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Slides based on Bank Management & Financial

Services by Peter Rose and Sylvia Hudgins, 7th ed.,


McGraw-Hill, Gup book, and adapted by Shinta
Wangke, 2010.

Key Topics in Chapter

To understand the main forces of change in

the banking industry

To identify the main trends derived from

the forces of change

BANK ORGANIZATION
An organization is a social arrangement
which pursues collective goals and has a
boundary separating it from its environment
organization is a means to an end to achieve
its goal

Organizational
Structure
An organizational structure is a mainly
hierarchical concept of subordination of
entities that collaborate and contribute to
serve one common aim.

BANK PANIN

Current issues in
banking
Deregulation
Re-regulation
Competition
Financial innovation and the adoption of

new technologies

Deregulation
Deregulation is the removal or simplification

of government rules and regulations


Deregulation typically undertaken to improve
the performance of industry that being
deregulated

Supervisory re-regulation
Re-regulation can therefore be defined as the

process of implementing new rules,


restrictions and controls in response to market
participants efforts to circumvent existing
regulations

Competition
There is no doubt that

competitive pressures
on banks have increased as
a result of deregulation and
liberalisation of the sector

Financial innovation
and the adoption of
Financial innovation, like innovation
new
technologies
elsewhere in business, is an ongoing
process, whereby private parties
experiment to try to differentiate their
product and services
Financial innovation can be defined as the
act of creating and then popularising new
financial instruments as well as new financial
technologies, institutions and markets

Responses to the
forces of change
Mergers and Acquisitions
Conglomeration
Globalisation

Mergers and
Acquisitions

Mergers and Acquisitions (M&As) are

changing the structure of many banking


sectors.They are not a force of change in
themselves, but rather a response to the forces
of change

A merger is when two, usually

similarly sized, banks agree to go


forward as a new single bank rather than
remain separately owned and operated

An acquisition is when a bank takes

over another one and clearly becomes


the new owner. Acquisitions are also known
as takeovers and they normally occur when
big institutions buy smaller ones.

Conglomeration
Financial conglomerates are defined

as a group of enterprises, formed by


different types of financial institutions,
operating in different sectors of the
financial industry

Globalization
globalization can be defined as the

evolution of markets and institutions such


that geographic boundaries do not limit
financial transactions.

Questions?