This class exists in these courses :
• IÉSEG > IESEG Degree - Programme Grande École > Semester 2 > 2,00 ECTS

Prerequisites

*Strict requirement: Introduction to Banking (Master course offered by the Finance track)
*Financial statement analysis: P&L, balance sheet, etc.
*Non-required but beneficial: Banking and Financial Regulation (Master course offered by the Finance track)

Learning outcomes

At the end of the course, the student should be able to:
Understand that banks are so levered and dependent on the economy that small political or financial news can impact their implied value significantly
Understand the impact that regulation can have on the banks' ability to finance the economy
Understand low interest rate policy and spreads (credit spreads, sovereign spreads) impact the banks' profit, valuation and risk destabilising the banking sector
This course is particularly useful for students who might chose to work in the private equity, Investment banking, asset management (buy-side), or equity brokerage (sell-side)

Course description

Banking Valuation: methodologies based on peer comparison, market reference, but also more theoretical methods. A significant portion of the course will aim at explaining how 'real life' themes can impact the valuation of banks. For example how interest rate spread movements can impact share prices, or how take-over or mergers can influence valuation, or how a political crisis or tax measures can influence the valuation.
Day 1: reminder of bank's P&L, balance sheet, regulation, introduction to valuation
Day 2: peer comparison analysis vs theoretical valuation
Day 3: what can impact the valuation of banks positively or negatively
Day 4: modelling M&A in banking and case study

Class type

Class structure

Teaching methods

• Case study
• Interactive class

Assessment

Each day of the course, students will be asked to answer a few 'real life' case studies to evaluate whether they have an understanding of the key drivers of banks' profitability and how they impact the valuation of the banks. A written final exam completes the evaluation.