商業(yè)銀行管理英文課件：第12章 Managing and Pricing Deposit Services

1、Chapter Twelve Managing and Pricing Deposit ServicesCopyright 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.Key TopicsTypes of Deposit Accounts Offered The Changing Mix of Deposits and Deposit Costs Pricing Deposit Services Conditional Deposit Pricing Rules for

2、 Deposit Insurance Coverage Disclosure of Deposit Terms Lifeline Banking 12-2Copyright 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.IntroductionDeposits are a key element in defining what a banking firm really does and what critical roles it really plays in th

3、e economyMoreover, deposits provide much of the raw material for making loans and, thus, may represent the ultimate source of profits and growth for a depository institutionTwo key issues every depository institution must deal with in managing the publics depositsWhere can funds be raised at lowest

4、possible cost?How can management ensure that the institution always has enough deposits to support lending and other services the public demands?So challenging has it become today to attract significant new deposits that many financial firms have created a new executive position chief deposit office

5、r 12-3Copyright 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.Types of Deposits Offered by Depository InstitutionsTransaction (Payment or Demand) DepositsMaking payment on behalf of customersOne of the oldest servicesProvider is required to honor any withdrawal

6、s immediatelyHottest item in the transaction deposit field today appears to be the mobile check depositDesigned principally for customers on the move, carrying camera-equipped smart phonesNontransaction (Savings or Thrift) DepositsLonger-Term Higher Interest Rates Than Transaction DepositsGenerally

7、Less Costly to Process and Manage12-4Copyright 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.Types of Deposits Offered by Depository Institutions (continued)Transaction DepositAn account used primarily to make payments for purchases of goods and servicesTypes o

8、f Transaction DepositsNoninterest-Bearing Demand DepositsInterest was prohibited by Glass-Steagall ActOne of the most volatile and unpredictable sources of fundsMost deposits are held by business firms Interest-Bearing Demand DepositsNegotiable Orders of Withdrawal (NOW)Money Market Deposit Account

9、(MMDA) and Super NOW due to Garn-St Germain Depository Institution Act of 198212-5Copyright 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.Types of Deposits Offered by Depository Institutions (continued)Nontransaction DepositAn account whose primary purpose is t

10、o encourage the bank customer to save rather than make paymentsTypes of Nontransaction DepositsPassbook Savings AccountStatement Savings DepositTime Deposit (CD)Retirement Savings DepositsIndividual Retirement Account (IRA) - The Economic Recovery Tax Act of 1981Keogh Plan retirement accounts availa

11、ble to self-employed personsRoth IRA The Tax Relief Act of 1997 allows non-tax-deductible contributions that can grow tax free and pay no tax on investment earnings when withdrawnDefault Option Retirement Plans The Pension Protection Act of 2006 12-6Copyright 2013 The McGraw-Hill Companies, Inc. Per

12、mission required for reproduction or display.Interest Rates Offered on Different Types of Deposits The Composition of Deposits A.Interest cost B. Operating costs（service cost）: All the other expenses except interest costs, including staff salaries, advertising and publicity cost, amortization of dep

13、reciation cost, office cost, and the cost of other services provide to customers, etc. It is the key point of cost control. The cost of capital: interest cost + operating costBankers would generally prefer a high proportion of transaction deposits (including regular checking or demand accounts) and

14、low-yielding time and savings depositsThese accounts are among the least expensive of all sources of funds and often include a substantial percentage of core deposits12-7TABLE 121 The Changing Composition of Deposits in the United States12-8Copyright 2013 The McGraw-Hill Companies, Inc. Permission r

15、equired for reproduction or display.As Table12-1 shows, time and savings deposits represented more than four-fifths of the total deposits held by all U.S. insured commercial banks in 2007. Best combination of Bank deposits: High proportion of demand deposits and low-yielding time and savings deposit

16、s.-The cost is the lowest of all funding sources.Interest Rates Offered on Different Types of Deposits The cost of different deposit account interest cost！ Current (check deposit) Saving deposits Time deposit expense cost？ Fee income？Available funds cost and marginal cost analysis Available capital

17、cost rate 可用資金成本率 （Interest cost + operating cost）/available capital 可用資金100% NOTE： Available funds: refers to funds after deducting the necessary legal deposit reserve and the necessary excess reserves can be actually used in lending and investment .B. Marginal cost rate of deposit 邊際存款成本率（New inte

