The essence of the assets and liabilities of the bank

To include a primary reserve assets that may at any time be used by the bank for the deposits and ongoing payments. This group of assets include notes and coins on hand, funds on correspondent accounts, the mandatory minimum reserves. Primary reserves are marginally profitable type of asset, and the bank's management to maximize profits tends to reduce their stake in the asset structure. However, this reduction is possible only to a certain level, because of cash on hand should be sufficient to exchange money, deposit withdrawals, cash SPD to their needs. The required amount of cash determined by the structure of liabilities of commercial banks and share in the liabilities of the current accounts of individuals and legal persons, deposits, payment terms on which the came. Planning for the movement of cash on hand, sources of recharge is one of the major problems that are solved in the management of the assets of the bank. Commercial banks hold temporarily free funds in their correspondent accounts at the national and commercial banks. There are sufficient funds in correspondent bank accounts for the performance of current payments is the result of the bank's current liquidity management. The amount of funds on correspondent accounts can not be below the relevant standard set by the NBU. Since the interest paid on balances in correspondent accounts, as a rule, lower interest rates offered on interbank loans and deposits, natural for the bank's management to minimize the residues of these accounts to a level sufficient to carry out urgent payments. Passive operation - is to attract funds from various sources in order to maintain liquidity and to ensure profitable operations of the bank. Category: Management Operations Commercial Bank | Tags: asset, Essence