Cross-Border Valuation: The International Cost of Equity Capital

How does a firm in one country evaluate an investment in a firm in another country, or how does it evaluate a foreign project that the firm itself is undertaking? The firm must estimate future free cash flows just as in a domestic project, but choosing an appropriate discount rate is a particular challenge. This study examines the determinants of the discount rate for an international acquisition or project by examining the sources of risk in an international setting. These risks include stock-market price risk measured with various versions of the capital asset pricing model, as well as exchange rate risk and political risk. To measure stock market risk, both segmented and integrated models of the world equity markets are considered. The emphasis of the study is on some of the practical aspects of estimation, particular for markets where no comparable investments exist on which to base estimates of risk premiums. To show how each of these risks might be measured, the study reports estimates for a representative French firm, Thals. The estimates range widely depending on whether or not the equity market is globally integrated.

Corporate governance

Governance is largely about the decision-making process in a complex organization Shareholders (owners) delegate authority to professionals who have the managerial skills to increase shareholders’ wealth. As a consequence the contributors of a firm's capital base are usually different from the contributors of its management base. This separation of ownership from control has led to organizations establishing a system of corporate governance controls designed to discourage managers from pursuing objectives that fail to maximize shareholder wealth. These controls constitute the firm's corporate governance framework. Corporate governance controls are designed to monitor managers behavior or align the goals of management with the goals of shareholders. In this chapter, a corporate governance framework is developed that outlines the roles and responsibilities of participants involved in governing the organization and portraying information to the capital market

Upgrading investment regulations in second pillar pension systems : a proposal for Colombia

The passivity of the demand for pension products is one of the striking features of mandatory pension systems. Consequently, the provision of multiple investment alternatives to households (multifund schemes) does not ensure that contributions are invested efficiently. In addition, despite the theoretical findings that short term return maximization is not conductive to long-term return maximization, the regulatory framework of pension fund management companies puts excessive emphasis on short-term maximization. Therefore, it is not obvious that typical regulatory framework of pension funds is conductive to optimal pensions. By establishing a set of default options on investment portfolios, this paper proposes a mechanism to align the incentives of the pension fund management companies with the long-term objectives of the contributors. The paper provides a methodology, which is subsequently applied to Colombia.Debt Markets,Emerging Markets,Financial Literacy,Mutual Funds,Investment and Investment Climate

Equity research - Bankinter, S.A.

Mestrado Bolonha em FinançasThe project consists of estimating the target price of Bankinter S.A., for 1st January 2024. This Equity Research Report follows the CFA Institute research report guidelines. Bankinter is a Spanish publicly traded company in the commercial banking industry listed on Madrid and Barcelona stock exchanges. It conducts its activity in Spain, Portugal, Ireland, and Luxembourg. This report issues a Buy recommendation for Bankinter, with a 2024YE PT of € 6.39 per share and an upside potential of 19.71% in 6 months, an annualized return of 12.74%, against the current price of € 5.34 per share, as of 31st May 2023, with medium risk. The buy recommendation is mainly explained by: Robust financials and low capital requirements; Better performance in Spain under stress scenarios and better asset quality; Strong digital development; Robust client profile; Strong Dividend Commitment (50% payout ratio). We reached Bankinter’s valuation through the Residual Income model on a consolidated basis, and we complemented it with other methods, namely the dividend discounted model, the flow to equity approach and the multiple valuation. The bank is subject to significant risks, such as regulatory changes, unexpected changes in interest rates, slowing of economic growth and disposable income, decreases in asset values, and operational risks that can affect both net interest income and fee income. As a trust institution, the bank must be conscious of its obligation to preserve its credibility to stay out of a bank run, considered the worst-case scenario in a bank, which may lead to a bank’s bankruptcy.Este projeto consiste na estimação do preço alvo da ação do Bankinter S.A. para 1 de janeiro de 2024. Este relatório de avaliação segue as diretrizes de investigação do CFA Institute. Bankinter é uma empresa espanhola cotada na bolsa de Madrid e Barcelona a operar na banca comercial. Exerce atividade em Espanha, Portugal, Irlanda e Luxemburgo. Este relatório emite uma recomendação de Compra para o Bankinter, com um Preço-Alvo de € 6.39 por ação para 2024YE com uma valorização potencial de 19.71% em 6 meses, e um retorno anualizado de 12.74% face ao preço corrente de € 5.34 por ação no dia 31 de maio de 2023, com nível médio de risco. A recomendação de compra é principalmente explicada por: Fundamentos sólidos e baixos requisitos de capital; Melhor desempenho na Espanha em cenários de stress e melhor qualidade dos ativos; Forte desenvolvimento digital; Perfil robusto de clientes; Compromisso forte com dividendos (taxa de pagamento de 50%). Chegamos à avaliação do Bankinter por meio do modelo do Rendimento Residual numa base consolidada, e complementámos com outros métodos, como o modelo de dividendos descontados, a abordagem de fluxo de capitais próprios e a avaliação por múltiplos. O banco está sujeito a riscos significativos, como mudanças regulatórias, mudanças inesperadas nas taxas de juros, desaceleração do crescimento económico e rendimento disponível, queda nos valores dos ativos e riscos operacionais que podem afetar tanto o resultado de juros líquidos quanto o rendimento de serviços. Como instituição de confiança, o banco deve estar consciente de sua obrigação de preservar sua credibilidade para evitar uma corrida aos depósitos, considerado o pior cenário possível num banco, o que pode levar à falência do banco.info:eu-repo/semantics/publishedVersio

