Investment policy of commercial bank

Summary • An investment policy statement is a document drafted between a portfolio manager and a client that outlines the client’s portfolio objectives and information relevant to achieving the objectives. • The components of an investment policy statement are scope and purpose, governance, investment, return and risk objectives, and risk management. • An IPS provides guidance to portfolio managers when making portfolio decisions and helps keep clients from making emotional decisions related to their portfolio. Understanding an Investment Policy Statement An investment policy statement provides guidance to portfolio managers when making portfolio decisions. Asset allocation decisions, client risk tolerance, A well-constructed investment policy statement provides a framework for investment decisions made by the portfolio manager and also helps commit the client to a long-term investment strategy. Emotional decisions made by the client to the portfolio can be avoided – an IPS acts to remind clients regarding the overarching goals and strategies of the portfolio. Components of an Investment Policy Statement Referencing a document published by the 1. Scope and Purpose • Establishing and building context regarding the investor’s source of wealth • Identifying and defining the investor • Setting forth roles and responsibilities of the portfolio manager • Identifying a risk management structure • Assigning responsibility for portfolio monitoring and reporting 2. Governance • Spec...

Bank Policies With all the regulatory headaches looming in the coming months, your policies shouldn't be one of them. Alleviate the tedious task of developing bank policies from scratch. These policies provide a quick reference with thorough, easy-to-read instructions to guide your bank through the policy development or revision process. There are more than 100 policies available, covering everything from compliance to lending and social media. Using any standard word processor and following the instructions provided, you can quickly customize these policies to work for your bank. If amendments are made to the policy within 12 months of purchase, you will automatically receive the revised text necessary to keep your policy in compliance with regulatory expectations. This policy outlines the financial relief protection extended to servicemembers when they are called into active military duty. Covers issues with direct implications to community banks, such as the bank’s obligations in reducing interest rates, installment and lease contracts, coverage of certain family members, and automatic extensions of power of attorney. Establishes an appropriate practice for renewing and restructuring troubled credits. Addresses the requirements that are appropriate for the complexity of the bank’s loans and that are consistent with safe and sound lending practices and regulatory reporting requirements. The text from this policy is included in the Collection, Workout, Charge-Off and Reco...

Every one of the nation's 14,600 banks should have a written investment policy. A written investment policy integrates the bank's investment activity with its other activities. Significant changes in cash position, borrowed funds, the quality and maturity of loans, the nature and stability of deposits, capital position or dividend payout will often require corresponding changes in investment strategy. If too vague or general, a policy will not serve the purposes of bank managements, boards of directors and regulatory authorities, who prefer specific statements they hope will preclude unpleasant surprises. Bank investment officers, on the other hand, usually advocate general guidelines that permit wide latitude in carrying out their duties. The author presents a model investment policy that can be adapted to the specific needs of individual banks. It fixes responsibility for managing the investment portfolio and the broad limits of its composition, lists acceptable securities and specifies their approximate quality, and suggests how the portfolio should evolve in successive phases of the interest rate cycle. The Financial Analysts Journal aims to be the leading practitioner journal in the investment management community by advancing the knowledge and understanding of the practice of investment management through the publication of rigorous, peer-reviewed, practitioner-relevant research from leading academics and practitioners. Building on two centuries' experience, Taylor &...