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.

• Understand the principles of value creation in wholesale-retail banking and asset management
• Use different valuation methods to value a financial institution
• Compare enterprise valuation with equity valuation
• Differentiate between quantitative and qualitative factors affecting the value of banks
• Apply correctly valuations derived from the stock market, IPOs and M& A transaction
• Identify and value synergies in acquisitions
• Conduct successfully a due diligence process
• Understand why some bank acquisitions succeed and so many fail

• Executives and general managers
• Investment and corporate bankers
• Experts in investment banking and corporate finance
• Analysts in banks, investment funds or private equity houses
• Managers in M&A departments
• Experts responsible for corporate strategy and planning
• Banking and strategy consultants
• Human resources and training

Understanding the bank’s strategic position

• Welcome and introduction
• Program overview
• Delegates’ expectations

Understanding bank strategies

• The Banking industry after the financial crisis
• An updated outlook of the word economy
• Recent developments in mature and emerging markets
• Assessing the strategic position of a financial institution
• Understanding the value drivers in
  • Corporate banking
  • Retail banking
  • Investment Banking

Exercise

Analyzing the financial statement of banks

• Definitions
• Analyzing the asset side under IFRS and US- GAAP
  • Treatment of securities
  • Mapping provisions and loan losses
  • Calculating fair value
• Analyzing the liability side under IFRS and US- GAAP
• Fair value of long- term liabilities
• Analyzing shareholder’s equity
• Regulatory equity
• BIS- ratios
• Treatment of goodwill
• Treatment of excess capital and equity shortfalls
• Derivatives accounting
• The spread model
• Gap analysis
• Assessing key expense items
• Analyzing the income statement

Exercise

The value of banks

Equity cash flow valuation

• Difference between equity and enterprise valuation
• Introduction to the DCF methodology
• Understanding the equity cash flow methodology
  • The direct method
  • The indirect method
• Calculating equity cash flow
• Understanding the key value drivers
• Decomposition of ROE

Case study

• Introduction to the Capital Asset Pricing Model (CAPM)
• Calculating the cost of equity
• Determining the market risk premium
• Understanding beta (ß)
• The cost of equity of private banks

Exercise

Introduction to the dividend discount model

• Advantages of the dividend discount model
• The Gordon Growth Model
• Understanding financial ratios
  • P/E, P/B, ROE and COE
  • Importance of a bank’s gearing
  • The sustainable growth factor
• Identifying over- and under valuations of traded banking stocks

Case study

Valuing banks from the outside

• Valuation by multiples
  • Understanding best practice
  • P/ E
  • P/ B
  • Applying stock market multiples correctly
• Using performance ratios to estimate the value of banks

Exercise

The acquisition of a financial institution

• Charting the bank market
• Identifying attractive markets
• Understanding market premiums
• Defining market entry strategies
• Forms of acquisitions and payment
• Organic growth vs acquisitions

Understanding synergies

• Understanding success factors in mergers& acquisitions
• Avoiding the most common mistakes
• Identifying synergies
  • Cost synergies
  • Revenue synergies
  • New growth opportunities
• Valuing synergies in domestic and international acquisitions
• Getting synergies after the merger
• The domestic branch network
• The international branch network
• Overlapping activities
• Calculating restructuring charges
• IT implementation
• Economies of scale and scope
• Other synergies
• Personal decision
• Business decision
• Divestitures
• Investments
• Time table for implementation
• First results
• Why do some acquisition work and so many fail?

Case study

Executing an IPO mandate

Executing an acquisition

• Paying a premium
• Realizing synergies
• Forms of acquisition and different kinds of remuneration
• Paying in stocks

Case study

Post merger integration

• Mission and vision
• Rationale for the combined entity
• The fast integration
• The soft integration approach

Exercise

Valuing banks for an IPO

• Understanding recent trends in equity markets
• The market for bank IPOs
• Rationale for an IPO
• The “beauty contest”: form and contents
• Different forms of underwriting
• IPO valuation techniques
• How to choose the peer group
• How to select valuation multiples
• Estimating earnings growth
• The pricing of IPO’s in a book-building process
• Post IPO performance

Exercise

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

This rate includes participant’s manual, Hand-Outs, buffet lunch, coffee/tea on arrival, morning & afternoon of each day.

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