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 bankingincluding sound lending policy, capital management, and liquidity risk managementas 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
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