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X. Read the passage below and explain the meanings of the words which have been highlighted.

XII. Complete the sentences using your own words:. | Bills of Exchange | C. Study the letter with a request to a bank to accept a bill. | Role of the Central Bank in Interbank Settlement | XVII. Study the Bank’s following tables, add the data on the Bank of England, and the NBU and state what is different and what is not in their performance. | Organization of Effective Bank Supervision | Introduction to the Legal Framework | I. Key terms | V. Study the following text and make up a plan, covering all crucial points | Introduction to the Camel Rating System |


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The third component of the CAMEL rating system is management. However, bank supervisors usually evaluate management last, as it brings together all other areas of importance.

· Of course, management must be rated subjectively and thus a ratio cannot be used, unlike with the other components of the CAMEL system.

· Evaluation of management begins by looking at the performance of the bank.

- Well managed banks should have adequate capital, good asset quality, adequate profits, and sufficient liguidity;

- As a result, bank supervisors using the CAMEL system will not rate management until after the other four areas have been rated.

· It is equally important to judge management through policies, systems, and controls that have been put in place.

- Policies set a specific framework for key banking areas, such as lending, foreign exchange, and liquidity to guide managers in day to day activities;

- Systems and controls help ensure policies are carried out efficiently and are adhered to.

· Management should also be evaluatedon the bank's adherence to laws and regulations, including timely andaccurate submission of reports to the Central Bank.

· Finally, supervisors evaluate management depth, which looks at the development of future top managers for the bank.

The fourth part of the CAMEL rating system is evaluation of bank earnings: in other words, how profitable is the bank.

· Banks need to be profitable in order to add to their capital.

- While new capital can come from outside sources such as issuing new shares or an injection of capital from shareholders, most new capital comes from earnings;

- Earnings are only valuable in building capital if they are retained, as a bank which pays out almost all its profits as dividends does little to increase its capital.

· As was true with capital, earnings can be measured in a quantitative way, that is, through a ratio.

· The ratio most widely used to measure bank profitability is return on average assets. This measures profits after tax as a percentage of the assets from which the profits were earned.

- The numerator is net profit after tax, but before dividends are paid out;

- The denominator is average total assets the bank had in the year in which profits were earned, though profits can also be measured on a quarterly basis.

· It is also important to analyze the quality of earnings. Are the profits truly genuine (derived using proper accounting standards)? Are they of a recurring nature and not due to large and one-time-only transactions?


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IX. Write a memorandum.| VI. Study the following notes and prepare an oral presentation

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