The role of investment banking for the German economy: Final report for Deutsche Bank AG, Frankfurt/Main

The aim of this study is to assess the contributions of investment banking to the economy with a particular focus on the German economy. To this end we analyse both the economic benefits and the costs stemming from investment banking. The study focuses on investment banks as this part of banking is particularly relevant for financing companies as well as the development and use of specific products to support the needs of private and professional clients. The assessment of benefits and costs of investment banking has been conducted from a European perspective. Nevertheless there is a focus on the German economy to allow a more detailed analysis of certain aspects as for example the use of derivatives by German companies, the success of M&As in Germany or the effect of securitization on loan supply and GDP in Germany. For comparison purposes other European countries and also the U.S. have been taken into account. The last financial crisis has shown the negative impacts of banks on the financial system and the whole economy. In a study on the contribution of investment banks to systemic risk we quantify the negative side of the investment banking business. In the last part of the study we assess how the effects of regulatory changes on investment banking. All important changes in banking and capital market regulation are taken into account such as Basel III, additional capital requirements for systemically important financial institutions, regulation of OTC derivatives and specific taxes. --

Comment Letters Received on August 1994 Exposure Draft Banks and Savings Institutions

https://egrove.olemiss.edu/aicpa_sop/1727/thumbnail.jp

THE INDONESIAN BANK CRISIS AND RESTRUCTURING: LESSONS AND IMPLICATIONS FOR OTHER DEVELOPING COUNTRIES

Drawing on the Indonesian experience in 1997, this paper demonstrates the complexity of managing banking crises deals. It aims at deriving conclusions from this experience for other developing countries facing similar problems. The paper also refers to comparative experiences of other countries, in particular Malaysia and Thailand, examines the IMF programme and reveals its shortcomings. The key question is to what extent the ineffectiveness and slow progress of bank restructuring, corporate restructuring and continued dilemmas in macroeconomic management in Indonesia were due to shortcomings of the economic programme, its sequencing or emphasis, and to what extent it has to be attributed other factors, including corruption and lack of policy-making capacity. Although prudential requirements and regulations, such as lending limits, were introduced to address corporate governance problems, governance of the banking sector was generally weak, and there was little incentive for banks to make appropriate risk assessments in their activities. It is shown that structural weaknesses precipitated and aggravated the crisis. There is clear evidence for mistakes in the initial responses to the crisis by both the Government and the international financial institutions. The most difficult problems facing a country like Indonesia are the political and social constraints to rapid restructuring and reforms to strengthen the financial sector. Indonesia was obliged to implement second generation Washington consensus reforms focusing on corporate governance, bankruptcy procedures, business-government relations, and more restrictive prudential regulation. A clear message of the paper is that a "one-size-fits-all" programme is unlikely to be successful. Policy makers must be able to address linkages between the financial sector and macroeconomic performance, which, if not managed appropriately, can exacerbate macroeconomic cycles. There is also a need to reduce the concentration of bank ownership and to minimize moral hazards through the design of clear exit mechanisms. Moreover, attempts to restructure the banking system can only be successful in the context of an overall recovery of the domestic economy. The main message of the paper is the importance of appropriate speed and sequencing of necessary reforms, taking due account of the institutional, legal and human capacities that are specific to each country. [English only] Drawing on the Indonesian experience in 1997, this paper demonstrates the complexity of managing banking crises deals. It aims at deriving conclusions from this experience for other developing countries facing similar problems. The paper also refers to comparative experiences of other countries, in particular Malaysia and Thailand, examines the IMF programme and reveals its shortcomings. The key question is to what extent the ineffectiveness and slow progress of bank restructuring, corporate restructuring and continued dilemmas in macroeconomic management in Indonesia were due to shortcomings of the economic programme, its sequencing or emphasis, and to what extent it has to be attributed other factors, including corruption and lack of