Stephen M. Frost 
The Bank Analyst’s Handbook 
Money, Risk and Conjuring Tricks

It is not uncommon to meet professionals in financial services who
have only a vague idea of what their colleagues actually do. The
root cause is specialization and the subsequent development of
jargon that makes communication between common specialists faster
and more precise but is virtually impenetrable to everybody else.

The Bank Analyst’s Handbook provides a modern
introduction to financial markets and intermediation. Individual
subject areas are covered in a thorough but clear and succinct
manner. The breadth of the author’s experience as a sell-side
bank analyst is exploited to good effect to pull together these
threads and create a coherent framework for the analysis of
financial markets, whether these are in advanced economies or
developing markets.

The Handbook is well-written and highly accessible. It builds on
orthodox financial theory (with all of its flaws and controversies)
but also highlights many of the real problems involved with
translating such theory into practice. It can be appreciated at
many different levels and this explains its wide target readership.
The Bank Analyst’s Handbook:

* Bridges the gap between the more superficial introductory books
and specialist works

* Covers all the important functions and subjects related to the
financial services industry

* Provides a comprehensive overview for financial services
professionals, business school students, consultants, accountants,
auditors and legal practitioners, analysts and fund-managers and
corporate managers.

‘An excellent guide for any professionals who are coming into
the banking industry. Extremely well-written, covering clearly and
lucidly a range of topics which many bankers themselves don’t
understand. I will make this book mandatory reading – no, make that
studying – for anybody I hire to work as a financial sector
consultant.’

–Chris Matten, Executive Director, Pricewaterhouse Coopers

‘A great insight into the often murky and impenetrable world of
banking… compulsory reading for analysts and investors
alike.’

–Hugh Young, Managing Director, Aberdeen Asset Management
Asia Ltd

Table of Content

Foreword.

Acknowledgements.

Prologue.

PART I: FINANCIAL SYSTEMS.

1. Securities Markets and Financial Intermediation.

2. Introduction to Securities Valuations.

3. Central Banks and the Creation of Money.

PART II: THE SPREAD BUSINESS.

4. Deposit Taking and Other Funding.

5. Corporate Lending.

6. Operational Services.

7. Mortgage Lending.

8. Credit Cards and Other Retail Loans.

Part III: RISK MANAGEMENT.

9. The Controls Cycle.

10. Managing Interest Rate and FX Risk.

11. Trading.

12. Managing Market Risk.

13. Managing Credit Risk.

14. Capital Management.

Part IV: CAPITAL MARKETS.

15. Fund Management.

16. Investment Banking.

17. Securitization.

PART V: BANK VALUATIONS AND ACQUISITIONS.

18. Bank Valuations.

19. Bank Acquisitions.

PART VI: PROBLEM LOANS AND BANKING CRISES.

20. Corporate Failures and Problem Loans.

21. Banking Crises.

22. Dealing with & Valuing Insolvent Banks.

PART VII: SUPERVISION & FINANCIAL STATEMENTS.

23. Regulation, Supervision and Policing.

24. The Balance Sheet.

25. The Income Statement.

PRIMERS.

Statistics for Finance.

Derivation of Duration and Convexity.

Financial Institutions.

Appendix I: The Basel Accord.

Appendix II: Glossary of Terms.

Sources and Further Reading.

Index.

About the author

Stephen Frost was educated in the UK at King’s College, Cambridge University where he majored in theoretical physics. He is a Sloan Fellow of the London Business School and a member of the Association for Investment Management and Research (AIMR) and is a CFA charterholder.
The author spent a decade working as head of regional financial institution research at UBS Securities and, more recently, at HSBC Securities in Asia, and has also worked in the banking industry in London and New York.