The Principles of Banking

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 banking—including sound lending policy, capital management, and liquidity risk management—as 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.

Subrahmanyam S. Venkata, PhD, is Affiliate Professor of Electrical and Computer Engineering at the University of Washington and President of Venkata Consulting Solutions, LLC, USA.

Anil Pahwa, PhD, is University Distinguished Professor and Logan-Fetterhoof Electrical and Computer Engineering Faculty of Distinction Chair in Department of Electrical and Computer Engineering at Kansas State University, USA.

Forewords NEAL ARDLEY

SHARON BOWLES

HENRIQUE FRAGELLI

OLDRICH MASEK

JASON OAKLEY

HELEN SACHDEV

Preface

Part I Banking, bank customer business and regulation

Ch 1: Banking, bank business and financial statements

Ch 2: Ethics, conduct and customer service

Ch 3: Bank regulatory capital and the “Basel rules”

Part II Bank asset-liability management

Ch 4: The yield curve

Ch 5: Asset-Liability Management

Ch 6: Balance sheet management: money markets, FX, trading and hedging, and securitisation

Ch 7: Interest rate risk in the Banking Book

Ch 8: Bank Treasury operating model

Ch 9: ALCO governance framework and Terms of Reference

Ch 10 ALM sundries: Asset Encumbrance, hedge accounting, IFRS9 and EIR

Part III Bank liquidity risk management

Ch 11: Principles of bank liquidity management

Ch 12: Liquidity risk metrics

Ch 13: Liquidity risk reporting

Ch 14: Funds transfer pricing

Part IV Bank strategy and governance

Ch 15: Bank strategy I: Inputs and setting

Ch 16: Bank strategy II: Capital and funding strategy management

Ch 17: Principles of corporate governance

Part V Principles of risk management and regulation

Ch 18: Risk management framework

Ch 19: Credit risk assessment and reporting principles

Ch 20: Stress testing, ICAAP, ILAAP and Reverse Stress Testing

Ch 21: Recovery Planning and Resolution Planning

Ch 22: Sustainable banking and climate change risk management

Ch 23: Case studies: Analysis, problem solving and decision making

Ch 24: Everything changes, and nothing changes: excerpts from a timeless work

Part VI Guide to the companion website

Ch 25: Applications software, policy templates and spreadsheet models[KM1] 

Afterword

List of Terms

Index

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