Managing Bank Capital : Capital Allocation and Performance Measurement

Efficient capital management is fundamental to the optimisation of shareholder value for any financial institution. In this significantly expanded and updated new edition of the successful Managing Bank Capital Chris Matten addresses the issue of capital allocation both from an internal and an external perspective. His expert advice and international perspective on best practice will guide managers in investment, retail, and private banks through proven techniques for improving performance, minimising risk and maximising shareholder value. Organised in six discrete sections to cater for every interested reader from MBA student to experienced investment banker, Managing Bank Capital contains both introductory and detailed technical chapters on: the role and definition of capital the treasurer s perspective managing the physical capital base the regulator s perspective understanding and meeting regulatory capital constraints the risk manager s perspective building an internal risk capital model the shareholder s perspective using earnings volatility to measure risk a holistic approach to capital management bringing the four perspectives together to manage capital so as to enhance shareholder value "Chris Matten s new edition is must reading for bankers from Switzerland to Japan to Australia. Chris is one of the few people who has worked as a banker in a diverse range of market environments in the native language of that market, whether it be Swiss German, Japanese or English. Even more important, Chris has consistently questioned the conventional wisdom, pointed out its holes, and made significant advances both as a banker and as a writer. In my library, Chris ranks with the detective novelists Elmore Leonard, Sue Grafton and Robert B. Parker every time a new edition comes out, I buy it. I m already looking forward to the third and fourth editions of this classic work on capital allocation." Donald R. van Deventer, PhD, President, Kamakura Corporation "Chris Matten has once again taken the subjects of shareholder value, capital, and performance measurement, which are often shrouded in the mystery of the Greek alphabet, and has explained them in plain language, so they can be understood and profitably implemented. This book is an absolute read for anyone serious about shareholder value and the implementation of a disciplined capital and balance sheet management process. Chris s approach is not prescriptive, but rather he sets out various approaches and their relative strengths. The reader can then select the path that makes most sense to the culture and strategy of their organisation." Walter Bauer, CIBC "We . have a high regard for Chris Matten because of two outstanding qualities. One is his ability to develop and apply finance theory to the major issues of bank capital management. The other is his ability to clearly and precisely expound what he has done. Taken together, they produce applied finance writing of the first rank. We have used the first edition of his book for a number of years and are looking forward to the second edition." Donald H. Adams, Associate Professor and Director Corporate Finance, Macqarie Applied Finance Centre, Sydney "Bank capital adequacy has, for decades, occupied center stage at the world s largest regulated industry. Transforming regulatory capital into economic consciousness is proving a formidable task. Chris Matten continues to be an enlightening path finder toward that inspired goal." John Andrew McQuown, Chairman, KMV Corporation