M&T Bank Risk Exposure Analysis
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This paper explores the possible risks facing M&T bank and identifies possible strategies to mitigate them. The paper addresses liquidity and funding risks, credit risk exposure, economic risk, capital adequacy, accounting and governance risk, foreign exchange risk and the bank's profitability. The paper compares the bank's competitive position with its rival banks in the banking industry, and suggests possible recommendations for the future of the bank.
Summary and Conclusions
Summary and Conclusions
From the Paper:"According to the Federal Reserve Bank (n.d.), a commercial bank earns returns to its shareholders by accepting and managing risk; including the risk that interest rates may narrow the interest spread between assets and liabilities and the risk that borrowers may default to pay. Interest rate risk has been defined as the potential for changes in rates to reduce a bank's earnings or value (Federal Reserve Bank n.d.). The major source of interest rate risks to commercial banks is the re pricing of bank assets, liabilities and off-balance-sheet instruments. These risks occur in both short term and long term borrowings. As a financial institution, M&T Bank has faced a series of market risk exposures, including interest rate risks, credit risks and liquidity risks. In its routine banking activities of deposit-taking and lending, its assets and liabilities re price by different amounts at different times with changes in interest rates. This subjects the net interest income of the bank to the impacts of the changing interest rates.
"Owing to technological progress and deregulations, commercial banks have witnessed a rapid growth in off-balance sheet exposures. The paper explains that this is due to diminishing on-balance-sheet business, at the same time as the bank management is acting to strengthen capital adequacy. Most of M&T Bank's acquisitions did not use on-balance-sheet assets as financial instruments, which increased the bank's chances of off-balance-sheet exposures."
Sample of Sources Used:
- M&T Bank (n.d.). Annual Report. Retrieved November 29, 2010 from http://ir.mandtbank.com/secfiling.cfm?filingID=950152-09-1650
- CorporateInformation.com (n.d.). M&T Bank Corporation. Retrieved November 29, 2010 from http://www.corporateinformation.com/Company-Snapshot.aspx?cusip=55261F104
- Federal Reserve Bank (n.d.). An Analysis of Commercial Bank Exposure to Interest Rate Risk. Retrieved November 29, 2010 from http://www.federalreserve.gov/pubs/Bulletin/1996/296lead.pdf
- Banknet (2010). Merrill Lynch & Trust Company. Retrieved November 29, 2010 from http://www.ibanknet.com/scripts/callreports/getbank.aspx?ibnid=usa_2577494
- Forbes.com (n.d.). M&T Bank Corporation (NYSE: MTB). Retrieved December 4, 2010 from http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=MTB
Cite this Case Study:
M&T Bank Risk Exposure Analysis (2013, May 10) Retrieved July 02, 2022, from https://www.academon.com/case-study/m-t-bank-risk-exposure-analysis-153257/
"M&T Bank Risk Exposure Analysis" 10 May 2013. Web. 02 July. 2022. <https://www.academon.com/case-study/m-t-bank-risk-exposure-analysis-153257/>