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Centre for Financial and Management Studies (CeFiMS)

Banking Strategy

Course Code:
C366
Unit value:

Introduction

The module examines bank strategy in the global economy. This module deals with the strategic (as opposed to operational) side of international banking, such issues as how banks are funded, how they acquire loan books, how they enter new markets and how they deal with international regulatory requirements.

Resources

Study Guide

You will receive a looseleaf binder containing eight units and this is your core learning resource as it directs your study. Each unit has recommended reading either from the core text books or from supplementary readings which are included in the Course Reader. The study guide also directs you through the case studies which form an important part of this module.

Textbook

Smith, RC., Walter, I. & DeLong, G. (2012) Global Banking, 3rd Edition, Oxford University Press.

Readings

You are provided with a range of academic journal articles, extracts from supplementary text books and other reports or material. You will also consider a number of Case Studies. All these comprise the Course Readers which forms an essential part of this course.

Virtual Learning Environment

You will have access to the VLE, which is a web-accessed learning environment. Via the VLE, you can communicate with your assigned academic tutor, administrators and other students on the module using discussion forums. The VLE also provides access to the module Study Guide and assignments, as well as a selection of electronic journals available on the University of London Online Library.

Scope and syllabus

Course Units

Unit 1: Financial Intermediation: Dynamics and Governance Mechanisms

We begin by assessing the continuing transformation process of global banking – its causes, its course and its consequences. From an overview of the most recent development and the major dimensions of international commercial and investment banking we will look at governance mechanisms with a detailed case study on Corporate Governance.

Unit 2: Strategic Drivers of Structural Change in Global Banking

The Unit considers the environment in which banks manage their strategies. We will look at the strategic drivers of structural change in global banking under the three broad headings of economic factors, technological changes and regulatory changes.

Unit 3: Strategy and Strategic Positioning

Financial firms will attempt to reposition themselves to maximise their comparative advantages, but also need to be able to control the formidable risks inherent in the strategies selected. We will consider a model which outlines the strategy of financial firms: How should they decide what to do, for which clients, and in which markets?

Unit 4: Acquisition and use of funds

The way banks fund their operations greatly influences their profitability and risk. This has particularly been the case since interest rate ceilings on deposits and other liabilities were removed in developed countries in the late 1970’s and early 1980’s. We examine strategies related to the funding of bank operations. We identify different sources of funding and evaluate the strengths and weaknesses of each with regard to how they affect the bank’s liquidity risk, interest rate risk, and profitability.

Unit 5: Banks’ international M&A deals

We next consider the strategic rationale for banks’ expansion through mergers and acquisitions (M&A) rather than organically and the degree to which such deals have worked. There is also a focus on the financing of such transactions.

Unit 6 Managing bank risk

This Unit considers the changing nature of the risks facing banks and the techniques that banks use to manage risk. The chief risks studied include credit risk, liquidity or funding risk, interest rate risk, market risk, operational risk, country risk and systemic risk.

Unit 7 Business models and systemic risk

We next consider banks’ different business models, some of which made them especially vulnerable in the global financial crisis of 2007-08 while other banks were able to weather the crisis largely unscathed. There is also a focus in this unit on the lessons for risk management to emerge from the crisis.

Unit 8: Regulatory and Compliance Issues

This unit considers the key regulatory overlays of the global financial services industry, emphasising that balancing efficiency against stability and fairness is never easy. Linkages are drawn between structural change in financial intermediation and supervisory and regulatory functions.

Method of assessment

Students are individually assigned an academic tutor for the duration of the module, with whom you can discuss academic queries at regular intervals during the study session.

You are required to complete two Assignments for this module, which will be marked by your tutor. Assignments are each worth 15% of your total mark. You will be expected to submit your first assignment by the Tuesday of Week 5, and the second assignment at the end of the module, on the Tuesday after Week 8. Assignments are submitted and feedback given online. In addition, queries and problems can be answered through the Virtual Learning Environment.

You will also sit a three-hour examination on a specified date in October, worth 70% of your total mark. An up-to-date timetable of examinations is published on the website in April each year.