Textual Analysis : Credit Risk Management Practices

The banking industry is highly competitive. The financial services industry has been around for hundreds of years. Wells Fargo has many competitors itself. In this paper, I will be doing a comparison of Wells Fargo & Company (WFC) and one of its biggest competitors, Bank of America Corporation (BAC). By analyzing looking at the financial ratios, one can see whether the company is successful or not. In the following, I will try to analyze and make a comparison of Wells Fargo’s and Bank of America’s recent performance in growth, income, and efficiency. Using a these criteria, I will determine which bank is the better buy according my analysis. My analysis of WFC & BAC’s performances

The banking industry has undergone major upheaval in recent years, largely due to the lingering recessionary environment and increased regulatory environment. Many banks have failed in the face of such tough environmental conditions. These conditions

Since the onset of the financial crisis 2008, the sovereign debt crisis in western economies and the new financial regulation with Basel III coming up, the financial industry faces the challenge of reinventing itself. The ring-fence for Commercial and Investment Banking, and new economic and regulatory capital requirements will determine the kinds of products banks will be able to distribute. It will have a huge impact in the Investment Banking business, which will suffer tough regulation and supervisory procedures. At the same time, credit risk models will be reviewed because they have failed to predict the crisis of 2008. The current financial and economic crisis doesn’t have any precedent in the past.

Financial statements for banks have uniquely different analytical problem than statements for manufacturing, service and most companies in general. Therefore this analysis of JPMorgan and Chase 's financial statements requires a different approach in order to recognize the banks worth as an investment.

To address this deficiency, the Basel Committee on Banking Supervision (BCBS) proposed the post-crisis regulatory capital framework - Basel III, aimed to improve both the quantity and quality of banking organisations regulatory capital and to build additional capacity for loss absorbency into the banking system to withstand markets and economic shocks (BCBS). The importance of capital to a banking organisation cannot be overemphasised, the amount of capital held by a bank determine: (i) the level risk the bank can enter into. (ii) Loss absorbency capacity. (III) The profitability level. (iv) The cost of fund. (v) Investors' confidence, and (vi) the going - concern of the bank. It is vital that banking organisations are able to maintain a balance between their capital risk portfolios. As a result, banks tend to adjust their balance sheet components to achieve an internally set capital

= = = The British banking industry has come under extreme scrutiny over recent years and it is likely to continue during the foreseeable future. The perceived anti-competitive nature is as a result of

Considering the confidential nature of the industry within which Bank X operates, the author has made significant efforts in ensuring that respondents are approached in an appropriate way, through the correct channels of contacts and have been informed of the process of the way the confidential findings will be presented in the paper. When designing and conducting research the author has made an endeavour to ensure to prospective respondents that information will be processed in a confidential manner so as not to compromise them. Officially, the research project adopted the following set of rules outlining the responsibilities and practices for all individuals and organisations:

Banks are required, unless APRA set higher levels, to maintain at level 1 and 2 as a minimum risk-weighted capital ratio of 4 % in Tier 1 and 8% for total capital at all times. APRA assess and takes into account the general risks and other circumstances relevant for the individual ADI. A ‘capital buffer’ could be added by ADI if the ADI is judged as being vulnerable more than normal volatility in its revenues and risks. In considering the required capital ratio, APRA considers all material risks, both on and off-balance sheet. Credit risks are placed into four

This report compares financial performance of two major banks of UK i.e. HSBC Bank Plc and Barclays Bank Plc on the basis of their Balance sheets and profit and loss accounts for the year 2009. This report also provides SWOT analysis of both banks i.e. HSBC and Barclays Bank Plc and provides an insight into their Banking Strategies.

Table 4 summarises descriptive statistics of RATE, the un-weighted (weighted) risk disclosure index (RDI) as well as SSB for all bank fiscal years, as well as for each of the eight firm years investigated, separately from 2006 to 2013. Table 4 shows a number of remarkable outcomes. First, it reports that there is a high amount of variation in ratings between banks. For instance, RATE ranges from a minimum of 1 (Default) to a maximum of 19 (AA- which mean very high credit quality) with the median RATE 14.12 (Good credit quality) that indicate most banks in MENA have good rating, but there has been a continuous decreases in ratings during 2008 and years after which reflects the impact of continues crises beginning with GFC in 2007 and credit crunch in 2010. For instance, the average banks ratings is 14.4, 14.29, 14.09, 13.77, 13.69 and 13.84 in 2008, 2009, 2010, 2011 and 2012, but RATE begin to increases in 2013 which indicates recovery in MENA banks from GFC crisis effects. Finally, there is evidence that the level of listed bank RATE before GFC is higher than during and after GFC.

COMPARATIVE ANALYSIS OF FINANCIAL PERFORMANCE OF PUBLIC AND PRIVATE BANKS [IN THE CASE OF SELECTED PRIVATE AND PUBLIC BANKS]

The financial proportions are readied on the premise of recorded financial proclamations and they are helpful markers of a company 's present financial execution and current financial circumstance. These financial proportions can be utilised to dissect current patterns and to contrast the association 's financial position with those of others. The effect of financial proportions on the financial execution of Bahraini business and Islamic banks. The financial execution of banks was emphatically and absolutely affected by their operational proficiency, resource administration and their size. Notwithstanding, proportions themselves can 't demonstrate the span of the banks, which implies that banks must be measured by their general financial execution.

Vineet Agarwal (2004) has observed that the key issues faced by the banking sector today are intense competition along with falling interest margin in banks creates an urgent need for developing sophisticated financial products and innovations. Insurance has come as an ideal option for the banks. It fulfils the major requirements for a successful insurance business viz., asset management and investment skills, distribution and capital adequacy. The author made a note in his study that French banks, those pre-dominantly choose to start bancassurance market shares.

It is inherently difficult to predict the timing and intensity of a systemic banking crisis. Therefore, informs our strictly ordinal definition of credit quality. It is not the absolute (cardinal) level of default risk that matters, but rather the rank-order of default risk among all banks. In order to reduce the cost of processing bank accounting information, banks’ public reporting requirements should be vastly enhanced to facilitate cheaper and better credit analysis. In most countries, bank regulators protect their privileged data access, and do not share crucial bank data publicly (or even with other bank regulators) in a narrow pursuit of their own agency power and to shield themselves from accountability. Future bank regulation therefore needs to create an entirely new information environment for external credit analysis. Better public information and more bank reporting is the best strategy to reduce the exorbitant influence of credit rating agencies in the current system.

List of abbreviations List of tables Acknowledgements Abstract 1. 2. 3. 4. 5. 6. 7. 8. Introduction Problem statement Objectives and hypothesis of the study Literature review Structure and performance of the financial sector in