A timely and robust discussion of responsible bank stewardship and practice.
The Second Edition of The Principles of Banking offers banking professionals, regulators, and students from a variety of backgrounds an authoritative and practical discussion of the foundations of modern banking and good banking practice. In the book, you'll find a comprehensive roadmap to a more sustainable business model for your banking organization.
The author draws on his many years' experience as a commercial and investment banker as he explains the original principles of banking—including sound lending policy, capital management, and liquidity risk management—as well as new material covering the impact of COVID-19 on banks, risk management, and balance sheet management.
The Principles of Banking also provides recommendations for bank asset-liability management best practices that enable banks to deliver optimized balance sheets for the benefit of all stakeholders. It also includes new chapters in market risk management, foreign exchange risk management, interest rate risk, and credit risk policy and management.
An essential update to a widely read and taught banking text, The Principles of Banking, Second Edition is an indispensable resource for banking professionals and students everywhere.
Forewords xix
Preface xxxix
Acknowledgements xlv
About the Author li
Part I Banking, Bank Customer Business and Regulation 1
Chapter 1 Banking, bank business and financial statements 3
Chapter 2 Ethics, conduct and customer service 75
Chapter 3 Bank regulatory capital and the Basel Rules 97
Part II Bank Asset and Liability Management 159
Chapter 4 The yield curve 161
Chapter 5 Asset liability management I 201
Chapter 6 Balance sheet management: money markets, FX, trading and hedging,
and securitisation 251
Chapter 7 Managing interest- rate risk in the banking book (IRRBB) 303
Chapter 8 Bank Treasury operating model 333
Chapter 9 ALCO governance framework and terms of reference 351
Chapter 10 ALM sundries: asset encumbrance, hedge accounting, IFRS 9 and EIR
383
Part III Bank Liquidity Risk Management 401
Chapter 11 Principles of bank liquidity management 403
Chapter 12 Liquidity risk metrics 445
Chapter 13 Liquidity risk reporting 461
Chapter 14 Bank funds transfer pricing 469
Part IV Bank Strategy and Governance 491
Chapter 15 Bank strategy I: inputs and setting 493
Chapter 16 Bank strategy II: capital and funding management 521
Chapter 17 Principles of corporate governance 541
Part V Principles of Risk Management and Regulation 573
Chapter 18 The risk management framework 575
Chapter 19 Credit risk assessment and reporting principles 617
Chapter 20 Stress testing, ICAAP, ILAAP and reverse stress testing 647
Chapter 21 Recovery planning and resolution planning 693
Chapter 22 Sustainable banking and climate change risk management 703
Chapter 23 Case studies: analysis, problem solving and decision making 721
Chapter 24 Everything changes, and nothing changes: excerpts from a timeless
work 753
Part VI Guide to the Companion Website 761
Chapter 25 Applications software, policy templates and spreadsheet models
763
Afterword 771
List of Terms and their Abbreviations 775
Index 781
MOORAD CHOUDHRY is a non-executive director at Recognise Bank Limited, in London, a non-executive director at the Loughborough Building Society, and an independent non-executive advisor on the Risk Committee at Nubank, in Sao Paulo. He was born in Bangladesh and lives in Surrey, England.
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