Capital and Liquidity Regulations, Resilience, and Bank Value

Valuing A Bank

When valuing a bank, three matters are important. First, which valuation methods are appropriate for banks? Second, are any customization required for the standard methods for valuation; and third, on the basis of value drivers, how the customization be done? As outlined earlier, the shareholder value approach i.e. equity-based approach is better for baking institutions. However, the focus should be spotted on the value drivers. The key aspect of decision making in investment and asset management relies on a thoughtful study of the valuation as well as the sources of value. In addition to the fundamental factors, like, earnings, cash flows, revenue; business nature and risk-oriented factors are needed to be considered in the valuation.