Bank and Insurance Capital Management (The Wiley Finance by Frans de Weert

By Frans de Weert

Within the aftermath of the monetary trouble, capital administration has develop into a serious think about worth production for banks and different monetary associations. even if complicated and topic to regulatory swap, the strategic value of capital administration turned obvious throughout the obstacle and has moved the topic to the head of company agendas.Bank and coverage Capital administration is a vital consultant to assist banks and insurance firms comprehend and deal with their capital place. Bridging the distance among conception and perform, it presents confirmed recommendations for handling financial institution capital, in addition to explaining key capital administration views, together with accounting, regulatory, danger and capital administration and company finance. It additionally exhibits the way to study a firm's stakeholders similar to depositors, coverage holders, debt holders and shareholders, and deal with their expectancies, and the way to align threat and capital administration with a purpose to most sensible optimize the go back on capital and guard capital during times of tension. financial capital can be mentioned extensive, as are the practicalities of financial institution and coverage M&A, and the e-book additionally indicates how monetary techniques can be utilized to optimise the capital place and the way diversification results are mirrored within the capital position.This publication will arm readers with the information and talents had to know the way capital administration can enhance capital constitution and function, reaching an optimum fee of, and go back on capital, developing price therefore.

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Example text

As a separate department, but can also form part of the treasury department, whose role is explained below. 3. The treasury is responsible for all the cash flows within a bank or insurance company. This means that the treasury must ensure that, if a cash payment needs to be made, the bank or insurance company has sufficient cash or can easily acquire the cash to satisfy the payment obligation. Conversely, if a cash inflow takes place, the treasury is also responsible for giving this cash a good destination.

5% of cases. How this is established and how reliable this is, is elaborated on in Chapters 5 and 10. With respect to the second question, pricing is not entirely unrelated to unexpected losses. Ultimately the capital position of a bank or insurance company is based on a plausible quantification of unexpected losses. Every company, be it a financial or non-financial institution, has to realize a satisfactory return on capital. This return is determined by the ratio of net profit over capital position.

This means that all business lines within a bank or insurance company, such as retail and commercial banking, form part of the business. The activities that are conducted in the business determine the structure and composition of the balance sheet and, most importantly, the associated risks. Risks need to be seen in the broadest sense possible. The liquidity risks that arise as a result of the business conducted need to be managed by the treasury department. The capital management department needs to manage P1: OTE/OTE/SPH P2: OTE c06 JWBK489-Weert September 7, 2010 18:5 Printer: Yet to come Trim: 229mm x 152mm Balance Sheet Management 35 the relationship between available capital and risks taken by the business.

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