Bank and Insurance Capital Management

Overview

In the aftermath of the financial crisis, capital management has become a critical factor in value creation for banks and other financial institutions. Although complex and subject to regulatory change, the strategic importance of capital management became apparent during the crisis and has moved the subject to the top of corporate agendas.

Bank and Insurance Capital Management is an essential guide to help banks and insurance companies understand and manage their capital ...

See more details below
Other sellers (Hardcover)
  • All (9) from $46.29   
  • New (7) from $46.29   
  • Used (2) from $64.29   
Bank and Insurance Capital Management

Available on NOOK devices and apps  
  • NOOK Devices
  • Samsung Galaxy Tab 4 NOOK
  • NOOK HD/HD+ Tablet
  • NOOK
  • NOOK Color
  • NOOK Tablet
  • Tablet/Phone
  • NOOK for Windows 8 Tablet
  • NOOK for iOS
  • NOOK for Android
  • NOOK Kids for iPad
  • PC/Mac
  • NOOK for Windows 8
  • NOOK for PC
  • NOOK for Mac
  • NOOK for Web

Want a NOOK? Explore Now

NOOK Book (eBook)
$45.99
BN.com price
(Save 42%)$80.00 List Price

Overview

In the aftermath of the financial crisis, capital management has become a critical factor in value creation for banks and other financial institutions. Although complex and subject to regulatory change, the strategic importance of capital management became apparent during the crisis and has moved the subject to the top of corporate agendas.

Bank and Insurance Capital Management is an essential guide to help banks and insurance companies understand and manage their capital position. Bridging the gap between theory and practice, it provides proven techniques for managing bank capital, as well as explaining key capital management perspectives, including accounting, regulatory, risk and capital management and corporate finance. It also shows how to analyse a firm's stakeholders such as depositors, policy holders, debt holders and shareholders, and manage their expectations, and how to align risk and capital management so as to best optimize the return on capital and preserve capital in periods of stress. Economic capital is also discussed in depth, as are the practicalities of bank and insurance M&A, and the book also shows how financial innovations can be used to optimise the capital position and how diversification effects are reflected in the capital position.

This book will arm readers with the knowledge and skills needed to understand how capital management can improve capital structure and performance, achieving an optimal cost of, and return on capital, creating value as a result.

Read More Show Less

Product Details

  • ISBN-13: 9780470664773
  • Publisher: Wiley
  • Publication date: 1/11/2011
  • Series: Wiley Finance Series , #516
  • Edition number: 1
  • Pages: 264
  • Product dimensions: 6.20 (w) x 9.00 (h) x 1.00 (d)

Meet the Author

FRANS DE WEERT is a mathematician by training with extensive research experience in quantitative finance. After his academic career he worked as an equity derivatives trader at Barclays Capital in London and New York. In his latest role he was responsible for the Latin American trading activities in equity derivatives. He subsequently moved on to become a strategy consultant at Booz & Company for which he advised senior management in the financial services industry. Currently Frans works as a banking and insurance supervisor and as an independent financial markets trainer. Frans has published several books on options trading and the banking and insurance sector and currently lives and works in Amsterdam.