18、rest + new operating cost）/New deposit funding The Ownership of DepositsThe private sector Individual, partnerships and corporations The government sector State, local and federal government deposits（instability） Hold a small amount of the U.S. federal government deposits.Offshore Banks Foreign gove

19、rnments, corporate deposits, Bank depositsThe dominant holder of bank deposits inside the United States is the private sector.Interest Rates Offered on Different Types of Deposits The Cost of Different Deposit Accounts Managers of depository institutions would prefer to sell only the cheapest deposi

20、ts to the public but it is predominantly public preference that determines which types of deposits will be created12-12Copyright 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.Pricing Deposit-Related ServicesIn pricing deposit services, management is caught in a

21、 dilemma It needs to pay a high enough interest return to attract and hold customer funds, but must avoid paying an interest rate so costly it erodes any potential profit marginAn individual depository institution has little control over its prices in a financial marketplace that approaches perfect

22、competitionIt is the marketplace, not the individual financial firm, that ultimately sets pricesFinancial institutions, like most other businesses, are price takers, not price makers12-13Copyright 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.Pricing Deposits a

23、t Cost Plus Profit Margin The Glass-Steagall Act of 1933 Federal limits on interest rates paid on depositsThe Depository Institutions Deregulation Act of 1980Deregulation has brought more frequent use of unbundled service pricing as greater competition has raised the average real cost of a deposit f

24、or deposit-service providersThis means that deposits are usually priced separately from other servicesCost-plus pricing formula12-14Copyright 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.Using Marginal Cost to Set Interest Rates on DepositsWhat deposit interes

25、t rate should the bank offer its customers?We need to knowThe marginal cost of moving the deposit rate from one level to anotherThe marginal cost rate, expressed as a percentage of the volume of additional funds coming into the bank12-15Copyright 2013 The McGraw-Hill Companies, Inc. Permission requi

26、red for reproduction or display.TABLE 122 Using Marginal Cost to Choose the Interest Rate to Offer Customers on Deposits12-16Copyright 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.Using Marginal Cost to Set Interest Rates on DepositsConditional Pricing Where a

27、 depository sets up a schedule of fees in which the customer pays a low fee or no fee if the deposit balance remains above some minimum level, but faces a higher fee if the average balance falls below that minimumConditional pricing techniques vary deposit prices based on one or more of these factor

28、sThe number of transactions passing through the account (e.g., number of checks written, deposits made, wire transfers, stop-payment orders, or notices of insufficient funds issued) The average balance held in the account over a designated period (usually per month)The maturity of the deposit in day

29、s, weeks, months, or years12-17Copyright 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.EXHIBIT 121 Example of the Use of Conditional Deposit Pricing by Two Banks Serving the Same Market Area12-18Copyright 2013 The McGraw-Hill Companies, Inc. Permission required

30、 for reproduction or display.Using Marginal Cost to Set Interest Rates on DepositsConditional Pricing Deposit pricing policy is sensitive to at least two factors:The types of customers each depository institution plans to serveThe cost that serving different types of depositors will present to the o

31、ffering institution12-19Copyright 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.Pricing Based on the Total Customer Relationship and Choosing a DepositoryRelated to the idea of targeting the best customers for special treatment is the notion of pricing deposits

32、 according to the number of services the customer usesCustomers who purchase two or more services may be granted lower deposit fees compared to the fees charged customers having only a limited relationship to the offering institutionIn theory, relationship pricing promotes greater customer loyalty a

33、nd makes the customer less sensitive to the prices posted on services offered by competing financial firms12-20Copyright 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.TABLE 123 Factors in Household and Business Customers Choice of a Financial Firm for Their Dep

34、osit Accounts (ranked from most important to least important)12-21Copyright 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.Basic (Lifeline) Banking: Key Services for Low-Income CustomersShould every adult citizen be guaranteed access to certain basic financial s

35、ervices, such as a checking account or personal loan? A recent survey found that a substantial segment of the U.S. population is either“Unbanked” No deposits or loans of any kind“Underbanked”Having access to some critical services but not othersAmong the “underbanked” are those families relying on e

36、xpensive payday loans, check cashing firms, pawnshops, and money order services to pay their billsRacial and ethnic minorities are substantially more likely than the general population to be “underbanked” 12-22Copyright 2013 The McGraw-Hill Companies, Inc. Permission required for reproduction or display.Truth in Savings ActPassed in November 1991Consumers must be informed of the deposit te