Managing Bank Capital

<body stylesrc="../_private/template_title.htm" topmargin="10" leftmargin="10" bgcolor="#FFFFFF" link="#333366" vlink="#000000" alink="#000000"> <div align="left"> <table border="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%" cellpadding="0" id="table2"> <tr> <td width="780"> <div align="center"> <table border="0" cellpadding="5" cellspacing="0" height="206" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table3"> <tr> <td align="right" height="198" width="1%"> <p align="left"> <img border="0" src="../images/book_matten2.jpg" width="133" height="200"></td> <td valign="top" align="left" height="198"> <table border="0" cellspacing="1" style="border-collapse: collapse" bordercolor="#111111" cellpadding="0" id="table4"> <tr> <td colspan="3" width="0%"> <p class="book_title">Managing Bank Capital: <br> <span class="book_title_sub">Capital Allocation and Performance Measurement</span></td> </tr> <tr> <td width="1%" class="book_details_tags" valign="top" height="16" align="left"> <img border="0" src="../images/blank_2x2.gif" width="2" height="2"><img border="0" src="../images/blank_2x2.gif" width="2" height="2"></td> <td width="52%" class="book_details_tags" valign="top" height="144" align="left" rowspan="9"> <map name="FPMap2"> <area href="../main/ratings.htm" shape="rect" coords="74, 0, 164, 33"> </map> <img border="0" src="../images_title/matten24.gif" usemap="#FPMap2" width="165" height="158"></td> <td class="book_details" valign="top" height="16" align="left" width="50%"> </td> </tr> <tr> <td width="1%" class="book_details_tags" valign="top" height="16" align="left"> </td> <td class="book_details" valign="top" height="16" align="left" width="50%"> </td> </tr> <tr> <td width="1%" class="book_details_tags" valign="top" height="16" align="left"> </td> <td class="book_details" valign="top" height="16" align="left" width="50%"> </td> </tr> <tr> <td width="1%" class="book_details_tags" valign="top" height="16" align="left"> </td> <td class="book_details" valign="top" height="16" align="left" width="50%"> </td> </tr> <tr> <td width="1%" class="book_details_tags" valign="top" height="16" align="left"> </td> <td class="book_details" valign="top" height="16" align="left" width="50%"> </td> </tr> <tr> <td width="1%" class="book_details_tags" valign="top" height="16" align="left"> </td> <td class="book_details" valign="top" height="16" align="left" width="50%"> </td> </tr> <tr> <td width="1%" class="book_details_tags" valign="top" height="16" align="left"> </td> <td class="book_details" valign="top" height="16" align="left" width="50%"> </td> </tr> <tr> <td width="1%" class="book_details_tags" valign="top" height="16" align="left"> </td> <td class="book_details" height="32" align="center" width="50%" rowspan="2"> </td> </tr> <tr> <td width="1%" class="book_details_tags" valign="top" height="16" align="left"> </td> </tr> </table> </td> </tr> </table> <table border="0" cellpadding="10" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="468" id="table5"> <tr> <td> <script type="text/javascript"></script> <script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js"> </script> </td></tr> </table> </div> <table border="0" cellpadding="5" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table6"> <tr> <td width="50%" valign="top"> <p align="left" class="body_expanded">When people talk of bank capital, this is the book that comes to mind. The first edition was a short text that focused primarily on economic capital and concepts such as RAROC. That was so successful that the author vastly expanded it as this second edition. Now the book is an in-depth look at bank capital from four different perspectives—those of the</p> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="125" align="left" id="table7"> <tr> <td width="120" height="10"> <font size="2"> </font></td> <td width="5" height="10"><font size="2"> </font></td> </tr> <tr> <td width="120"> <script type="text/javascript"></script> <script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js"> </script> </td><td width="5"> </td> </tr> </table> <p align="left" class="bullet"><img border="0" src="../images/bullet.gif" width="20" height="10">treasurer</p> <p align="left" class="bullet"><img border="0" src="../images/bullet.gif" width="20" height="10">regulator</p> <p align="left" class="bullet"><img border="0" src="../images/bullet.gif" width="20" height="10">risk manager, and</p> <p align="left" class="bullet"><img border="0" src="../images/bullet.gif" width="20" height="10">investor.