For more author information please visit www.dftktrainings.com

Read More Show Less

Table of Contents

Preface xi

Acknowledgements xv

1 Capital Management as a Means to Create Value 1

1.1 The primary objectives of capital management 1

1.2 Optimization of capital structure 2

1.3 Optimization of performance 4

Part I Accounting Perspective 7

2 Bank and Insurance Business Model 9

2.1 Bank business model 9

2.2 Insurance business model 12

3 Balance Sheets of Banks and Insurance Companies 15

3.1 Bank balance sheet 15

3.2 Insurance balance sheet 18

3.3 Goodwill 20

4 Differences between Banking and Insurance 23

5 Economic Capital 25

6 Balance Sheet Management 31

6.1 Capital versus balance sheet management 31

6.2 Function versus departmental responsibilities 32

6.3 Capital hedging 36

6.4 Expected versus unexpected losses 37

6.5 Capital versus liquidity 39

6.6 Funds transfer price 39

6.7 Corporate line 40

7 Accounting versus Regulation 43

Part II Regulatory Perspective 45

8 Types of Available Capital 47

8.1 Bank capital components 47

8.2 Insurance capital components 56

8.3 Determination of available capital for insurance companies under Solvency II 58

8.4 Capital treatment of dated hybrids 61

8.5 Deduction of interests in other financial institutions 64

9 Capital Instruments 67

9.1 Common shares 67

9.2 Rights issue 68

9.3 Preference shares 70

9.4 Hybrid equity 71

9.5 Convertible capital instruments 73

10 Regulatory Capital Requirements 75

10.1 Bank capital requirement ratios 75

10.2 Ratio hedging against currency movements 78

10.3 The three-pillar approach to bank capital requirements 79

10.4 Current capital requirements for insurance companies 93

10.5 Upcoming capital requirements for insurance companies: Solvency II framework 95

10.6 Liability side of the balance sheet under Solvency II 97

10.7 Standardized approach Solvency II 102

11 Potential Changes in Capital Regulation 107

11.1 Regulational shift to core capital 107

11.2 Regulatory classification preference shares 110

11.3 Hybrid regulation 111

11.4 Subordinated debt for systemically relevant banks 115

11.5 Positive revaluation reserves 115

11.6 Minority interests 116

11.7 Deferred tax assets 117

11.8 Participations in other financial institutions 118

11.9 Leverage ratio limit 118

11.10 Financial autonomy 119

12 Reserve Adequacy Test 123

13 Materializing Diversification Benefits through Capital Structures 125

14 Risk-Weighted Assets Optimization 131

15 Balance Sheet Analysis as Integral Part of Valuation 135

Part III Risk and Capital Management Perspective 139

16 Investment of Capital and Balance Sheet Segmentation 141

16.1 Investment of capital for banks 141

16.2 Investment of capital for insurance companies 143

16.3 Investment of capital: duration differences for banks and insurance companies 145

16.4 Segmentation of the balance sheet 146

17 Alignment between Risk and Capital Management 149

17.1 Where risk and capital management meet 149

17.2 Capital preservation as a key condition for performance optimization 154

17.3 The soft side of capital management 157

17.4 Emerging role of risk and capital management 161

17.5 Critical success factors of risk and capital management 163

17.6 Differences in risk management per line of business 166

18 Risk-Adjusted Return on Capital and Economic Profit 171

19 Strategy, Risk, and Capital Management Cycle 177

Part IV Corporate Finance Perspective 181

20 Corporate Finance Decision Making 183

20.1 Role of RWAs in bank takeovers 183

20.2 Enterprise value versus market capitalization 185

20.3 Weighted average cost of capital and the optimal level of debt financing 187

20.4 Financial institution equity valuation 191

20.5 Capital buy-backs 194

21 Strategic Diversification 199

22 Conclusions 207

22.1 Capital management perspectives 209

Appendix A Accounting Classifications 213

Appendix B Credit Ratings 215

Appendix C Standardized Approach of Solvency II 217

Appendix C.1 Market Risk 217

Appendix C.2 Counterparty default risk 224

Appendix C.3 Life risk 224

Appendix C.4 Non-life risk 226

Appendix C.5 Health risk 228

Appendix C.6 BSCR 230

Appendix C.7 Operational risk 230

Bibliography 233

Index 235

Read More Show Less

Customer Reviews

Be the first to write a review
( 0 )
Rating Distribution

5 Star

(0)

4 Star

(0)

3 Star

(0)

2 Star

(0)

1 Star

(0)

Your Rating:

Your Name: Create a Pen Name or

Barnes & Noble.com Review Rules

Our reader reviews allow you to share your comments on titles you liked, or didn't, with others. By submitting an online review, you are representing to Barnes & Noble.com that all information contained in your review is original and accurate in all respects, and that the submission of such content by you and the posting of such content by Barnes & Noble.com does not and will not violate the rights of any third party. Please follow the rules below to help ensure that your review can be posted.

Reviews by Our Customers Under the Age of 13

We highly value and respect everyone's opinion concerning the titles we offer. However, we cannot allow persons under the age of 13 to have accounts at BN.com or to post customer reviews. Please see our Terms of Use for more details.

What to exclude from your review:

Please do not write about reviews, commentary, or information posted on the product page. If you see any errors in the information on the product page, please send us an email.

Reviews should not contain any of the following:

  • - HTML tags, profanity, obscenities, vulgarities, or comments that defame anyone
  • - Time-sensitive information such as tour dates, signings, lectures, etc.
  • - Single-word reviews. Other people will read your review to discover why you liked or didn't like the title. Be descriptive.
  • - Comments focusing on the author or that may ruin the ending for others
  • - Phone numbers, addresses, URLs
  • - Pricing and availability information or alternative ordering information
  • - Advertisements or commercial solicitation

Reminder:

  • - By submitting a review, you grant to Barnes & Noble.com and its sublicensees the royalty-free, perpetual, irrevocable right and license to use the review in accordance with the Barnes & Noble.com Terms of Use.
  • - Barnes & Noble.com reserves the right not to post any review -- particularly those that do not follow the terms and conditions of these Rules. Barnes & Noble.com also reserves the right to remove any review at any time without notice.
  • - See Terms of Use for other conditions and disclaimers.
Search for Products You'd Like to Recommend

Recommend other products that relate to your review. Just search for them below and share!

Create a Pen Name

Your Pen Name is your unique identity on BN.com. It will appear on the reviews you write and other website activities. Your Pen Name cannot be edited, changed or deleted once submitted.

 
Your Pen Name can be any combination of alphanumeric characters (plus - and _), and must be at least two characters long.

Continue Anonymously

    If you find inappropriate content, please report it to Barnes & Noble
    Why is this product inappropriate?
    Comments (optional)