Assessment task details and instructions
Part A answer TWO QUESTIONS ONLY in this section
1. The following is a summary of the accounts of Crocked Bank (£bn)
Cash and balances with central banks 120
Derivative financial instruments 229
Net loans and advances to customers 312
Other assets 10
Premises etc 30
Total Assets 701
Customer deposits 214
Bank deposits 16
Short term funding 27
Long term borrowings and debt securities in issue
(at historic cost) 50
Derivative financial instruments 229
Trading liabilities 36
Total Liabilities 572
Common equity: par value + capital surplus 5
Other Reserves 16
Shareholders equity 64
Retained earnings 44
Total Equity 129
Total Liabilities and Equity 701
Net Interest Revenue 5
Other Operating Income 6
Net Gains (Losses) on Trading and Derivatives 2
Net Gains (Losses) on Assets at FV through
Income Statement 1
Net Fees and Commissions 4
Loan Loss Provisions 1
Other -1 11
Profit before Tax 3
Net Income 2
Calculate the following including for each section:
• A full explanation or your workings
• The assumptions that you have made
• An explanation of the particular relevance of the ratios for banks
i) Reserve ratio. (5 marks)
ii) Net interest margin. (5 marks)
iii) Earnings base. (5 marks)
iv) Burden ratio. (5 marks)
v) Efficiency ratio (5 marks)
2. Evaluate the strengths and weaknesses of bank loan risk management
3. The Basel Accords have now become so complex that they are defeating their original purpose. Discuss.
Part B answer TWO QUESTIONS ONLY in this section
4. Discuss the factors driving the internationalisation of banks. In your answer, give examples of internationalisation in the UK and European banking sectors.
5. Give a comprehensive overview of money laundering activities. In your answer, drawing on relevant theories, explain what motivates organisations and banks to engage in money laundering activities and outline anti-money-laundering policies and their effectiveness.
6. Discuss what shadow credit intermediation (i.e. shadow banking) is, why it exists and how it works. In your answer, summarise why this sector needs to be regulated.
Assessed intended learning outcomes
On successful completion of this module you will be able to:
1. Evaluate credit decisions and the related portfolio risk and complete a financial analysis of a business, undertake monitoring and control
2. Apply the contextual framework for the drivers of change to the decision-making process and demonstrate knowledge and understanding of banking operations
3. Critically analyse leadership decisions by using technical knowledge of bank procedures combined with financial analysis skills
4. Critically analyse and evaluate strategic and operational decision-making within an ethical and socially responsible framework of corporate governance
5. Prepare a report on the management of banks.
On completion the student will have had the opportunity to:
6. Apply information technology in evaluating the consequences of modern bank management techniques
7. Formulate alternative strategies to problem situations in modern banking under a range of different circumstances
8. Evaluate and judge behaviour of strategic choices on bank performance under different market scenarios
9. Locate, summarise and synthesise a range of information from electronic data sources relevant to modern international banking
10. Work independently and collaboratively with others, developing team working and leadership skills appropriate to traders and risk analyst and finance managers operating in a global business context.
1. Equip students with appropriate tools of analysis to understand the basic mechanics of banks’ financial instruments and their roles in promoting efficiency in the financial markets
2. Analyse critically banks’ specialist knowledge which will be provided in a cross-cultural framework in order to develop understanding and critical evaluation of differing management styles and levels of technical ability
3. Apply critical frameworks that will enable students to evaluate the globalization of financial markets and the continual liberalization of economies around the world which are creating a large and integrated market for banking and the financial services industry
4. Evaluate critically various types of risks and their effect on bank performance and profitability, also the effect of competition and regulators on bank sustainability
5. Explore the challenges and opportunities presented by these developments and question the ability of existing structures and products to maintain a stable international banking system.
Word count/ duration (if applicable)
Your assessment should be 3,000 words + 10% as an allowance for titles and other matter not deemed to be contributing. No extra words are allowed. Material in excess of the wordcount will not be marked.
You are advised to apportion the wordcount pro rata with the marks e.g. a 10 mark section should be 300 words, a 15 mark section 450 words and so on.
More words do not get higher marks as too often it is an indication of work that has not been critically reviewed by the candidate, that is badly organised and poorly presented.