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JPM vs. RBS Commercial Bank Comparison

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					Bank Financial & Risk Management Report: US Bank vs. Foreign Bank – Suggested Format

1. Title Page

2. Table of Contents

3. Executive Summary

4. Vision/Mission, Business Lines, Strategic Initiatives

5. Corporate Governance & Corporate Social Responsibility

6. Risk Management

        Liquidity Risk

        Capital Adequacy (Solvency Risk)

        Interest Rate Risk

        Credit Risk

        Operational Risk

        Market Risk (Trading & OBS)

        Other Risks – at least 2, depending on the pair of banks under consideration

7. Financial Management

        Analysis of Value Measures

        -   EPS, P/E ratio, Share Price, Dividend Yield, M/B, Stock Performance (increase in
            market value)

        Analysis of Financial Performance – Dupont Analysis
        -   ROE, ROA, PM, AY, Leverage

        Analysis of Financial Condition

        -       Liquidity, Asset Quality, GAP, IR Risk, NIM, Cost/Income Ratio, Solvency Ratio,
        Capital Ratio, Credit Rating

8. Summary Analysis & Critiques

9. Final Comments – Conclusions & Recommendations

10. References

11. Appendices, if any



1|Page
VISION/MISSION, BUSINESS LINES, STRATEGIC INITIATIVES

INTERBANK




ROYAL BANK OF CANADA

  VISION – Always earning the right to be our client’s first choice

  MISSION          We are continually striving to do better for our shareholders by delivering value to
                   our clients, providing opportunities to our employees, and making a positive impact
                   on our communities

  VALUES           Excellent service to clients and each other; Working together to succeed; Personal
                   responsibility for high performance; diversity for growth and innovation; Trust
                   through integrity in everything we do

  BUSINESS LINES           Canadian banking, Wealth management, US & International banking, Capital
                           markets, Corporate support

  STRATEGIC GOALS          To be the undisputed leader of financial services in Canada

                           To build on our strengths in banking, wealth management, and capital
                           markets in the United States

                           To be a premier provider of selected global financial services




2|Page
CORPORATE GOVERNANCE & CORPORATE SOCIAL RESPONSIBILITY

INTERBANK




ROYAL BANK OF CANADA

 Corporate Governance

         Board of Directors& Management

         – Roles & Responsibilities; Structure & Committees

 Corporate Social Responsibility

         Application of Triple Bottom Line
         Corporate Giving / Philanthropy & Economic Impact




3|Page
LIQUIDITY RISK

INTERBANK




ROYAL BANK OF CANADA




4|Page
CAPITAL ADEQUACY (SOLVENCY RISK)

INTERBANK




ROYAL BANK OF CANADA




5|Page
INTEREST RATE RISK

INTERBANK




ROYAL BANK OF CANADA




6|Page
CREDIT RISK

INTERBANK




ROYAL BANK OF CANADA

  Credit risk is the risk of loss associated with a counterparty’s inability or unwillingness to fulfill its
  payment obligations

  Policies Balance risk and return

                   Limit risk to reputation

  Strategies       Ensure credit quality by rigor in credit analysis and approval

                   Diversify credit risks in transactions, relationships, and portfolios

                   Monitor, measure, and mitigate credit risk

                   Price appropriately for the risk assumed

                   Transfer risk to third parties; use hedging strategies; get insurance cover

                   Limit / Avoid clients in nuclear, chemical, biological warfare; gambling businesses;
                   illegal activities; unethical transactions

  Structure        Risk Policy Committee; Group Risk Committee; Policy Review Committee; Structured
                   Transactions Oversight Committee



7|Page
OPERATIONAL RISK

INTERBANK




ROYAL BANK OF CANADA

 Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and
 systems or from external events; embedded in all activities

 Policy Part of ERM (Enterprise Risk Management) – Identify, measure, control, monitor, and report.

 Strategies      Enterprise wide assessment; risk indicators to manage day-day to activites;
                 operational event data collection and analysis; industry loss analysis

                 Managed through infrastructure, systems, and people

                 Compliance and mitigation

                 Quarterly enterprise-wide reports to Senior Management and BoD

 Structure       BoD, Chief Risk Officer, Group Risk Management




8|Page
MARKET RISK

INTERBANK




ROYAL BANK OF CANADA

 Market risk is the risk of loss that may arise from changes in market factors such as interest rates,
 foreign exchange rates, equity or commodity prices. Arises from both trading activities and ALM
 activities.

 Policy Comprehensive risk policy framework for front-, middle-, and back-office operations

         Controls and Limits in line with best practices

         Limits on size and term at the desk, at the portfolio, and at the business unit levels

 Strategies      Monthly reporting to and review by ALCO, Group Risk Committee

 Measurement              VAR, Sensitivity Analysis and Stress Testing; Internal Models (IR, FX, Equity
                          and Commodity risk) and Standardized Approach (structured credit
                          derivatives)

 Structure       Risk Policy Committee; Group Risk Management

 VAR     statistical measure of worst-case loss expected over a specified period within a 99%
         confidence level; Example: A portfolio with a one-day VAR of 20 million will have 1/100
         chance of losing 20 million over the course of a trading day



9|Page
OTHER RISKS - 1

INTERBANK




ROYAL BANK OF CANADA




10 | P a g e
OTHER RISKS - 2

INTERBANK




ROYAL BANK OF CANADA




11 | P a g e
ANALYSIS OF VALUE MEASURES

INTERBANK




ROYAL BANK OF CANADA




12 | P a g e
ANALYSIS OF FINANICAL PERFORMANCE (DUPONT ANALYSIS)

INTERBANK




ROYAL BANK OF CANADA




13 | P a g e
ANALYSIS OF FINANCIAL CONDITION

INTERBANK




ROYAL BANK OF CANADA




14 | P a g e
SUMMARY ANALYSIS & CRITIQUE

INTERBANK




ROYAL BANK OF CANADA




15 | P a g e
FINAL COMMENTS – CONCLUSIOSN & RECOMMENDATIONS

INTERBANK




ROYAL BANK OF CANADA




16 | P a g e

				
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posted:8/18/2011
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