Explain the following bank management activities:
Liquidity management, asset management, liquidity management, capital adequacy management, credit risk management, interest-rate risk management.
Bank Management Activities are:
Liquidity management speaks of a bank’s credibility to break-even its financial obligations as they come due.The source can be direct cash holdings in currency or on account at the Federal Reserve or other central bank. More often, it arrives from getting securities that can be sold quickly with minimum amount of loss. This conventionally states very high creditworthy securities, consisting of government bills, whose maturities are for a short period.
If their maturity is small enough the bank might just easily wait for them to give back the principle at maturity. For short term, very safe securities tend to trade in liquid markets, giving the idea that huge volumes can be sold with no need of moving prices very much and with minimum cost of transaction.
Asset Management is a team inside a financial firm whose only objective is to manage assets (cash, investments etc.) of clients. The asset management firm has given out portfolio managers as well as internal access, detailed equity research reports that must provide them an edge over investors attempt to handle their finances.
It invests its clients’ funds in equities, derivatives, commodities, securities, currencies, etc., to grow these investments. It opts for investment vehicles based on the clients approach towards the situation.