Download Management of Banks and Financial Institutions

Management of Banks and Financial Institutions
Instructor: Ashok Thampy
Term: IV
Programme: PGP
Credit: 3
Objective:
This course aims to equip students with an understanding of the issues in the management
of financial institutions. Financial institutions are subject to risk on both sides of their
balance sheet and this course will deal extensively with the techniques for measuring and
managing these risks. The regulation of financial services is also be dealt with in some
detail.
Course outline:
Topics
Sessions
1. Overview of the financial system
(1)
Role of the financial system-historical developments-market structure
Ref: Indian Financial System-Ch.2, MY Khan
2. Analyzing bank performance and valuation
(2)
Ref: Bank Management-Ch. 2,3 T. Koch
Valuation: Measuring and Managing Value of Companies-Ch. 16, Tom Copeland,
Tim Koller and Jack Murrin
3. Valuation and merger analysis
Case: Finansbank (HBS)
Case: Chase Manhattan Bank (HBS)
(2)
4. Interest rate and liquidity risk for banks
Interest rate risk management for banks
Maturity model-duration gap-repricing gap models
Ref: Bank Management-Ch. 4,5,6,8 Koch et al
(2)
5. Managing interest rate risk with swaps
Ref: Bank Management-Ch. 5,6,8 Koch
Case: Banc One Corp: Asset and Liability Management
(1)
6. Bank for International Settlements norms for capital standards
Issues in capital management, capital adequacy ratios and BIS standards
Ref: Bank Management-Ch. 9, T. Koch
BIS publications
(1)
7. Securitization and special issues in valuing securitized instruments
Ref: Financial Institutions Management-Ch. 28, Anthony Saunders
(1)
8. Credit risk management
(3)
Different approaches to evaluating credit risk such as Creditmetrics, KMV model
Ref: : Bank Management-Ch. 10,11 Koch
Financial Institutions Management-Ch. 11,12, Anthony Saunders
9. Credit derivatives and innovations in structuring products
Ref: Notes, Enron, First American Bank
(3)
10. Lessons from financial failure
Case: Tip of the iceberg:JP Morgan Chase and Bear Stearns (HBS)
Case: What happened to Citigroup? (HBS)
(2)
11. Industry guest speakers
(2)
References:
Timothy W. Koch and Scott MacDonald, Bank Management, 6th Edition, Thomson South
Western.
Anthony Saunders, Financial Institutions Management, 3rd Edition, Irwin McGraw Hill
Meir Kohn, Financial Institutions and Markets, Tata McGraw Hill
M. Y. Khan, Indian Financial System, Tata McGraw Hill
L. M. Bhole, Financial Institutions and Market, Tata McGraw Hill
Phillipe Jorion, Value at Risk, McGraw Hill
Project:
The project will involve the analysis of a bank. The project includes performing a
financial ratio analysis and valuation of a bank.
Evaluation: Midterm - 40%, Project - 20%, Final - 40%
Examinations: Closed-book