</p> <p align="left" class="body_expanded">Needless to say, the book will appeal to any of these individuals. It will also appeal to senior managers, consultants and theorists.</p> <p align="left" class="body_expanded">The book is not technical. Indeed, the one thing it does not do well is delve into the formulas and mechanics of capital calculations, RAROC or other RAPMs. It is a qualitative book written from the perspective of a practitioner who has "been around the block" a few times. </p> <p align="left" class="body_expanded">You learn about treasurers struggling to achieve a desired capital ratio and the increasingly important role that hybrid equity products play. Regulatory capital and the differences between tier 1, tier 2 and tier 3 capital are explained. There are discussions of economic profit and earnings-at-risk. There is a chapter on implementing capital allocation policies and procedures. For a non-technical soup-to-nuts exploration of bank capital, the book is unparalleled.</p> </td> <td width="50%" valign="top" class="body" rowspan="2"> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%" id="table8"> <tr> <td width="100%" bgcolor="#333366"> <p class="header_yellow" align="center">Contents</td> </tr> <tr> <td width="100%" class="explanatory_text"> <table border="1" cellpadding="0" cellspacing="5" style="border-collapse: collapse" bordercolor="#CCCCFF" bgcolor="#CCCCFF" width="100%" id="table9"> <tr> <td class="contents_expanded"> <p class="contents"><b>Introduction: Capital Allocation in Banking. </b></p> <p class="contents"><b>THE ROLE AND DEFINITION OF CAPITAL. </b></p> <p class="contents">1. The Role of Capital. </p> <p class="contents">2. Capital-Based Management Techniques. </p> <p class="contents"><b>THE TREASURER'S PERSPECTIVE. </b> </p> <p class="contents">3. Managing the Available Capital Base. </p> <p class="contents">4. Capital Instruments. </p> <p class="contents">5. Capital Allocation versus Capital Investment. </p> <p class="contents"><b>THE REGULATOR'S PERSPECTIVE. </b> </p> <p class="contents">6. Regulatory Capital Requirements. </p> <p class="contents">7. The Basel Accord. </p> <p class="contents">8. Current Problems and Future Developments: Towards an Internal-Models Based Approach? </p> <p class="contents"><b>THE RISK MANAGER'S PERSPECTIVE. </b></p> <p class="contents">9. Asset Volatility as a Capital Allocation Tool. </p> <p class="contents">10. Modelling Market Risk. </p> <p class="contents">11. Modelling Credit Risk. </p> <p class="contents">12. Modelling Operational and Other Risks. </p> <p class="contents"><b>THE SHAREHOLDER'S PERSPECTIVE. </b> </p> <p class="contents">13. Earnings-at-Risk as a Capital Allocation Tool. </p> <p class="contents">14. Modelling Earnings-at-Risk. </p> <p class="contents"><b>AN HOLISTIC APPROACH TO CAPITAL MANAGEMENT. </b></p> <p class="contents">15. Implementing Capital Allocation Policies and Procedures. </p> <p class="contents">16. Economic Profit and Shareholder Value. </p> <p class="contents">17. Determining the Cost of Capital: A Stock Market Perspective. </p> <p class="contents">18. Practical Issues in Implementation. </p> <p class="contents"><b>19. Conclusion</b></p> </td> </tr> </table> </td> </tr> </table> <p align="left" class="body_expanded">Because it was published in 2000, it does not describe the finalized version of Basel II, but it does discuss Basel I and the philosophy and objectives of Basel II in considerable detail. </p> <p align="left" class="body_expanded">This is the must-read on bank capital. For additional information on the mathematics behind capital calculations, supplement with <strong style="font-weight: 400">Schroeck (<a href="../titles/schroeck_g_(2002).htm">2002</a>) and</strong> Belmont (<a href="../titles/belmont_david_(2004).htm">2004</a>). For additional information on regulatory capital, and especially Basel II, supplement with Gup (<a href="../titles/gup_benton_(2004).htm">2004</a>) and/or Ong (<a href="../titles/ong_michael_(2004).htm">2004</a>).