Strategic Management for Banks

Banks: Strategies for Maximising Value

Face-to-faceTwo days

Course Overview

A decade on from the Global Financial Crisis banks are facing entirely different challenges. Low interest rates, tighter regulation, increased competition and macro-economic uncertainty weigh heavily on banks’ current financial performance and valuation. The objective of this two day course is to provide participants with the analytical tools to understand first, how analysts and investors value banks, and secondly how management can evaluate and develop strategies which maximise value.
Day 1 reviews the tools and techniques used by investors and analysts to value banks. This is then compared with techniques available to management to evaluate alternative strategies internally. Case studies are reviewed for each approach.
Day 2 applies the tools and techniques from Day 1 to the task of ‘Managing for Value.’ Participants consider the impact of increased regulation, low interest rates, increased competition and digital disruption. A further case study is reviewed.

Download Course Outline

  • Understand . . .

    How analysts and investors value banks

  • Learn about . . .

    The techniques used to evaluate alternative strategies

  • Find out how to . . .

    Manage a business to maximise its value

Objectives: Participants in this course will come away with…

  • The analytical tools to value banks and consider the alternative strategies to maximise their valuation
  • The expertise to value banks’ strategies and compare these with the external market’s valuation
  • A clear understanding of how investors value banks
  • An appreciation of the impact of regulatory rules on banks’ valuations

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Course Modules

  • 1. introduction

    • What is equity?
    • The impact of accounting conventions
    • The influence of regulation

  • 2. bank valuation – market approach

    • The attraction of gearing: macro-economic gearing; stock market gearing; and balance sheet gearing
    • Dividend discount models
    • Earnings growth and Price:Earnings Ratios
    • Return on Equity, Return on Tangible Equity and Price:Book multiples
    • The drivers of Return on Equity
    • Cost of Equity – brief introduction
    • Economic profit
    • Long term growth rates
    • The significance of Net Asset Value (NAV) growth

  • 3. market approach – case study

    • Comparison of banks’ forecasts
    • Comparative valuations
    • Macro-economic stress–testing
    • Review and discussion

  • 4. bank valuation – internal approach

    • Equity Cash Flow – definition and approach
    • The relevance of “Cash-Flow” in banking
    • Cost of Equity – Capital Asset Pricing Model (CAPM)
    • Terminal Value – relevance and calculation
    • Establishing Value Drivers
    • Portfolio review

  • 5. internal approach – case study

    • Commercial bank valuation
    • Valuing a diversified bank’s portfolio
    • Review and discussion

  • 6. valuation impact of regulation

    • Review of key regulatory developments
    • Capital
    • Liquidity
    • Pro-cyclicality and Equity Cash Flow valuation
    • Product portfolio valuation under Basel III

  • 7. managing for value

    • Business model evolution following the Global Financial Crisis
    • Investment Banking models and profitability
    • The franchise value of deposits and the impact of low interest rates
    • Market Based Finance – from out of the shadows
    • The ‘unbundling’ of banking
    • FinTechs – the valuation impact of digital disruption

  • 8. managing for value - case study

    • Analysis of recent banks’ restructuring
    • Assessment of the value impact

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