Bank Management SchoolFederal Reserve System Courses

Type of Participant Targeted

Bank Management (BankMan) is intended for participants with two to three years of relevant experience.

Prerequisites

None.

Course Overview

BankMan is designed to enhance the analytical, decisionmaking, and leadership skills of the participant, with an emphasis on the interdependence of various specialties in the management of a bank. The material is presented from the perspective of bank management, rather than from a regulator's. It is the only school that does so, thereby providing the participant with a unique and necessary perspective.

A key element of the school is the use of a computer-based model to simulate a banking environment. The participant, as part of a team, operates a simulated bank in competition with other teams. Case studies, loan exercises, and industry speakers are also used as a means for meeting the course objectives.

BankMan will (1) broaden the participant's understanding of the specific banking functions, (2) provide an overview of the interrelated operations of a banking organization, (3) enhance the participant's appreciation for the complex issues senior bank managers face, (4) enhance the participant's analytical and decisionmaking skills, and (5) develop team-building skills. Strengthening these areas will enable the participant to contribute more effectively to the goal of maintaining a safe and sound banking system.

Course Objectives

Upon completion of this 8-day course, the participant will, at a minimum, be able to

• Categorize and evaluate specific banking functions (e.g., strategic planning, administrative policies, marketing, loans, securities, asset/liability management, funding, and operations)
• Assess the integrated operations of a banking organization, including the activities of trust, information technology, and consumer-related issues
• Determine the effects of management decisions on capital, earnings, and the organization's stock price
• Measure the effects of economic conditions and competition on a bank's earnings and competitive abilities
• Understand the importance of effective internal controls and information systems
• Assess and manage the various risks that bank management faces
• Judge the influence of funding policies on the composition and volatility of an institution's liability structure, as well as the relationships of the policies to institutional liquidity
• Propose means of improving the quality of individual loans and, ultimately, the loan portfolio Federal Reserve System
• Determine how to maximize profits and shareholder value from a banker's point of view, while operating under stringent regulatory guidelines
• Support the importance of interpersonal skills in the development of a strong management team

Curriculum Overview

Subject	Approximate Class Hours	Approximate Homework Hours
Bank simulation activities (includes policy development, internal controls exercise, and concluding shareholders' meeting)	20.50	15.00
Loan discussion	7.00	2.00
Integrated supervision case study	4.50	1.00
Banking and related topics
1. Industry speakers (team building, strategic planning, investment strategies, marketing strategies, asset/liability management, mergers and acquisitions, banker's view of economics, legal issues in lending, and loan administration)	18.00	-
2. Instructor presentations (managing risk, capital markets overview, funding strategies, aspects of good policies, and course overview)	4.50	-
Test and review	2.50	2.00
TOTALS	57.00	20.00

Learning Objectives

Upon completion of each section, the participant will, at a minimum, be able to demonstrate the following skills:

Bank simulation activities

• Determine the sometimes competing responsibilities of a bank manager
• Interpret the effects of management decisions in one area of the bank's operations on other areas of the bank
• Measure the effects of competition on bank performance
• Assess the ingredients for the successful operation of a bank
• Determine how to operate a bank profitably in a regulated environment
• Design policies that distinguish the bank from its competitors and contribute to its financial success
• Evaluate the importance of effective internal controls and propose responses to deficiencies in the bank
• Appraise the value of interpersonal skills in the effective functioning of a management team

Loan discussion

• Rate the quality of a loan
• Devise an action plan to correct the deficiencies in a weak loan
• Justify a banker's concerns in defending a weak loan

Integrated supervision case study

• Determine whether to acquire a financial institution after considering relevant safety and soundness, trust, information technology, and consumer affairs issues
• Measure the relative merits of financial versus non-financial considerations in an acquisition decision
• Support management decisions with sound reasons that support the best interests of the bank

Banking and related topics

• Contrast a banker's perspective of the various functional areas of banking to a regulator's viewpoint
• Determine the strategic and operational characteristics of a high-performance bank
• Conclude how to manage a successful bank within the constraints of industry regulation

Test and review

• Test comprehension of the material presented during class
• Interpret how well the participant has assimilated a banker's perspective of the issues related to managing a bank

Class Size

Optimum class size is 40 to 50 participants, which allows four to five members for each bank simulation team, organized into two communities of five teams each. However, four teams per community can be accommodated, making a class size of as few as 32 feasible. A class having fewer than 32 participants is generally not desirable.

Instructors

The instructors for this course are experienced examiners who have a solid familiarity with the operations of a commercial bank. Among the five instructors for each class, at least one has sufficient computer expertise to run and troubleshoot the computer simulation exercise. In addition, one instructor has the capital-markets expertise that is needed to facilitate related decisions in the simulation exercise. Finally, the lead instructor is well acquainted with every aspect of the course and has effective leadership skills.

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