Course Introduction:
Bank Valuation is an intensive, in-depth program that uses lectures, case studies and hands-on modeling to teach the intricacies of valuing depository institutions. The overall goal training is to give participants a structured approach to the valuation of a bank.
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Understand the principles of value creation in wholesale-retail banking and asset management
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Use different valuation methods to value a financial institution
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Compare enterprise valuation with equity valuation
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Differentiate between quantitative and qualitative factors affecting the value of banks
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Apply correctly valuations derived from the stock market, IPOs and M& A transaction
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Identify and value synergies in acquisitions
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Conduct successfully a due diligence process
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Understand why some bank acquisitions succeed and so many fail
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Executives and general managers
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Investment and corporate bankers
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Experts in investment banking and corporate finance
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Analysts in banks, investment funds or private equity houses
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Managers in M&A departments
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Experts responsible for corporate strategy and planning
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Banking and strategy consultants
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Human resources and training
Understanding the bank’s strategic position
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Welcome and introduction
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Program overview
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Delegates’ expectations
Understanding bank strategies
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The Banking industry after the financial crisis
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An updated outlook of the word economy
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Recent developments in mature and emerging markets
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Assessing the strategic position of a financial institution
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Understanding the value drivers in
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Corporate banking
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Retail banking
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Investment Banking
Exercise
Analyzing the financial statement of banks
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Definitions
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Analyzing the asset side under IFRS and US- GAAP
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Treatment of securities
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Mapping provisions and loan losses
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Calculating fair value
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Analyzing the liability side under IFRS and US- GAAP
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Fair value of long- term liabilities
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Analyzing shareholder’s equity
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Regulatory equity
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BIS- ratios
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Treatment of goodwill
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Treatment of excess capital and equity shortfalls
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Derivatives accounting
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The spread model
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Gap analysis
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Assessing key expense items
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Analyzing the income statement
Exercise
The value of banks
Equity cash flow valuation
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Difference between equity and enterprise valuation
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Introduction to the DCF methodology
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Understanding the equity cash flow methodology
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The direct method
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The indirect method
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Calculating equity cash flow
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Understanding the key value drivers
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Decomposition of ROE
Case study
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Introduction to the Capital Asset Pricing Model (CAPM)
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Calculating the cost of equity
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Determining the market risk premium
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Understanding beta (ß)
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The cost of equity of private banks
Exercise
Introduction to the dividend discount model
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Advantages of the dividend discount model
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The Gordon Growth Model
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Understanding financial ratios
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P/E, P/B, ROE and COE
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Importance of a bank’s gearing
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The sustainable growth factor
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Identifying over- and under valuations of traded banking stocks
Case study
Valuing banks from the outside
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Valuation by multiples
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Understanding best practice
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P/ E
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P/ B
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Applying stock market multiples correctly
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Using performance ratios to estimate the value of banks
Exercise
The acquisition of a financial institution
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Charting the bank market
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Identifying attractive markets
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Understanding market premiums
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Defining market entry strategies
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Forms of acquisitions and payment
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Organic growth vs acquisitions
Understanding synergies
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Understanding success factors in mergers& acquisitions
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Avoiding the most common mistakes
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Identifying synergies
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Cost synergies
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Revenue synergies
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New growth opportunities
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Valuing synergies in domestic and international acquisitions
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Getting synergies after the merger
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The domestic branch network
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The international branch network
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Overlapping activities
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Calculating restructuring charges
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IT implementation
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Economies of scale and scope
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Other synergies
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Personal decision
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Business decision
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Divestitures
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Investments
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Time table for implementation
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First results
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Why do some acquisition work and so many fail?
Case study
Executing an IPO mandate
Executing an acquisition
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Paying a premium
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Realizing synergies
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Forms of acquisition and different kinds of remuneration
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Paying in stocks
Case study
Post merger integration
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Mission and vision
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Rationale for the combined entity
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The fast integration
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The soft integration approach
Exercise
Valuing banks for an IPO
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Understanding recent trends in equity markets
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The market for bank IPOs
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Rationale for an IPO
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The “beauty contest”: form and contents
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Different forms of underwriting
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IPO valuation techniques
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How to choose the peer group
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How to select valuation multiples
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Estimating earnings growth
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The pricing of IPO’s in a book-building process
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Post IPO performance
Exercise
Course Methodology:
A variety of methodologies will be used during the course that includes:
· (30%) Based on Case Studies
· (30%) Techniques
· (30%) Role Play
· (10%) Concepts
· Pre-test and Post-test
· Variety of Learning Methods
· Lectures
· Case Studies and Self Questionaires
· Group Work
· Discussion
· Presentation
Course Fees:
This rate includes participant’s manual, Hand-Outs, buffet lunch, coffee/tea on arrival, morning & afternoon of each day.
Course Timings:
Daily Course Timings:
08:00 - 08:20 Morning Coffee / Tea
08:20 - 10:00 First Session
10:00 - 10:20 Coffee / Tea / Snacks
10:20 - 12:20 Second Session
12:20 - 13:30 Lunch Break & Prayer Break
13:30 - 15:00 Last Session