Managing Bank Capital: Capital Allocation and Performance Measurement [Hardcover]

Chris Matten (Author)

Book Description

Publication Date: August 6, 1996 | ISBN-10: 0471961167 | ISBN-13: 978-0471961161 | Edition: 1

This comprehensive guide examines the role of capital trading in financial instruments, commercial and private banking in an international perspective, and is required reading for any bank manager, controller or consultant.

Editorial Reviews

From the Publisher

This comprehensive guide examines the role of capital trading in financial instruments, commercial and private banking in an international perspective. It discusses the allocation of capital to issues such as compliance with regulatory authorities, bank failure and the valuation of banks.

From the Inside Flap

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 --This text refers to an alternate Hardcover edition.

See all Editorial Reviews

Product Details

• Hardcover: 224 pages
• Publisher: John Wiley & Sons; 1 edition (August 6, 1996)
• Language: English
• ISBN-10: 0471961167
• ISBN-13: 978-0471961161
• Product Dimensions: 9.1 x 6.1 x 0.8 inches
• Shipping Weight: 1 pounds
• Average Customer Review: 4.0 out of 5 stars  See all reviews (5 customer reviews)
• Amazon Best Sellers Rank: #2,137,105 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

14 of 14 people found the following review helpful:

5.0 out of 5 stars A Must-Read Book for Shareholder Value Management, June 4, 1999

By A Customer

This review is from: Managing Bank Capital: Capital Allocation and Performance Measurement (Hardcover)

Chris Matten provides a comprehensive guide to applications of RAROC and shareholder value for managing bank capital and compensating bank executives and traders. The author provides particularly good sections on how EVA, shareholder value, and other earnings based measures can be manipulated and abused. This is not the sort of book which the corporate finance shareholder value crowd would likely read, but is one which they need to read.

9 of 10 people found the following review helpful:

4.0 out of 5 stars Excellent only book on the economic allocation of capital., April 26, 1998

By A Customer

This review is from: Managing Bank Capital: Capital Allocation and Performance Measurement (Hardcover)

Mr. Matten's insightful work highlights how rigid appliction of the Basle Accords can lead to capital misallocation. He then provides insightful suggestions, with good examples, on how to better allocate bank capital by discriminating between borrowers on the basis of risk, all the while remaining within the basle guidelines. Mr. Matten points to the need for sophisticated mathematical-statistical analysis but does not dwell on the technicalities, making the book accessible to non-rocket scientists. All in all, a highly recommended book.

5 of 5 people found the following review helpful:

3.0 out of 5 stars Helpful Concepts, Lacking Implementatin Steps, July 29, 2002

By A Customer

This review is from: Managing Bank Capital: Capital Allocation and Performance Measurement, 2nd Edition (Hardcover)

With all the attention paid to bank capital management, this book is helpful in describing the concepts. However, it is not quantitative enough. The step-by-step of capital allocation for a given asset class of varying risk levels is lacking. For example, how should the bank treat the sub-prime portion of its credit card or auto loans in the capital allocation? I wish it were more specific. Could Providian or Capital One have directed the capital away from high risk loans, had they followed the advice of the book?