Bank calculation

Under Bank calculation refers to all computing procedures in the accounting of banks that the peculiarities of the banking system into account and determining the cost and the bank interest rates and bank charges for bank transactions serve.

General

Bank calculation is an important research area in banking management . It is based on the Business Administration created Fundamentals of calculation and first analyzed the specific banking cost accounting . It is based on a cost type calculation in which the neutral expenses were removed and the imputed costs added. The bank calculation has the task of analyzing the bank's cost structure and determining the prime costs, forming a decision-making basis for controlling and enabling bank prices to be set. In addition, it is used to control profitability ( cost-benefit analysis ), particularly in the context of company comparisons .

history

The Zurich Cantonal was first names one of the first banks that bankkalkulatorische bills, when it conducted in 1881 a similar net interest margin calculation form. Wilhelm Hasenack was one of the first important German authors in the banking calculation sector. In 1924 he dealt with the relationship between bank calculation and fee policy. For him, the bank calculation was the "attempt to create a coherent cost accounting procedure for banking services from an economic point of view, be it to carry out an operational control ... or to obtain documents for setting fees, commissions and interest". Hasenack was an advocate of departmental costing , i.e. cost center accounting , which should calculate the costs and profitability of each department . His pioneering work already addressed problems and possible solutions that have not lost any of their relevance to this day. In the early 1930s, Deutsche Bank began to develop a calculation method that Hans Rummel described in an article in 1934. Erich Fehrmann followed in 1936 with a book, the first treatise with a complete introduction and an overview of the bank calculation.

The bank calculation should serve to determine the cost of the services provided to the bank customer and thus create the basis for a reorganization of the fee policy. Curt Eisfeld wrote an essay in May 1934 that dealt with the theoretical and practical requirements of bank calculation. In 1934 Manuel Falter came to the conclusion that the high share of fixed costs involved in banking operations required a minimization of idle costs .

The modern bank calculation is based on the division into two service spheres carried out by Stefan Kaminsky since 1955 , namely into the value range (value sphere or liquidity-financial area) and operational area (operating sphere or technical-organizational area), which do not exist with non-banks . Because there (money) capital is a prerequisite for the procurement of production factors , in banks it is used for the production of most bank services. Kaminsky was the first to design a closed system of full cost accounting based on the causation principle for the bank's internal accounting, whereby the high proportion of overheads raises attribution problems. However, Fehrmann is considered the discoverer of this dualistic provision of services in banking, who as early as 1936 made a distinction between piece service (operating sphere) and service unit (value sphere). As a result, a distinction is made between cost and revenue and operating costs / revenue in the cost and revenue accounting of credit institutions. For Wilhelm Kalveram , bank calculation was suitable for operational monitoring, price determination and profitability control in 1961. A fundamental work on the subject was the dissertation submitted by Joachim Süchting in Cologne in 1963 , which is based on the calculation models of American banks and based on this, submits proposals for the price calculation of German banks.

Karl-Friedrich Hagenmüller defined the bank calculation as "the preparation and correlation of performance-related consumption of value (costs), performance quantities and performance-related increase in value (income) to determine the profitability , the success situation or the prime costs in banking". This definition shows that the bank calculation is more broadly defined than the industrial calculation in business administration, where it is usually only reserved for cost unit accounting. In banking management, costing is also used in part for income statements and cost center accounting.

Business and value sphere

The bank calculation takes into account the distinction between operational and value spheres, to which the bank operational factors of production are assigned. In the operating sphere, "all human efforts, the use of machines and property and all consumables and materials are reflected". The production factors labor , resources and materials can be assigned to it. The sphere of values is an abstract sphere of activity, "whose performance consists in the acceptance, creation and transfer of monetary options". It includes the monetary factor - known only in banking - which consists of the use of means of payment .

Bank services mostly arise from the interaction of both spheres, which results in a dualism that also pervades the bank calculation. Both spheres generate costs and generate revenues. Operating costs are a consumption of value that is caused by the provision of services in the operating sphere. Correspondingly, the cost of value is the consumption of value that is caused exclusively by the abstract act of value transfer that takes place in the sphere of value. Operating revenues are to be assigned to the operating sphere, the more important value revenues to the value sphere.

