The Principles of Banking

by Choudhry, Moorad; Cummins, John; Plenderleith, Ian

• ISBN13: 9780470825211
• ISBN10: 0470825219
• Edition: 1st
• Format: Hardcover
• Copyright: 2012-05-29
• Publisher: Wiley

Summary

The 2007-2008-2009 financial market crisis has shown that the original principles of banking sound liquidity risk management have been forgotten during a prolonged bull market run. The ultimate result of this was bank failures such as Northern Rock, Lehmans and HBOS which had profound consequences for the world economy and created a global recession that may yet lead to long-term depression. This book is an essential guide for bankers in every country of the world that reiterates the primary objective of banks and serves as a policy guide for all market practitioners. The original principles of banking such as sound lending policy and liquidity management need to be restated again and emphasized for bankers, regulators and investors. The book investigates the part played by unsound banking practices in the creation of the 2007-2008 financial market crisis. It then lists a "policy guide" for all banks that bankers must observe through good times, which will enable them to survive the bad times. This is followed by in-depth technical analysis that bankers must observe as part of good business banking practice. And banks must recognize that business cycles are just that: cycles. Good times do not last forever and banks must be managed with discipline so that they survive the bad times. This book is a policy guide for the entire business cycle.

Author Biography

Moorad Choudhry is Treasurer, Corporate Banking Division at The Royal Bank of Scotland.
He is Visiting Professor at the Department of Mathematical Sciences, Brunel University; Visiting
Professor at the Department of Economics, London Metropolitan University; and Visiting Teaching Fellow at the Department of Management, Birkbeck, University of London. He is a Fellow of the Chartered Institute for Securities & Investment and a Fellow of the ifs-School of Finance.
He lives in Surrey, England.

Table of Contents

Forewords	p. xiii
Preface	p. xvii
Acknowledgements	p. xxiii
About the Author	p. xxv
A Primer on Banking	p. 1
A primer on bank business and balance sheet risk	p. 3
Bank regulatory capital	p. 75
Banking and credit risk	p. 131
A primer on securitisation	p. 179
The yield curve	p. 221
Bank Asset and Liability Management	p. 351
Asset-liability management I	p. 353
Asset-liability management II	p. 385
Asset-liability management III: Trading and hedging principles	p. 445
Asset-liability management W: The ALCO	p. 493
The ALCO: Terms of reference and treasury operating model	p. 503
Risk reporting, risk policy and stress testing	p. 531
Bank Liquidity Risk Management	p. 587
Principles of bank liquidity management	p. 589
liquidity risk metrics	p. 653
Liquidity risk reporting and stress testing	p. 687
Internal funds pricing policy	p. 715
Bank Strategy and Governance	p. 759
Bank strategy I: Formulating strategy and direction	p. 761
Bank strategy II: Capital and funding management	p. 801
Principles of corporate governance	p. 831
Applications Software, Policy Templates and Teaching Aids	p. 861
Applications software, policy templates and spreadsheet models	p. 863
Afterword	p. 867
List of terms and their abbreviations	p. 869
Index	p. 875
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