Principles of Money and Banking

Wednesday - Friday
9:00 am - 5:00 pm

This module introduces the participant to the basic principles of why banks exist. It discusses in comprehensive detail the principle of financial intermediation, banks' as well as other financial intermediaries' primary and ancillary functions, the important role they play in the country's economic development, and the regulatory environment in which they operate. The module likewise presents the structure of the Philippine banking system, including highlights of the relevant laws, rules and regulations that govern the system participants.

The module provides an excellent venue for those wishing to “learn the ropes” in banking. The anatomy of a bank as gleaned from its financial reports, where the success or failure of each of its functions, activities or services is measured and reflected, is dissected, laid bare and analyzed. The concepts of performing vs. non-performing assets, “spread” vs. “margin,” “cost of funds” vs. “cost of capital,” among other things, are defined, discussed and illustrated.

Capping the module is a comprehensive discussion of the activities on the “right and the left sides of the accounting equation” or, more specifically, the various ways by which banks source and utilize funds, i.e., from liabilities and equity to lending and investments. The module likewise examines the underlying regulations affecting these activities and, as necessary, illustrates all relevant calculations. 

Successful completion of the module enables the participant to:

• Understand the structure of the financial system, the legal and regulatory framework within which banks operate, and the crucial role banks play in the financial intermediation process and in the proper functioning and wellbeing of the economy;
• Learn and understand how banks operate and how their various activities, products and services are functionally linked to generate earnings that ensure their continuing viability;
• Identify the risks, problems and issues banks wrestle with daily and the management tools employed to effectively deal with these;
• Learn and understand the basic concepts and principles of money and interest rates, including all relevant formulas, calculations and banking applications; 
• Discuss the various ways banks most efficiently source and utilize funds within the confines of regulations; 
• Demystify and explain the fundamental bases and operational frameworks of the Basel Accords governing bank risks and capital requirements; and
• Cite and discuss the more germane regulations affecting banks' key functions, activities and services.

This module is designed for bank personnel wishing to gain an insight on other functional areas in the bank to which they have not been previously exposed, bank management/officer trainees, business graduates aiming for a career in banking, and those in the legal profession in search of an “immersion” course in banking.

This is a required module for those enrolling in the Center's Diploma Program in Banking.

The module, which employs lectures, interactive discussions and practical exercises, is divided into four sub-modules with details as follows:
 
I.    THE FINANCIAL INTERMEDIATION PROCESS

     - Financial intermediation: an overview and introduction
     - Philippine banking: historical highlights
     - Role of banks in economic development
     - Major controls the BSP uses to control money and credit
     - Structure of the Philippine banking system
     - Highlights of banking laws and regulations

II.    THE ACCOUNTING FRAMEWORK OF BANKS

     - Bank vs. non-bank financial statements: an analysis
     - How do banks make/lose money?

III.    FUNDS SOURCING ACTIVITIES

     - Sources of bank funds
     - Bank capital: (Basel Accord) mandatory requirements, regulatory measures 
     - Deposits: types, reserve requirements, interest calculation
     - Interbank call loans: requirements, advantages
     - BSP rediscounting facility: concept, importance, advantages

IV.    FUNDS UTILIZATION ACTIVITIES

     - Uses of bank funds
     - Loans: types, pricing, interest calculation, statutory provisions
     - Investments: objectives, classifications, risks, pricing
     - Correspondent bank accounts

is the Director for Credit Programs at the Ateneo-BAP Institute of Banking, the Program Director for Finance at the Ateneo Center for Continuing Education, and a professor of Finance at the Ateneo Graduate School of Business.