Types of costs / types of revenue	Operating sphere	Sphere of values
operating cost	Personnel costs Material costs Material costs Cost taxes and duties
Operating income	Booking item fee Account maintenance fee Processing fee
Value cost		Interest expense, commission expense, imputed interest, risk costs, lending business ( value adjustments , provisions ) Losses from proprietary trading
Value proceeds		Interest income ( credit and securities business ) commission income ( credit provision , deployment and overdraft commission ) profits from proprietary trading

Calculation levels

The bank calculation takes place in three consecutive stages.

First stage

In the total operating costing , a cost type and revenue type calculation is set up according to the table above. The overall success can be determined by comparing the costs and revenues. Their further development leads to the calculation of the interest margin:

   Zinsen und ähnliche Erträge
   - Zinsaufwand
   = Brutto-Zinsspanne
   - Verluste aus dem Handelsergebnis
   + Gewinne aus dem Handelsergebnis
   = Ergebnis der Wertleistung
   + Betriebserlöse
   - Betriebskosten
   = Netto-Zinsspanne

Second step

The content of the second stage is made up of cost center accounting , service group accounting , unit service accounting and the operating accounting sheet (BAB).

A cost center accounting ( departmental costing) subdivided into main cost centers related to market performance (such as credit department, securities department) and auxiliary cost centers ( accounting , registry ). They are allocated the types of costs and revenues that they caused or achieved.

The service group calculation appears for the first time with Kaminsky. He understands the service group to be a “combination of several internal or job services into a larger, comprehensive unit”. It therefore determines the costs of related groups of bank service types.

In the piece performance calculation ( piece calculation), the operating costs of the main cost centers are divided by the number of market performances. The bank calculation is based on bank services which, according to Hans-Jacob Krümmel, represent market services. The banking business that is marketable is considered to be the market service .

According to Bernhard Hartmann, the BAB consists of a cost center accounting for the operating and value area and a cost center income accounting. The primary cost center direct costs and the secondary cost center overhead costs are offset here.

Third step

A third stage develops the partial interest margin calculation (shift balance), business partner calculation, branch calculation, contribution margin calculation and customer calculation.

The partial interest margin calculation has the task of breaking down the gross interest margin into partial interest margins that are related to the individual types of business. The value of the proceeds will be lending business the value of cost of deposit business compared. The aim is to determine causal relationships between refinancing costs and income from the use of capital.

The business partner calculation is a special form of cost center accounting and is roughly segmented into the lending business , payment transactions and securities business , to which the costs and revenues are allocated.

The branch calculation is only worthwhile for branch banks that maintain an extensive branch network. From the branch calculation it is first possible to see whether it is a question of “collection branches” or “credit branches”, depending on whether the deposit business or the lending business dominates in a branch.

The contribution margin calculation with direct costs can be seen as the basic method of bank calculation. It has the following structure for individual transactions:

    Zinserträge
    - Zinsaufwand
    = Konditionsbeitrag
    - Risikokosten (Wertberichtigungen, Rückstellungen)
    = Deckungsbeitrag 1 (Wertbereich)
    +/- direkt zurechenbare Provisionen
    = Deckungsbeitrag 2 (Wertbereich und Provisionsergebnis)
    +/- direkt zurechenbare Betriebserlöse und Betriebskosten
    = Deckungsbeitrag 3 (Marktergebnis)

The customer calculation determines the success of a certain customer relationship and is an essential source of information for the customer contribution margin calculation . It compiles the costs and revenues incurred at the customer level as earnings contributions from the operating and value area and represents the actual contribution of a customer relationship.

Market rate method

The market interest method, which emerged after 1980, is an alternative to the traditional, balance sheet-oriented bank calculation and a calculation method that is limited to the sphere of values. The market interest rate method dispenses with the refinancing connections between assets and liabilities and is based on the opportunity principle, in which the benefit of a banking business is to generate more than a comparable business would generate. To do this, the market interest method compares a planned loan transaction with an alternative investment in the money or capital market.

Functions

The bank calculation has a steering, control and documentation function. The control function can be exercised if bank prices are determined on the basis of the bank calculation and a lower price limit is set. The calculation of the margins influences the interest and credit interest and thus directs the demand for credit and the deposit business. The control function consists of monitoring the development of costs and revenues of the cost types and cost centers up to the branches and bank services. A target / actual comparison is also possible. The documentation function consists of an external (compliance with legal regulations: in particular price regulation , consumer loan agreement , proof of the calculation of the early repayment penalty ) and internal documentation function (e.g. for calculation-oriented credit decisions ).

