TREASURY OPERATIONS IN FINANCIAL INSTITUTIONS ISSUES AND PROBLEMS (A CASE STUDY OF UNION BANK OF NIGERIA PLC) UBN
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TREASURY OPERATIONS IN FINANCIAL INSTITUTIONS ISSUES AND PROBLEMS
(A CASE STUDY OF UNION BANK OF NIGERIA PLC) UBN
ABSTRACT
Banks are regarded as the bed rock of a nation’s economy. They are the
harbinger of economic development through a prudent management of both treasury
operations and treasury activities. This survey was carried out in an old
generation bank that is fully engaged in transaction of foreign exchange.
The study primarily looks into the treasury management operations and
the impact of these management operations on treasury activities. Study
exploited both the desk and primary sources of information; a structure
questionnaire was designed to gather pertinent data from 32 respondents that
are sratifically and randomly selected.
The data gathered was analysed and interpreted using the simple
arithmetic, percentage and inferential statistics. The result revealed that
bank fraud is most prevailing risk in the banking industry. Considering the
exposure techniques and strategies hedging technique was perceived to be a very
vital technique in risk exposure strategy.
TABLE OF CONTENT
CHAPTER ONE
1.0 Background of the study
1.1 Introduction
1.2 Statement of problem
1.3 Objectives of the
study
1.4 Research Questions
1.5 Hypothesis
1.6 Scope of the study
1.7 Significance of the
study
1.8 Limitation of the
study
1.9 Definition of terms
CHAPTER TWO
2.1 Review of related
literature
2.1 literature Review
2.2 Theoretical review of related literature
2.2.2 Treasury operations in
commercial banks
2.3 Treasury management activities in banks
2.4 Measures introduced by central bank of Nigeria
2.4.1 Responsibilities of
bank’s treasury department
2.4.2 Liquidity Management in
bank
2.5 Summary of related literature review
2.6 Empirical review of related literature
CHAPTER THREE
3.0 Research design and methodology
3.1 Research
design
3.2 Area of study
3.3 Population of study
3.4 Sources of data
3.5 Sampling method
3.6 Research
instrumentation
3.7 Validity and
reliability of research instrument
3.8 Methods of data
analysis and investigation
CHAPTER FOUR
4.0 Presentation and analysis of data
4.1 Presentation and analysis of results
4.2 Test of Hypothesis
CHAPTER FIVE
5.0 Summary of findings, conclusion and recommendation
5.1 Findings
5.2 Conclusion
5.3 Recommendation
Bibliography
Appendix
CHAPTER ONE
1.0 BACKGROUND OF THE STUDY
1.1 INTRODUCTION
Banking can be classified as both a profession and a
trade. As a trade, banking business involves the buying and selling of
services. On the other hand, banking could be referred to as a profession
because of its distinct body of knowledge which distinguished it from other
aspects of human endeavours.
Today, treasury professionals are
demanding a better system for bank administration beyond Microsoft Excel and
Access. The ability to globally research signers, add or update, automatically
generate confirmation letters and consolidate supporting documentation are at
the top of the list. Not only does it promote efficiency and increase controls,
but also aids in regulatory compliance.
Naturally, treasurers will normally
restrict their dealing to top quality financial institutions. These
institutions will have their own professional codes of conduct and can
therefore be expected to avoid conflicts of interest. Banks are normally
involved only as distributors dealers and as issuing and paying
agents
Further more the ability to hand operation at an
international level is crucial to any major financial institution. The same is
also true about the need for automating the production delivery of treasury
services. For treasury activities to be effectively carried out computers,
communication and artificial intelligence must provide gateways to planning,
execution and control. There is for instance the need for comprehensive system
of limit on all unmatched foreign exchange positions and for diversification of
currency portfolio so as to ensure that potential losses from foreseeable
exchanges rate kept to a minimum.
The Nigerian banking industry started in
1892 when the African banking corporation was incorporated from there other
banks evolved. For any government to achieve the national objective of stable
prices and sound economic growth, the banking system should be one that was
well developed with the depth, breath, which would make financial
intermediation efficient, effective and productive.
