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CHAPTER 3

BANK MANAGEMENT

Board of Directors
 Composed of a number agreed upon as contained in by the-laws, but in no case should it exceed
the number allowed by law.

 Headed by a chairman

 In small banks,the chairman of the board and the president may only be one person

Qualifications

1. Every directors shall own at least one share of the capital stocks of the corporation of which he is
the director; the share shall stand in his name in the books of the corporation.

Additional Qualification

a. Educational attainment
b. Adequate competency and understanding of the business
c. Age requirement
d. Integrity probity;and
e. Assiduousness

2. Commercial Bank
- at least two-thirds of the members of the board of directors shall be Filipino citizens

Thrift Bank
- majority of the members of the board pf directors shall be Filipino citizens

Rural Bank
- all members of the board of directors shall be Filipino citizens

3. The proposed directors of a bank shall be subject to qualifications and other requirements of
existing laws, rules , and regulations of the Bangko Sentral.

Responsibilities

1. They are duty-bound to adopt measures that shall safeguard the depositor’s interest

2. They must be sure to compensate the stockholders fairly enough in exchange for the risk they
undertake and the capital they invest.

3. The directors are responsible to the regulatory and supervisory agencies who keep surveillance
over the management of the bank’s affairs to allow maximum safety to depositors and also to give the
widest and best kind of service to the public.

In order to meet these varied responsibilities, the board possesses the necessary authority for the
implementation of its objectives.

a. Formulates the policies


b. Appoints or removes the officers
c. Fixes their salaries
d. Defines their duties and responsibilities
e. The power to amend the by-laws
f. The authority to declare or not to declare dividends
g. It also determines the allocation of bank reserves, the amounts and administration of loans and
investment.
h. The board also creates standing or special committees to which it delegates some of its
functions.

 The Executive committee - this committee deals with administrative matters. It often
meets to prepare the groundwork for board meetings. It acts as an advisory body of the board. Some
of the policies it prepares are eventually approved by the board.
 The Loans and Discount Committee - all matters pertaining to loans and discounts, to lines
of credit, and others related to the loaning function of a bank are deliberated on by this committee.
 The Investment Committee - this committee concerns itself with the bank’s investment
portfolio. It passes judgement on what securities and bank should purchase in what amounts, how to
diversify them and related matters.
 The Trust Committee - the fiduciary of a bank will be the main concern of this committee. It
will thresh out hoe the trust funds shall be invested, how much to charge to clients, how to
administer trust agreements, and others.
 The Examination Committee - in order that the bank will always be in shipshape condition
regarding its operations, the internal examination and audit of its accounts is an essential feature of
good management. It is the duty of this committee to improvise methods to conduct such internal
examination and supervision.

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