</p> <p align="center" class="body_expanded"> </script> <script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js"> </script> </td></tr> </table> </td> </tr> </table> <div align="left"> <table border="0" cellpadding="6" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" width="100%" bgcolor="#FFFFCC" id="table11"> <tr> <td width="100%"> <div align="center"> <center> <table border="0" cellpadding="0" cellspacing="0" style="border-collapse: collapse" bordercolor="#111111" bgcolor="#FFFFCC" id="table12"> <tr> <td> <p class="body" style="margin-bottom: 6"><b><font color="#333366" size="3">For related books, see sections:</font></b></p> <p class="bullet" style="margin-top: 4; margin-bottom: 4"> <img border="0" src="../images/bullet.gif" width="20" height="10"><a target="_top" href="../link_topic/risk_management_general.htm">Risk Management - General</a></p> <p class="bullet" style="margin-top: 4; margin-bottom: 4"> <img border="0" src="../images/bullet.gif" width="20" height="10"><a target="_top" href="../link_topic/risk_management_capital_allocation.htm">Risk Management - Capital Allocation</a></p> <p class="bullet" style="margin-top: 4; margin-bottom: 4"> <img border="0" src="../images/bullet.gif" width="20" height="10"><a target="_top" href="../link_topic/other_functions_regulation.htm">Other Functions - Regulation</a></p> </td> </tr> </table> </center> </div> </td> </tr> </table> </div> </td> <td>  </td> </tr> </table> </div>  <table border="0" style="border-collapse: collapse" width="100%" cellpadding="0" id="table1" bgcolor="#FFFFFF"> <tr> <td colspan="2" height="12"> <p style="margin-top: 0"> </td> </tr> <tr> <td align="right"> <p align="left" style="margin-bottom: 2px"> <a target="_top" href="http://www.riskexpertise.com/link/advertising.htm"> <font size="1" color="#000000" face="Arial">Ads by Contingency Analysis.</font></a></td> <td align="left"> <p align="right" style="margin-bottom: 2px"> <a target="_top" href="http://www.riskexpertise.com/link/advertising.htm"> <font size="1" color="#000000" face="Arial">Advertise on this site.</font></a></td> </tr> <tr> <td align="center" colspan="2">  <iframe src="http://servedbyadbutler.com/adserve/;ID=147917;size=300x250;setID=93136;type=iframe" allowtransparency="true" background-color="transparent" style="margin: 0px; padding: 0px; border-width: 0px" width="300" height="250" frameborder="0" marginwidth="0" marginheight="0" scrolling="no"> <![if lt IE 4]> <script src="http://servedbyadbutler.com/adserve/;ID=147917;size=300x250;setID=93136;type=js" type="text/javascript"> </script> <noscript> <a href="http://servedbyadbutler.com/go2/;ID=147917;size=300x250;setID=93136"> <img src="http://servedbyadbutler.com/adserve/;ID=147917;size=300x250;setID=93136;type=img" border="0" height="250" width="300" alt=""></a> </noscript><![endif]> </iframe>   </td> </tr> </table> <p align="center" style="margin-top: 20"> <map name="FPMap0_I1"> <area href="http://www.riskbook.com" shape="rect" coords="0, 0, 184, 29" target="_top"></map> <img border="0" src="../images/open_book_riskbook.gif" usemap="#FPMap0_I1" width="185" height="30"></p> <p class="a" align="center"><font face="Arial" size="2"><a href="../main/disclaimer.htm">disclaimer</a></font></p> <p class="a" align="center"><span class="verdana10">website:</span> <a target="_top" href="http://www.contingencyanalysis.com"> <font size="2" face="Arial">http://www.contingencyanalysis.com</font></a><br> <span class="verdana10">books direct link:</span> <a target="_top" href="http://www.riskbook.com"><font size="2" face="Arial">http://www.riskbook.com</font></a><br> copyright <font face="Times New Roman">©</font> Contingency Analysis, 1996 - current</p> <p class="a" align="center"><map name="FPMap1_I1"> <area target="_top" href="http://www.contingencyanalysis.com" shape="rect" coords="0, 0, 240, 88"> </map><img border="0" src="../images/logo_book_white.gif" usemap="#FPMap1_I1" width="241" height="89"></p>  </body>