Asset And Liability Management: The Banker's Guide to Value Creation And Risk Control

Every banker who is in touch with their industry, and keen to progress, needs to know how banking activities contribute to value creation and how to ensure risks are controlled. They need to know how to evaluate performances on a risk-adjusted basis. And how to price loans to ensure they create value. Bankers' performance is increasingly evaluated against their value creation and so it is very much in their interests to be proficient in Asset & Liability Management (ALM), the control of value creation and risk. This book is a general overview by a world expert in ALM and is a concise and crystal clear presentation of the essential concepts. It is packaged with a step-by-step tutorial CD with exercises, solutions and an attractive visual focus. It is unique in covering both value creation and risk control (most other books cover only risk control) and the new edition will include new chapters on the two new topics it is now essential for bankers to know about: Basel II and credit derivatives.

As institutional shareholders increase pressure on value creation and as central banks around the world are forcing banks to improve their ALM capabilities, the time has come for every banker to master the tools of Asset and Liability Management, and the control of value creation and risk.

Written for a general business audience by Jean Dermine, an INSEAD expert, Asset and Liability Management is a complete toolbox for those wishing to get to grips with the subject. Unique in its concise, clear and accessible presentation of the concepts, the book steers clear of complex mathematics and presents the tools in an intuitive and simple way by using modern, visual, educational techniques.

The book sheds light on questions such as:

• how do the various pieces of the bank puzzle fit with one another?
• how does each piece of the bank contribute to value creation?
• how does one ensure that risks are being controlled?
• how do you evaluate performances on a risk-adjusted basis?
• how do you price loans to secure the creation of value?

It also includes discussions on profit-center management, pricing credit risk and loan provisioning, and the management of interest rate and liquidity risks.

Threading through the book are a set of exercises with solutions to measure understanding of the concepts as they build on each other.

Packaged with the book is a step-by-step tutorial CD-ROM that focuses on visuals, and exercises with built-in solutions. This can be used as a stand-alone self-learning device or as a tool after reading the book to test and reinforce the concepts learnt.