--%>
Assignment Help - homework help

Bank assignment

You have just been hired as the branch manager for a big bank in XYZ. You were told that the bank is going to open a new branch at Island Learning Centre of the Open University of XYZ. The management of the bank is much concerned that the new branch might not be able to attract adequate customers to meet its gain projection. Your task is to propose the different services the bank must offer originally to form an adequate customer base. Below is a list of the services the branch could propose:

• current accounts
• savings deposits
• security underwriting
• personal trust management services
• retirement savings plans
• venture capital loans
• plant and equipment loans
• automobile loans
• residential real estate loans
• home improvement loans.

a) List five kinds of information you will require concerning the local community to aid you decide which of numerous possible services are likely to have adequate demand to make them gainful. Elucidate your answer in short.

b) Divide the probable services into two groups: those you think must be offered opening day and those you believe can be provided later as bank grows. Elucidate your outcome.

E

Expert

Verified

Part (a): Information collected from the local community include

(1) Historical growth rate of underwriting securities in domestic market. The bank can estimate the potential growth rate of this business. Securities underwriting can be profitable for emerging markets

(2) The sentiment of the property market. The sentiment of property market can determine the demand of the mortgage in the market

(3) The penetration rate of retirement savings. This information can help us to estimate the demand for retirement saving plans for the local community.

(4) The forth information required to determine the sentiment of the local population about investment services as it can help the bank to determine the potential growth rate of the personal trust services.

(5) The fifth information collected from local community is the factories in the city. It can be used to estimate the demand for plant and equipment and hence the amount of loans needed

Part (b):

The list of services that should be offered on the first day of business include:

  • Current accounts
  • Saving deposits
  • Residential home loans
  • Home improvement loans
  • Retirement saving plans and
  • Personal trust management services

 

The remaining part of the services in the list should be offered later. The first group of the services is the basic service offered by the bank to personals. For the new bank in the market, it is very important to obtain market presence. The first group of banking service is required to build up the brand.

   Related Questions in Corporate Finance

  • Q : Determine weighting of shares done and

    When computing the WACC, is the weighting of the shares done and the debt with book values of debt and shareholder’s equity or along with market values?

    		•
  • Q : Illustrates reserves are real money or

    The part of the net income which is not distributed to shareholders goes to reserves (to shareholders’ equity). As dividends shows real money, reserves are real money as well. Is it true?

    		•
  • Q : In which cases use different WACCs Is

    Is this possible to use different WACCs within order to discount each year’s flows? In which cases?

    		•
  • Q : Sinking Fund problem Berks Corporation

    Berks Corporation is expecting to have EBIT next year of $12 million, with a standard deviation of $6 million. Berks have $30 million in bonds with coupon of 10%, selling at par, which are being retired at the rate of $2 million annually. Berks also have 100,000 share

    		•
  • Q : Compute a company's cost of capital in

    How can we compute a company's cost of capital in emerging nations, particularly when there is no state bond that we could take as a reference?

    		•
  • Q : What is the expected risk premium on

    You have decided to invest 30 percent in X; 30 percent in Y; and 40 percent in Z. Theprobability of the state of the economy is Boom 25%; Normal 60%; and, Bust 15%. The rateof return for stock X is Boom .20; Normal .15; and, Bust .00. The rate of return for stock Y is

    		•
  • Q : Relationship between the preferred

    Quetion: A private equity fund invests $100 million into a portfolio company and receives 100% of the preferred stock and 80% of the common stock of the company.  The preferred stock carries a face value of $1

    		•
  • Q : Types of Corporate Bonds What are the

    What are the various types of Corporate Bonds?

    		•
  • Q : Is net income of a year is doubtful for

    Is the net income of a year money the company made that given year or is this a number whose importance is quite doubtful?

    		•
  • Q : Commercial bank problems For an

    For an enhanced understanding of banking industry, it is significant to look at the atmosphere in which commercial banks operate. Production growth and globalization are two main forces reshaping the banking industry nowadays. The following two questions are associate

    		•