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    Investment Management: by Banks

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    vivek0020
    Banks invest in securities as their second largest asset to generate income and maintain liquidity. An investment policy should be formally established to provide guidance on goals, permissible securities, and performance evaluation. Securities are classified into different risk types and can serve various investment goals like income, capital gains, and interest rate risk control. Common investment securities for banks include government securities, municipal bonds, and corporate bonds.

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    Investment Management: by Banks

    Uploaded by

    vivek0020
    24 views9 pages
    Banks invest in securities as their second largest asset to generate income and maintain liquidity. An investment policy should be formally established to provide guidance on goals, permissible securities, and performance evaluation. Securities are classified into different risk types and can serve various investment goals like income, capital gains, and interest rate risk control. Common investment securities for banks include government securities, municipal bonds, and corporate bonds.

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    Investment

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    Banks invest in securities as their second largest asset to generate income and maintain liquidity. An investment policy should be formally established to provide guidance on goals, permissible securities, and performance evaluation. Securities are classified into different risk types and can serve various investment goals like income, capital gains, and interest rate risk control. Common investment securities for banks include government securities, municipal bonds, and corporate bonds.

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    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    24 views9 pages

    Investment Management: by Banks

    Uploaded by

    vivek0020
    Banks invest in securities as their second largest asset to generate income and maintain liquidity. An investment policy should be formally established to provide guidance on goals, permissible securities, and performance evaluation. Securities are classified into different risk types and can serve various investment goals like income, capital gains, and interest rate risk control. Common investment securities for banks include government securities, municipal bonds, and corporate bonds.

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    Investment Management

    By Banks
    Contents
    • Developing Investment Policies and
    Goals,
    • Types of Investment Securities.
    Introduction
    • The second largest asset item on bank’s
    balance sheet is security investments.
    • Two motives:
    - To produce income
    - Liquidity
    • During recessionary period:: investment
    securities are a good alternative source of
    income
    Introduction
    • May be pledged
    • May be used to reduce income taxes
    • May be used for diversification
    • More recently, banks have been using
    securities to adjust their interest rate risk
    Developing Investment Policy
    and Goals
    • Bank investment policy should be formally
    established.
    • Should have sufficient flexibility
    • Should be written as a guide to managers
    in allocating responsibilities, setting
    invetsment goals, directing permissible
    securities purchases, and evaluating
    portfolio performance.
    Classification of Securities

    Type II Type III


    Type-I
    Moderately low-risk Higher-risk
    Low-risk securities
    Securities securities
    Different Invetsment Goals
    • Income
    • Capital gains
    • Interest rate risk control
    • Liquidity
    • Credit risk
    • Diversification
    • Pledging requirements
    Types of Investment Securities
    • Government Securities
    • Municipal Bonds
    • Corporate Bonds
    THANK YOU

    11

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