Individual evidence

^ Harry Zingel: Textbook of cost and performance accounting . 2004, p. 62

↑ Joachim Süchting : Calculation and pricing of the credit institutions: The price disposition area at German and American banks from a calculation point of view . 1963, p. 16

^ Wilhelm Hasenack: Bank calculation and fee policy . In: Journal for Business Administration . 1924, p. 450 ff.

^ Wilhelm Hasenack: Company calculations in the banking industry . 1925, p. 34

^ Wilhelm Hasenack: Bank calculation and fee policy . In: Journal for Business Administration . 1924, p. 188 ff.

↑ Hans Rummel: The possibilities of an exact cost calculation in the banking industry and their effects on profitability . In: Journal for commercial research . 1934, p. 281 ff.

↑ Erich Fehrmann: The business partner calculation in credit banking . 1936, p. 1 ff.

^ Kurt Weusthoff: Attempt to calculate operating costs in the banking industry . 1933, p. 10

↑ Curt Eisfeld: The bank calculation in theory and practice . In: The Sparkasse . 1934, p. 147 ff.

↑ Emanuel Falter: The interest and requirement range of the savings banks under the influence of degression . In: Business Administration . 1934, issue 6, pp. 145 f.

^ Stefan Kaminsky: The cost and income statement of the credit institutions . 1955, pp. 26-39

^ Carl Zimmerer : Bank costs account . 1956, p. 16

↑ Erich Fehrmann: The business partner calculation in credit banking . 1936, p. 127

^ Wilhelm Kalveram, Hans Günter: Bankbetriebslehre . 1961, p. 254

^ Joachim Süchting: Calculation and pricing of the credit institutions . 1963, p. 177 ff.

↑ Karl-Friedrich Hagenmüller: banking management apprenticeship . Volume 3, 1988, p. 103

↑ Erich Gutenberg : Introduction to Business Administration . 1958, p. 152 f.

^ Bernhard Hartmann: Bank Operations Analysis . 1962, p. 213

^ Stefan Kaminsky: The cost and income statement of the credit institutions . 1955, p. 28 f.

^ Stefan Kaminsky: The cost and income statement of the credit institutions . 1955, p. 27

^ Karl-Friedrich Hagenmüller: Banking operations and banking policy . Volume 3. 1959, p. 104

^ Stefan Kaminsky: The cost and income statement of the credit institutions . 1955, p. 36

^ Stefan Kaminsky: The cost and income statement of the credit institutions . 1955, p. 35

^ Karl-Friedrich Hagenmüller: Banking operations and banking policy . Volume 3. 1959, p. 108 ff.

^ Joachim Süchting: Bank Management . 1982, p. 86

^ Stefan Kaminsky: The cost and income statement of the credit institutions . 1955, p. 107

^ Hans-Jacob Krümmel: Bank interest . 1964, pp. 31-38

^ Bernhard Hartmann: Bank Operations Analysis . 1962, p. 227

^ Karl Friedrich Hagenmüller: Banking operations and banking policy . 1959, p. 223

^ Elisabeth Adrion: Income-oriented retail banking . 1997, p. 73 f.

^ Konrad Wimmer: Bank calculation and risk management: Controlling in credit institutions . 2004, p. 43 ff.

^ Konrad Wimmer: Bank calculation and risk management: Controlling in credit institutions . 2004, p. 46 ff.

[1] Harry Zingel: Textbook of cost and performance accounting . 2004, p. 62

[2] Joachim Süchting : Calculation and pricing of the credit institutions: The price disposition area at German and American banks from a calculation point of view . 1963, p. 16

[3] Wilhelm Hasenack: Bank calculation and fee policy . In: Journal for Business Administration . 1924, p. 450 ff.

[4] Wilhelm Hasenack: Company calculations in the banking industry . 1925, p. 34

[5] Wilhelm Hasenack: Bank calculation and fee policy . In: Journal for Business Administration . 1924, p. 188 ff.

[6] Hans Rummel: The possibilities of an exact cost calculation in the banking industry and their effects on profitability . In: Journal for commercial research . 1934, p. 281 ff.

[7] Erich Fehrmann: The business partner calculation in credit banking . 1936, p. 1 ff.