| CODE | BKF5110 | |||||||||
| TITLE | Bank Financial Management | |||||||||
| UM LEVEL | 05 - Postgraduate Modular Diploma or Degree Course | |||||||||
| MQF LEVEL | 7 | |||||||||
| ECTS CREDITS | 5 | |||||||||
| DEPARTMENT | Banking and Finance | |||||||||
| DESCRIPTION | This study-unit examines the nature, functions and strategic context of practical financial management in the modern banking and financial services firm (FSF). The external and internal drivers that shape financial management are explored, and their strategic and managerial contexts are studied. Three integrative themes run throughout this unit: the need to identify, measure and manage risk and return trade-offs; how the market (or economic) model may improve a bank's value; and the need to subject a bank's targets and performance to the external tests of the market. The challenges raised by the present 'credit crunch' to these themes are considered. The main topics covered include: financial and performance analysis; cost efficiency; asset and liability management; capital adequacy, capital allocation and VAR (Value-At-Risk) modelling; lending and securitisation. Contemporary issues and problems are addressed, together with the new techniques that are being developed to handle these challenges. Study-unit Aims: 1. To provide a rigorous grounding in the nature, strategic context and managerial functions of practical financial management in banks and similar financial services firms. 2. To give an understanding of how bank financial management contributes towards meeting a bank's strategic and related objectives. 3. To identify and develop the skills, techniques and practical competences needed for advanced level financial management in banking. 4. To expose students to contemporary problems and issues in the field, and to consider how these are being addressed via new techniques and management thinking. 5. To develop independent analytical skills and other key skills, like communication, group work, time management, task prioritisation and presentational methods. 6. To equip students for career advancement in financial management within the financial services sector. Learning Outcomes: 1. Knowledge & Understanding: By the end of the study-unit the student will be able to: - Comprehend the wider macroeconomic and strategic context of bank financial management (BFM). - Appreciate that BFM is fundamentally concerned with practical risk management. - Comprehend how to evaluate the overall performance of a bank. - Demonstrate an understanding of how BFM is applied to measuring and managing the key risks of banking. - Appreciate the risk and return trade-offs that banks have to make and how these impact on bank value. - appreciate the key roles of capital adequacy, liquidity and bank supervision. - Illustrate and comprehend how the recent 'credit crunch' (2007/09) has raised important questions on applying the free market model to banks and the developing responses to these questions. - Have an understanding of contemporary issues in bank corporate governance and how these might be addressed. 2. Skills: By the end of the study-unit the student will be able to: - Apply practical skills in evaluating bank performance. - Use a collection of analytical techniques for measuring and managing bank risks. - Question the applicability and limitations of analytical techniques. - Demonstrate an understanding of and discuss how BFM contributes to a bank's broader strategic plan. - Apply with greater confidence many transferable skills in important management areas like - synthesis - communication - group work - time management - task prioritisation - and presentational skills Main Text/s and any supplementary readings: Main Texts: - Anthony Saunders and Marcia Millon Cornett, Financial Institutions Management: A Risk Management Approach, McGraw Hill, Seventh Edition, 2011. - Allen N. Berger, Philip Molyneux and John O. S. Wilson, The Oxford Handbook of Banking, Oxford University Paperback version 2012. Supplementary Readings Textbooks - B. Casu, C. Girardone and P. Molyneux, Introduction to Banking (FT Prentice Hall, 2006). - Stephen Valdez and Philip Molyneux An Introduction to Global Financial Markets, Sixth Edition (Palgrave Macmillan, 2010). - Steven I. Davis, Banking in Turmoil: Strategies for Sustainable Growth, (Palgrave Macmillan, 2009). - Paul Krugman, The Return of Depression Economics and the Crisis of 2008 (Penguin Books, 2008). - Stephen I Davies (2010), Effective Bank Regulation and Supervision: Lessons