The Managerial Functions in a Commercial Bank - Assignment Example

This ensures that issues of money laundering do not occur in the bank.The capital adequacy management refers to the bank’s managerial function that ensures that a bank has sufficient capital to carry out all its operations. It involves a number of activities and process. First, the bank through its manager must decide the amount of capital the bank must keep. This is done by identifying the needs of the bank and the central bank regulation policy on bank reserves. Second, once bank capital needs are identified, adequate policies are formulated to ensure that the capital adequacy level is not exceeded.

Third, the bank through it managers mobilize the necessary capital and manage it to conform to policies that ensure that it is sufficient and quality bank assets at any given time.The asset-risk management refers to protecting banks assets from all risks associated with the asset and ensuring that they are performing appropriately. Asset-risk management involves keeping complete records of all the assets. The information that needs to be included in the asset register includes asset type, date and purchase price at acquisition, warranty information, spare parts, repair facilities and dates as well as service contracts (Collier 146).

Banks management must ensure that all preventive maintenance is carried out and all planned inspection must be carried to ensure that the asset is functioning appropriately. In addition, all assets must conform to the industry regulatory standards. The above functions would ensure that banks assets are reliable and performing as required.Risk structure of interest rates is comprised of all risks associated with changes in interest rates as well as defaults that may occur when a client take a loan and fail to honour his or her financial obligations.

Bonds duration is usually used to measure the interest rate risk. On the other hand, Term structure of interest rates is defined as a way in which interest rates on bonds with varying maturity terms are related. It has been estimated that interest rates on bonds of varying term maturities move together with time.