Welcome to my presentation….

Presented by:
Omar Faruk
ID: 18200009
Batch: 13th

Course Name: Money and Banking

Course code: FIN 321

Prepared For
SM Akber
Lecturer
Department of Business Administration

Ranada Prasad Shaha University

Today my presentation topic on Pubali Bank LTD.

SL# Topic

1 Select a bank doing business in Bangladesh and

listed in Dhaka Stock Exchange (DSE). Collect their
annual report. Based on your knowledge studied
in Money and Banking course identify different
types of assets and liabilities of your selected bank.
How your selected bank deals their liabilities
with their assets? Identify different types of risks
faced by your selected bank while doing its
business. How they deal with the risks? If you are
hired as a chief risk officer (CRO) of that
company what different strategies would you take
to deal with these risks?
 Different types of Asset and Liabilities of PBL:

Assets Liabilities

Current assets and Fixed Assets Current Liabilities

Tangible and Intangible Assets Non-current Liabilities

Operating and Non-Operating

Contingent Liabilities
Assets
Pubali Bank Limited deals their Liabilities with their Asset in many different way I will show some of them:
Asset/Liability Management
In the case of banking activities, the bankers must have to make the decision about the buying and selling the market securities for
making the particular loans or to cover the their demanded fund for the investment and lending activities. The overall process for making
the decision about the composition of bank’s assets and liabilities with the assessment of the risk is known as asset/liability management or
(ALM). The three important criteria are viewed as to manage the sources and uses of funds on the balance sheet and off-balance sheet
activities with respect to interest rate risk and liquidity.

Managing Interest Rate Risk with Dollar Gap

A commercial bank may use any of their financial instruments currently on its balance sheet in managing its assets and liabilities. The
principal purpose of asset liability management traditionally has been to control the size of the net interest income. This control can be
achieved by the to methods as follows;
· Aggressive Asset Liability Management
· Defensive Asset Liability Management
Aggressive Asset Liability Management
The aggressive asset liability management focuses on increasing the net interest income through the altering the portfolio of the
institution. The success of the aggressive asset liability management depends on the ability to forecast future interest rate changes. The
management of the bank may choose to focus on the maturity or dollar gap in controlling the interest rate risk of its portfolio. With the
aggressive interest rate risk management program, such strategy involves in two steps which are discussed below.

Defensive Asset Liability Management

The goal of the defensive asset liability management is to insulate the net interest income from changes in the net interest rates to prevent
the instability of changes from increasing or decreasing the net interest income. A defensive strategy attempts to keep the maturity gap
amount of rate sensitive assets in balance with the rate sensitive liabilities over the given period so that the gap will near to zero. If
successful, the increases in the interest rates waif produce the equal increases in interest revenue and interest expense, with the result that
net interest income and net interest margin will not change.
Discuss about different types of Risks faced by Pubali Bank Limited while doing their business and how they
deal with their Risk:

Balance Sheet Risk

Balance sheet risk can be categorized into two major types of significant risks- liquidity risk and interest rate risk. Changes in market liquidity
and/or interest rates expose banks/ business to the risk of loss, which may, in extreme cases, threaten the survival of institution.
Liquidity Risk
The risk that bank or business will be unable to meet it's commitment as they fall due leading to bankruptcy or rise in funding cost. Banks
traditionally use the statutory liquidity reserve and their borrowing capacity in the volatile inter-bank money market as the source of
liquidity.

Capital Adequacy
The need to adopt the best international practices given in the pretext of globalization of economies and businesses is a must as you are
aware of “Basel Committee on Banking Supervision” and the emphasis on maintaining the Capital Adequacy commensurate to exposure
or risk on balance sheet. The new “Basel Capital Accord” stipulates that “Banks must hold capital commensurate with the level of interest
rate risk they undertake”.
If I was hired as a chief risk officer (CRO) of the Pubali Bank limited. How I will with the risk in a six way. That
I will discuss about it in below:

I will apply the Classic risk management literature acknowledges four ways of dealing with risk after establishing a risk matrix: Avoid,
Reduce, Transfer and Retain or Accept. However, as it turns out, there are six ways, not just four ways to deal with risk, as the classic risk
matrix indicates. Two more are Exploit and Ignore.
The Classic Four: Avoid, Reduce, Transfer and Retain
Classic risk management as seen in Enterprise-wide Risk Management acknowledges 4 ways of dealing with risk:

1. Avoid
2. Reduce
3. Transfer
4. Retain or Accept

These four strategies can be illustrated using a risk matrix, where the impact of a certain event stemming from an exposure to a certain
risk, is plotted against the probability of that event actually happening. For generic definitions of what the terms Avoid, Reduce, Transfer
and Retain.
Five: Exploit
Strategies for linking risk and opportunity also lists a fifth strategy as a possible option: Exploit. That is, actively seeking out risk in order to
gain competitive advantage, since risk per se does not always carry a negative connotation, but can also lead to beneficial results,
depending on the outcome. Exploiting risk is also at the center of lesser and Lucia (2009) Embracing risk as a core competence.

Six:

Ignore
Tomlin (2006), in his research, found a “see-no-evil-hear-no-evil”-strategy amongst the businesses he investigated. He discovered that
many businesses willingly overlooked the risk they were exposed to, an approach he labeled Ignore, a kind of misunderstood Accept,
perhaps?

Conclusion
The four strategies (Avoid, Reduce, Transfer and Retain) arising from the risk matrix are important as hands-on and easy to understand
basic approaches towards dealing with risk. There’s more to risk than just avoiding risk. Adding Exploit adds the dimension of ‘positive’ risk,
while adding Ignore adds a notion of unwillingness to deal with risks
Thank you for watching……….