The Principles of Banking

Author: Moorad Choudhry
Publisher: John Wiley & Sons
ISBN: 9780470825211
Published In: April 2012
Format: Hardback , 350 pages
Jurisdiction: International or US ? Disclaimer:
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The ultimate guide for bank management: how to survive and thrive throughout the business cycle

An essential guide for bankers and students of finance everywhere, The Principles of Banking reiterates that the primary requirement of banking—sound capital and liquidity risk management—had been forgotten in the years prior to the financial crash. Serving as a policy guide for market practitioners and regulators at all levels, the book explains the keys to success that bankers need to follow during good times in order to be prepared for the bad, providing in-depth guidance and technical analysis of exactly what constitutes good banking practice.

Accessible to professionals and students alike, The Principles of Banking covers issues of practical importance to bank practitioners, including asset-liability management, liquidity risk, internal transfer pricing, capital management, stress testing, and more. With an emphasis on viewing business cycles as patterns of stable and stressful market behavior, and rich with worked examples illustrating the key principles of bank asset-liability management, the book is an essential policy guide for today and tomorrow. It also offers readers access to an accompanying website holding policy templates and teaching aids.
- Illustrates how unsound banking practices that were evident in previous bank crashes were repeated during the creation of the 2007-2008 financial market crisis
- Provides a template that can be used to create a sound liquidity and asset-liability management framework at any bank
- An essential resource for the international banking community as it seeks to re-establish its credibility, as well as for students of finance
- Explains the original principles of banking, including sound lending policy and liquidity management, and why these need to be restated in order to avoid another bank crisis at the time of the next economic recession
- Covers topics of particular importance to students and academia, many of which are marginally—if ever—addressed in current text books on finance
- Offers readers access to a companion website featuring invaluable learning and teaching aids
Written by a banking practitioner with extensive professional and teaching experience in the field, The Principles of Banking explains exactly how to get back to basics in risk management in the banking community, essential if we are to maintain a sustainable banking industry.
PART I: A PRIMER ON BANKING 1
CHAPTER 1 A primer on bank business and balance sheet risk
CHAPTER 2 Bank regulatory capital
CHAPTER 3 Banking and credit risk
CHAPTER 4 A primer on securitisation
CHAPTER 5 The yield curve

PART II: BANK ASSET AND LIABILITY MANAGEMENT
CHAPTER 6 Asset–liability management I
CHAPTER 7 Asset–liability management II
CHAPTER 8 Asset–liability management III: Trading and hedging principles
CHAPTER 9 Asset–liability management IV: The ALCO
CHAPTER 10 The ALCO: Terms of reference and treasury operating model
CHAPTER 11 Risk reporting, risk policy and stress testing

PART III: BANK LIQUIDITY RISK MANAGEMENT
CHAPTER 12 Principles of bank liquidity management
CHAPTER 13 Liquidity risk metrics
CHAPTER 14 Liquidity risk reporting and stress testing
CHAPTER 15 Internal funds pricing policy

PART IV
BANK STRATEGY AND GOVERNANCE
CHAPTER 16 Bank strategy I: Formulating strategy and direction
CHAPTER 17 Bank strategy II: Capital and funding management
CHAPTER 18 Principles of corporate governance

PART V
APPLICATIONS SOFTWARE, POLICY TEMPLATES AND TEACHING AIDS
CHAPTER 19 Applications software, policy templates and spreadsheet models

Afterword

List of terms and their abbreviations

Index
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.