FIN – 4733
ADVANCED BANK
MANAGEMENT
STANFORD BANK GAME
BANK MANAGEMENT
SIMULATION
SIMULATION DESCRIPTION
• WORK IN “MANAGEMENT” TEAMS OF 4 – 5
PEOPLE
• REVIEW AND EVALUATE
MACROECONOMIC AND COMPETITIVE
CONDITIONS, AS WELL AS BANK
FINANCIAL POSITION
• PROVIDE DECISION INPUTS
• PREPARE A TERM REPORT AND GIVE AN
ORAL PRESENTATION OF RESULTS
TEAM ORGANIZATION
SBG BANK MANAGEMENT TEAM
PRESIDENT AND CEO
VICE PRESIDENT OF OPERATIONS
(CHIEF OPERATING OFFICER)
VICE PRESIDENT OF LENDING
(CHIEF CREDIT OFFICER)
VICE PRESIDENT OF INVESTMENTS
(CHIEF INVESTMENT OFFICER)
PRESIDENT AND CEO
Duties: To determine general bank objectives;
develop, integrate, and implement business
strategy designed to achieve bank objectives;
monitor overall profitability of bank; monitor bank
stock price movement; and coordinate and control
all activities of the senior management team
Additional Duties (Economist): To monitor the
financial, competitive, and economic environment
surrounding the bank; forecast financial trends in
the banking environment; assess competitive
threats and opportunities within this environment;
complete decision forms on a timely basis; and
maintain bank records concerning group decisions
PRESIDENT AND CEO
MAJOR SBG RESPONSIBILITIES:
Balance Sheet
Income Statement
Dividend Policy
Common Stock Price
Forecasting Interest Rate Changes
Forecasting Economic Conditions
Forecasting Funds Availability
Monitoring Other Banks’ Position
Evaluating Other Banks’ ratios
Page 1
Page 1
Page 1
Page 1
Page 7
Page 7
Page 7
Pages 8,9
Page 6
PRESIDENT AND CEO
Duties: To determine general bank objectives;
develop, integrate, and implement business
strategy designed to achieve bank
objectives; monitor overall profitability of
bank; monitor bank stock price movement;
and coordinate and control all activities of
the senior management team
PRESIDENT AND CEO
MAJOR SBG RESPONSIBILITIES:
Balance Sheet
Page 1;
Income Statement
Page 1;
Dividend Policy
Page 1;
Common Stock Price
Page 1.
VICE PRESIDENT OF
OPERATIONS
Duties:
To manage all aspects of the
bank’s deposit acquisition activity,
supervise personnel administration, and
control bank expansion/contraction activity
VICE PRESIDENT OF
OPERATIONS
MAJOR SBG RESPONSIBILITIES:
Monitoring Demand Deposit Acquisition
Pages 2.2, 2.9, and 7
Monitoring Time Deposit Acquisition
Pages 2.3, 2.8, and 7
Forecasting CD Availability
Pages 2.10, and 7
Monitoring Required Reserve Position
Pages 2.4 and 7
Monitoring Personnel Expenses
Page 3.19
Managing Bank Expansion/contraction
Page 3.20
VICE PRESIDENT OF
LENDING
Duties:
To manage all aspects of the
bank’s loan portfolio, including commercial
loans, commercial loan commitments, and
commercial letters of credit, consumer
installment loans, credit card receivables,
and mortgage loans
VICE PRESIDENT OF LENDING
MAJOR SBG RESPONSIBILITIES:
Forecasting New Loan Sales
Page 2.7
Monitoring Loan Charge-offs
Pages 2.7, 2.11
Monitoring Loan Loss Provision
Page 2.7
Establishing Credit Policy
Page 2.7
Determining Loan Interest Rates
Pages 2.7, 7
Determining Loan Fees
Page 2.8
Determining LOC Policy and Fees Pages 3.16, 3.18, 3.19
Monitoring Loan Commitments
Pages 3.17, 3.18
VICE PRESIDENT OF LENDING
MAJOR SBG RESPONSIBILTIES (CONTINUED):
Forecasting Commercial Loan Payments
Page 4.21
Determining Credit Card Fees
Page 3.14
Determining Credit Card Processing Fees Page 3.19
Determining Mortgage Loan Servicing Fees Page 3.18
Determining Mortgage Loan Initiation Fees Page 3.18
Forecasting Consumer Loan Payments
Page 4.22
Forecasting Mortgage Loan Payments
Page 4.22
VICE PRESIDENT OF
INVESTMENTS
Duties:
To manage the bank’s investment
portfolio, recommend and implement gap
management strategy, monitor the bank’s exposure
to economic risk and implement appropriate
hedging strategies to minimize this risk in the
futures market, recommend and implement
changes in bank capital structure, supervise trust
and accounting activities, and administer corporate
banking services
VICE PRESIDENT OF INVESTMENTS
MAJOR SBG RESPONSIBILITIES:
Monitoring Bank Cash Management Activities
Monitoring Bank Securities Portfolio
Establishing optimal gap risk factor
Monitoring and Hedging Interest Rate Risk
Controlling Purchase and Sale of Federal Funds
Pages 2.8, 7
Controlling Discount Window Borrowing
Issuing Capital Notes
Pages 2.6, 7
Issuing New Common Stock
Maintaining Trust Portfolio
Controlling Trust Income and Expenses
Pages 3.18, 3.19
Page 2.5
Page 6
Page 5
Page 1
Page 2.8
Page 10
Page 3.12
WRITTEN AND/OR ORAL
ASSIGNMENTS
• NAMING THE BANK
• ESTABLISHING A CORPORATE
STRATEGY FOR THE BANK
• ESTABLISHING FINANCIAL
PERFORMANCE OBJECTIVES FOR
THE BANK
• QUARTERLY OPERATING DECISIONS
• FINAL (TERM) REPORT
ELEMENTS OF THE FINAL (TERM)
REPORT
• OUTLINE OF THE BASIC CORPORATE STRATEGY
• EXPLANATION OF HOW THE STRATEGY WAS
IMPLEMENTED AT EACH ITERATION (QUARTER)
• IDENTIFICATION OF HOW UNANTICIPATED
CHANGES IN THE MACROECONOMY AND
COMPETITION LED TO ADJUSTMENTS,
MODIFICATIONS, AND OUTRIGHT CHANGES IN
OPERATING TACTICS
• EVALUATION OF THE FINANCIAL PERFORMANCE
AND CONDITION OF THE BANK AT THE END OF
EACH ITERATION (QUARTER)
• SUMMARY EVALUATION OF THE FINANCIAL
PERFORMANCE OVER THE ENTIRE PERIOD