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Institutional framework for constructing the apparatus of bank management

Category: Concept of the Bank and the Banking System

The Bank, like any other company, has some management personnel. On its structure affects primarily the nature of banking activities. Since the bank is now, the construction of the apparatus of his administration, on the one hand, contains some general features common to all enterprises engaged in manufacturing a particular product. The bank, like any other company, has its own management, its leadership and the performing unit, its accounting, its own personnel office, etc.

However, the bank is a special enterprise, it serves as a monetary institution, so the structure of its management staff bears the imprint of the specific activities it performs. This can be seen on the example of certain principles of organization of its work. Beneath them are understood, such assumptions of its activities, which provide the prerequisites for implementing the functions inherent to the bank and perform banking transactions.

Banks are usually organized along functional lines. This means that the structure of credit institutions should be tied to that particular its activities it performs. By virtue of the fact that the bank acts as a major credit institution in the apparatus of its management must be present credit personnel department. As the bank simultaneously performs calculations as part of its management structures must be specially selected departments or management, organizing payment transactions. Since the bank receives and gives out cash, as part of its management structures must be cash, etc. In general, the functions and operations that the bank will inevitably determine the design features of its management, bring in management personnel are structural units, which in its totality can not be found neither industrial nor commercial enterprise.

The principles of organization of the bank is not just a functional principle. Their composition is also singled out the principle of conformity goals. As is known, to the bank is making a profit. This means that the bank should be the structure of earning money (look for buyers of banking product, sell it at a price above their own costs). For profit management departments are planning to revenues and expenditures that make up the overall budget for the bank and its units, providing cost savings.

Among the principles of organization of the bank can be distinguished and the principle of hierarchy of authority to individual units. There are two echelons of power: senior management and other divisions of the bank. Go to top executives include the bank’s Board, the Board, Audit Commission, various committees, bringing together the most qualified of the bank staff and solving the most fundamental problems of the banking system.

The second tier in the subordination branches of the bank in relation to each other include all other directorates (departments) involved customer service, performing other work.

An equally important principle of construction of the apparatus of bank management is to ensure concerted and coordinated action. Recall that under the «structure» is meant not a random set of elements and their interactions. If an enterprise has the status of the bank, then inevitably it must contain in its composition such units, which on the one hand, it would ensure compliance within their respective operations, on the other hand, compliance with its work environments. If, for example, bank loans, it means that in addition to credit management as a support should be created divisions (groups) to include the issuance and repayment of loans, legal services, ensuring compliance with the legal system of lending standards, ad hoc staff credit check customers, quality of collateral and guarantees. Some banks in order to implement this principle, create a special administrative committee, which provides coordination and interaction between different branches of the bank.

The principles of organization of the bank stands out as the principle of streamlining management. In accordance with the principle of the bank should be organized in such a way as to ensure the development of the bank (through, for example, the introduction of new services, reduce costs, increase productivity, market research, etc.). Some banks have set up special units, organize the work of the expert council, comprising representatives of various branches of knowledge — of eminent economists, lawyers and scholars. The task of this council is to advise on most major issues of economic development policy of the country and the Bank, facilitating the development of the concept, training on behalf of the bank’s research activities, assistance in training personnel, etc.

From the standpoint of the organization of the bank is important to ensure the integrity and compliance with environmental conditions. This means that within a unified development strategy, adopted by the bank between its offices established close cooperation, each unit develops its activities in accordance with the changing environmental conditions.

It is imperative that the bank’s system of organization was also responsible to ensure the principle of control. Obligatory element here are the internal and external audits. Of the internal and external audits are designed to monitor the legality of actions performed, and their compliance with the standards and requirements of the Central Bank. The audits were organized in the framework of the parent bank, and in relation to its subsidiaries (internal audit). External audit by special auditing firms having a license to check the activities of credit institutions. Auditors of the bank may be individuals who have passed the appropriate qualifying examination and received in connection with the audit certificate.

Internal ordering, matching the internal divisions of the bank also provided through subordination to the rules — regulate the activities of employees, to implement this principle, banks are developing specific regulations (regulations, provisions for certain departments and services, eligibility data). Each employee of the bank must know their duties, have some knowledge and ability to follow the rules, as reflected in these and other documents.

Finally, it is important that the bank had provided timely and adequate information, new methods of processing it in order to take timely and necessary institutional and economic measures to ensure stability and reliability of the credit institution. Information provision, being part of a system of banking infrastructure, organizationally implemented by creating a bank of special units (groups) engaged in collecting and processing information.

Principles of organization of the bank

Functional structure

Relevance to the objectives of the bank

The hierarchy of authority and organization levels

Joint and coordinated action

Streamlining management

Integrity and compliance with environmental conditions


Regulation of staff

Ensure prompt and sufficient information

The ultimate goal of forming the structure of the bank are comfortable managing the full range of banking activities, improve the quality of banking services to customers, productivity of bank employees, achieving a profitable farming as a business.

Given this objective banking structure can not be frozen, on the contrary, it must evolve and be mobile.

First, the Bank needs to adapt its structure for the next day — to the bank to be established in accordance with its development strategy. In the current structure of the mature contours of those divisions, departments, sectors which in future will be created in order to implement the strategic objectives of development banking. Gradually, groups of employees can be created initially sectors, divisions and then (if necessary) management.

Secondly, the mobility of the structure can be dictated by changes in routine tasks. Banking market analysis reveals the development of some unprofitable and high profitability of other operations. Clearly, this should reduce the (sometimes to the complete dismantlement) of the individual departments and serious expansion of other units. In connection with the new directions of its activity the bank must take into account the existing realities and needs of their staff members. In general, you will notice that the structure of the management staff of the commercial bank is influenced by several factors.

Among them are the size of the pot and the number of its staff. Big Bank combines considerable mass of employees. Certain major banks have more than 2 thousand employees. Naturally, under these conditions, the number of divisions and departments are quite large. In a small bank may not have special departments, and the more controls that are typical for a large bank. In a small bank operates a limited group of people who may be merged into the main sections (eg, credit department, operations department, and accounting).

Active influence on the structure of the commercial bank has the availability of staff. In many cases, banks can not expand and create full-fledged structural units due to lack of trained personnel with knowledge of the transactions. Among the factors affecting the structure of the bank, the fundamental influence the level of its universalization, or specialization. If a bank declares itself a universal bank, it is inevitable (sooner or later) must be created in its structure a number of special units (departments, sectors, groups) who organize the diverse types of banking services. In contrast, the specialization of the bank on a certain kind of relieves him from performing certain operations and the corresponding forming separate divisions of government. On the other hand, the specialization of the bank to perform certain activities require it to expand those departments and offices, which are designed to regulate this wider range of activities appropriate to the type of activity.

The structure of the bank is determined, finally, problems of cost savings, the need to download the bank personnel. The Bank is a commercial venture, he works for a profit. He can not recruit staff redundant, since it increases the overall cost of wages of bank employees. The Bank needs to hire a staff, which would be sufficient to perform the appropriate scope of work and would provide the necessary downloading them.

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