policy-making capacity. Although prudential requirements and regulations, such as lending limits, were introduced to address corporate governance problems, governance of the banking sector was generally weak, and there was little incentive for banks to make appropriate risk assessments in their activities. It is shown that structural weaknesses precipitated and aggravated the crisis. There is clear evidence for mistakes in the initial responses to the crisis by both the Government and the international financial institutions. The most difficult problems facing a country like Indonesia are the political and social constraints to rapid restructuring and reforms to strengthen the financial sector. Indonesia was obliged to implement second generation Washington consensus reforms focusing on corporate governance, bankruptcy procedures, business-government relations, and more restrictive prudential regulation. A clear message of the paper is that a "one-size-fits-all" programme is unlikely to be successful. Policy makers must be able to address linkages between the financial sector and macroeconomic performance, which, if not managed appropriately, can exacerbate macroeconomic cycles. There is also a need to reduce the concentration of bank ownership and to minimize moral hazards through the design of clear exit mechanisms. Moreover, attempts to restructure the banking system can only be successful in the context of an overall recovery of the domestic economy. The main message of the paper is the importance of appropriate speed and sequencing of necessary reforms, taking due account of the institutional, legal and human capacities that are specific to each country. [English only] Drawing on the Indonesian experience in 1997, this paper demonstrates the complexity of managing banking crises deals. It aims at deriving conclusions from this experience for other developing countries facing similar problems. The paper also refers to comparative experiences of other countries, in particular Malaysia and Thailand, examines the IMF programme and reveals its shortcomings. The key question is to what extent the ineffectiveness and slow progress of bank restructuring, corporate restructuring and continued dilemmas in macroeconomic management in Indonesia were due to shortcomings of the economic programme, its sequencing or emphasis, and to what extent it has to be attributed other factors, including corruption and lack of policy-making capacity. Although prudential requirements and regulations, such as lending limits, were introduced to address corporate governance problems, governance of the banking sector was generally weak, and there was little incentive for banks to make appropriate risk assessments in their activities. It is shown that structural weaknesses precipitated and aggravated the crisis. There is clear evidence for mistakes in the initial responses to the crisis by both the Government and the international financial institutions. The most difficult problems facing a country like Indonesia are the political and social constraints to rapid restructuring and reforms to strengthen the financial sector. Indonesia was obliged to implement second generation Washington consensus reforms focusing on corporate governance, bankruptcy procedures, business-government relations, and more restrictive prudential regulation. A clear message of the paper is that a "one-size-fits-all" programme is unlikely to be successful. Policy makers must be able to address linkages between the financial sector and macroeconomic performance, which, if not managed appropriately, can exacerbate macroeconomic cycles. There is also a need to reduce the concentration of bank ownership and to minimize moral hazards through the design of clear exit mechanisms. Moreover, attempts to restructure the banking system can only be successful in the context of an overall recovery of the domestic economy. The main message of the paper is the importance of appropriate speed and sequencing of necessary reforms, taking due account of the institutional, legal and human capacities that are specific to each country. [English only] Drawing on the Indonesian experience in 1997, this paper demonstrates the complexity of managing banking crises deals. It aims at deriving conclusions from this experience for other developing countries facing similar problems. The paper also refers to comparative experiences of other countries, in particular Malaysia and Thailand, examines the IMF programme and reveals its shortcomings. The key question is to what extent the ineffectiveness and slow progress of bank restructuring, corporate restructuring and continued dilemmas in macroeconomic management in Indonesia were due to shortcomings of the economic programme, its sequencing or emphasis, and to what extent it has to be attributed other factors, including corruption and lack of policy-making capacity. Although prudential requirements and regulations, such as lending limits, were introduced to address corporate governance problems, governance