from the Financial Crisis (London: Searching Finance). Select Papers - David Walker (26 November, 2009), ‘A review of corporate governance in UK banks and other financial industry entities: final recommendations’ (London: The Walker Review Secretariat). - Financial Services Authority (March 2009), The Turner Review: A regulatory response to the global banking crisis, (London FSA). - Jean Dermine (2011), ‘Bank corporate governance beyond the global banking crisis’, INSEAD Working Paper 2011/33/FIN (Fontainebleau: INSEAD). - John Thornton (2011), ‘Post-crisis financial reform: Where do we stand’, forthcoming in Banker’s Journal, Malaysia, September/October 2011. - Jonathan R Macey and Maureen O’Hara (2003), The corporate governance of banks’, Harvard Business Review, April. - Ted Gardener ‘Regulators also have a duty of care’, Chartered Banker, December/January, 2012. - KPMG (2010), ‘Creating a new mould for banking’, KPMG International Bank for International Settlements (December 2010), ‘Basel III: A global regulatory framework for more resilient banks and banking systems’ (BIS: Basel Committee on Banking supervision). - Hervé Hannoun (2010), ‘The Basel III Capital Framework: a decisive breatkthrough’ (go to BIS website and look under Basel III). - KPMG (2010), ‘UK Banks: Performance Benchmarking Report. Full Year Results 2010’ www.kpmg.co.uk/banking. - Euromoney (2008), ‘Bank funding faces up to the credit crunch’, September. - The Economist (2009), ‘Bank funding needs: total liabilities’, September 5. - Bank for International Settlements (December 2010), ‘Basel III: International framework for liquidity risk measurement, standards and monitoring’, (BIS: Basel Committee on Banking Supervison). - Nada Mora (2010), ‘Can banks provide liquidity in a financial crisis?’ Economic Review, Federal Reserve Bank of Kansus City, Third Quarter. - The Economist (2009), ‘Europe’s corporate credit crunch: muck in the fuel pipe’ December 12. - Allen N. Berger, Nathan H. Miller, Mitchell A. Petersen, Raghuram G. Rajun & Jeremy C. Stein (2005), ‘Does function follow organizational form? Evidence from the lending practices of large and small banks’, Journal of Financial Economics 76. - Robert Sollis (2009), ‘Value at risk: a critical overview’, Journal of Financial Regulation and Compliance, Vol 17, No 4. - Franco Fiordelisi, David Marques-Ibanez and Phil Molyneux, ‘Efficiency and risk in European banking’, Journal of Banking and Finance, 35 (2011). - Thomas F. Cosimano and Dalia S. Hakara (2011), ‘Bank behaviour in response to Basel III: a cross-country analysis’, IMF Working Paper WP/11/119, May. - The Economist (2009), ‘Reforming finance: derivatives’ August 8. - Bank of International Settlements (May 2009), ‘Principles for sound stress testing practices and supervision’ (BIS: Basel Committee on Banking Supervision). - John Thirwell (2011) ‘Under pressure’, Chartered Banker, June/July 2011. - The Economist (2011), ‘Europe’s stress tests’, July 23. - Phillipe Jorion (2009), ‘Risk management lessons from the credit crisis’, European Financial Management, Vol 15, No 5. - The Economist (2008), ‘Confessions of a risk manager’, August 9. |
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| ADDITIONAL NOTES | Pre-requisite Qualifications: A first degree (preferably, but not necessarily) in a congruent discipline, like economics, banking, finance, management or accountancy or an equivalent professional qualification. In the absence of these qualifications, a mature student would need significant managerial and financial services experience. A grounding in corporate finance and/or bank management is desirable, but not necessary. | |||||||||
| STUDY-UNIT TYPE | Lecture | |||||||||
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| LECTURER/S | Edward Gardener |
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The University makes every effort to ensure that the published Courses Plans, Programmes of Study and Study-Unit information are complete and up-to-date at the time of publication. The University reserves the right to make changes in case errors are detected after publication.
The availability of optional units may be subject to timetabling constraints. Units not attracting a sufficient number of registrations may be withdrawn without notice. It should be noted that all the information in the description above applies to study-units available during the academic year 2025/6. It may be subject to change in subsequent years. |
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