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Case Study Assignment
You are a senior manager at a financial institution that engages in both commercial and investment banking activities and has offices in Germany and the US. The Board of Directors at the bank have asked you to prepare a policy statement for the annual report to shareholders. In the last few months, the following events have occurred:
1.In response to accelerating inflation, the European Central Bank has raised short-term interest rates.
2.New regulations have been put in place by the US Securities and Exchange Commission to prevent investment banks from providing both underwriting services and stock research.
3.The bank??s reserves on deposit with the US Federal Reserve have declined, substantially reducing commercial lending opportunities.
4.Several of the bank??s high-profile corporate clients have had their credit ratings downgraded and are searching for long-term financing.
5.The city of Berlin has announced it is searching for an underwriter to handle the sale of a record amount of municipal bonds denominated in US dollars.
Please prepare a statement for the shareholders that discusses in detail, the likely impact of the above events on the bank??s profitability, strategic business decisions, and asset and liability decisions going forward.