of the banking sector was generally weak, and there was little incentive for banks to make appropriate risk assessments in their activities. It is shown that structural weaknesses precipitated and aggravated the crisis. There is clear evidence for mistakes in the initial responses to the crisis by both the Government and the international financial institutions. The most difficult problems facing a country like Indonesia are the political and social constraints to rapid restructuring and reforms to strengthen the financial sector. Indonesia was obliged to implement second generation Washington consensus reforms focusing on corporate governance, bankruptcy procedures, business-government relations, and more restrictive prudential regulation. A clear message of the paper is that a "one-size-fits-all" programme is unlikely to be successful. Policy makers must be able to address linkages between the financial sector and macroeconomic performance, which, if not managed appropriately, can exacerbate macroeconomic cycles. There is also a need to reduce the concentration of bank ownership and to minimize moral hazards through the design of clear exit mechanisms. Moreover, attempts to restructure the banking system can only be successful in the context of an overall recovery of the domestic economy. The main message of the paper is the importance of appropriate speed and sequencing of necessary reforms, taking due account of the institutional, legal and human capacities that are specific to each country. [English only] Drawing on the Indonesian experience in 1997, this paper demonstrates the complexity of managing banking crises deals. It aims at deriving conclusions from this experience for other developing countries facing similar problems. The paper also refers to comparative experiences of other countries, in particular Malaysia and Thailand, examines the IMF programme and reveals its shortcomings. The key question is to what extent the ineffectiveness and slow progress of bank restructuring, corporate restructuring and continued dilemmas in macroeconomic management in Indonesia were due to shortcomings of the economic programme, its sequencing or emphasis, and to what extent it has to be attributed other factors, including corruption and lack of policy-making capacity. Although prudential requirements and regulations, such as lending limits, were introduced to address corporate governance problems, governance of the banking sector was generally weak, and there was little incentive for banks to make appropriate risk assessments in their activities. It is shown that structural weaknesses precipitated and aggravated the crisis. There is clear evidence for mistakes in the initial responses to the crisis by both the Government and the international financial institutions. The most difficult problems facing a country like Indonesia are the political and social constraints to rapid restructuring and reforms to strengthen the financial sector. Indonesia was obliged to implement second generation Washington consensus reforms focusing on corporate governance, bankruptcy procedures, business-government relations, and more restrictive prudential regulation. A clear message of the paper is that a "one-size-fits-all" programme is unlikely to be successful. Policy makers must be able to address linkages between the financial sector and macroeconomic performance, which, if not managed appropriately, can exacerbate macroeconomic cycles. There is also a need to reduce the concentration of bank ownership and to minimize moral hazards through the design of clear exit mechanisms. Moreover, attempts to restructure the banking system can only be successful in the context of an overall recovery of the domestic economy. The main message of the paper is the importance of appropriate speed and sequencing of necessary reforms, taking due account of the institutional, legal and human capacities that are specific to each country.

Annual Report 2014

Case reports of patients with acute appendicitis that was not recognised in time highlight the probability and the implications of significant complications. Early surgical treatment is dependent on early diagnosis, and this is usually the domain of general practice. With regard to the missed cases, it is important to see them in proper perspective: appendicitis is present in only a minority of all presentations of abdominal pain. General practitioners should refer 'liberally' in case of even minor signs or symptoms, so that appendicitis will be missed only in cases with a highly atypical presentation. It is important to realise that this happens, but it is not possible to draw conclusions from it that can serve as a guide to routine practice, as referral of all presentations of abdominal pain would be undesirable. There is a need to test the added value of diagnostic procedures like CRP and echography. However, until there is evidence that this could change the practice in atypical cases, practitioners can do no better than to reflect upon their faults