Commercial Bank Organisation

Because of diversity in the structures of credit institutions and in the Banking professions, it’s quite difficult to propose a simple and complete definition of what a BANK is.

Just like many other companies, the organisation of a credit institution can be described in many different ways depending on how you look at it. The examination of the organisation chart leads to the traditional approach that describes different entities: Management, Departments, Services, Branches. So, you can understand the hierarchical links between the different groups. The modern approach through flows shows the circuit of a procedure through the different departments, up to the end user; it helps check the weak points in a circuit, in terms of control and efficiency.

In fact there is no organisation chart that could be applied to any bank for there are too many organisational or historical or personal characteristics.

Today, a good definition of a credit institution could be:

A modern bank is a combination of industrial processes designed to give the best service to customers; these processes are developed thanks to many functions and professions - The combinations, the links, the inter-connections appear in every banking organisation.

The different functions can be arranged around four major poles:

• Development division totally devoted to customers whose mission is business development.

• Logistics division which is a service to the other poles.

• Strategy division which has to anticipate the evolution of the bank in its environment, to attribute, manage and take decisions on its resources.

Banks have the monopoly of the creation of means of payment necessary to the circulation of capital between economic agents. It can be cheques or credit-cards or even more sophisticated systems; their production and management are very complex and costly and need an adequate technological structure.

As in any firm, the main missions of general management of a credit institution are the following: to determine and organise and conceive bank strategy; to make sure this strategy is successful; subsidiaries pole which deals with different professions, separated for juridical, financial or organisational reasons.

To determine the objectives of a bank, General Management depends on the information and the data given by the various departments in the bank; so the strategy is conceived at these different levels.

The firm plan assesses what the future positioning of the bank is for a long period in terms of activity (all purpose bank or specialised bank, regional, national or international bank, customers or firms oriented). This plan has to be understood by the staff to encourage staff to adhere.

Medium and long term plans (3-5 years)

Every division in a bank is given an intermediary objective depending on the environment, it can be economic, financial, commercial or technical. These plans are mostly applied to the financial function, the marketing function and investments.

Annual plans for each activity

An annual plan is developed for each activity sector, so that general management can follow up results and take the necessary corrective actions to reach objectives.

To reach objectives, General Management must implicate all members of the bank, using two different links: hierarchical organisation and transversal connections.

Credit institutions have always had a rigid hierarchy; this hierarchy can be based on technical or managerial abilities. Many projects are to be carried out by different functions; so General Management should facilitate co-ordination between them.

General Management is dependent on:

1. The General Assembly of the shareholders it must report to. Its legitimate position and its powers are the decision of the board of Directors.

2. The staff has a right to influence upon the decisions of General Management through different committees and syndicates.

3. The supervisory bodies have a permanent control upon banking activities.

4. Consumers get together to defend their interests they can express in the media.

To manage a bank, General Management depends on various functions :

• To check the respect of internal and external regulations

• To check the efficiency of procedures

• To anticipate economic and financial evolution

• To manage more difficult projects.