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This note was uploaded on 04/02/2009 for the course DEPARTMENT FIN 4320 taught by Professor Sherwoodbishop during the Spring '08 term at Southwestern.

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FIN4320_Lecture_6_Bank_Relationships(42p) - Bank...

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