Treasury operations started in Nigeria in
April 1960 with the central bank of Nigeria which was the market place. It
initiated the market with the first batch treasury bills. The combinations of
earning and liquidity were especially relevant for treasury managers the world
over. This was because the ultimate objective of a commercial bank is to make
profit for its shareholders.
Union Bank of Nigeria (UBN) is one of the
lending and oldest financial services group in Nigeria and also one of Nigeria
apex Commercial Banks.
1.2 STATEMENT OF PROBLEM
The miscellaneous overheads and operating
cost of most banks have had to be on the increase over the past decade due to
high rate of lending and depositing in fixed deposits. The depression brought a
number of survival strategies to banks to enable them manage their find
collection and utilization.
in any case this research work addressed
the following problems:
(a)
Placement of inexperienced personnel in the bank can constitute a problem in
treasury operations.
(b)
Lack of diversification of investments can create problem and efficiency of
liquidity level.
1.3 OBJECTIVES OF THE STUDY
The objectives of the study
are as follows:
(a) To
determine whether the efficiency of treasury operation is based on the treasury
personnel employed in union Bank of Nigeria (UBN).
(b) To
determine whether investment diversification depend on effective treasury
management activity.
1.4 RESEARCH QUESTIONS
This project work attempts to
find suitable answers to the following questions:
(a) In
what ways does the effectiveness and efficiency of treasury operation depend on
the calibre of personnel in existing bank.
(b) In
what ways and manner does investment diversification depend on effective
treasury management activity.
1.5 RESEARCH HYPOTHESES
The key assumptions guiding
this study are as follows:
(a)
HO: There is no efficiency of treasury operation based
on
the calibre of personnel employed in the bank.
HI: There is efficiency of treasury
operation based on the calibre of personnel employed in the bank.
(b)
HO: There is no investment diversification which depend
on
effective treasury management activity.
HI: There is investment diversification which
depend on effective treasury management activity.
1.6 SCOPE OF THE STUDY
Commercials Bank had
encountered a lot of treasury operation problem. For the purpose of this study
the research work is limited to Union Bank of Nigeria (UBN). The study will
primarily direct its attention on its problems and challenges and it will
attempt to give recommendations for further studies.
1.7 SIGNIFICANCE OF THE STUDY
The study has both practical
and Academic significance as documented below:
PRACTICAL SIGNIFICANCE
Treasury operation in practical or real life significance is important
and relevant to the banking industries because it will identify the major
sources of funding financial institutions. It will also find out the various
ways those industries could be organized in order to lender effective and
efficient services to their customers.
Finally, the study will
enable the federal government to formulate the right policies for banking
industries.
ACADEMIC SIGNIFICANCE
The impact of treasury operation in education process is of paramount
important to higher institutions and to an individual for the upgrade of
his/her educational qualification. It is also important to the Non governmental
organization, the government and the entire public e.t.c.
1.9 DEFINITION OF TERMS
i.
INVESTING
This is the purchase of assets (both financial and
other wise) that offer the expectation of income and capital gains for the
purpose of increasing the investors wealth base.
ii. TRADING
These involves buying and selling of goods and
services with minutes or hours rather than months to take advantage of a
prevailing situation.
iii. BILL OF EXCHANGE
This is a Written order to pay a sum of money to a
particular person on a particular date.
iv. FOREIGN EXCHANGE
This is an asset earned through export of goods and
services as well as the flow of foreign investment, external grant and loans.
v.
ARBITRAGE
This is obtainable when a bank buy at a lower price in
one market and sell simultaneously at a higher price in a second market to earn
a risk less profit.
vi. TREASURY MANAGEMENT
This is where banks and other financial houses, acting
as financial inter medians provide linkage between deficit economic units and
surplus economic unit.
vii. LIQUIDITY MANAGEMENT
These involves determine the total amount of cash and
marketable securities the firm hold.
viii. CASH MANAGEMENT This is
concerned with the planning and controlling of cash flow into and out of the
firm and cash balance held by the firm at a period in time for financing
deficit or investing surplus of it.
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