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Valuing Banks

A New Corporate Finance Approach

  • Federico Beltrame
  • Daniele Previtali

Table of contents

  1. Front Matter
    Pages i-xxiv
  2. Federico Beltrame, Daniele Previtali
    Pages 1-5
  3. Federico Beltrame, Daniele Previtali
    Pages 7-40
  4. Federico Beltrame, Daniele Previtali
    Pages 41-81
  5. Federico Beltrame, Daniele Previtali
    Pages 83-109
  6. Federico Beltrame, Daniele Previtali
    Pages 111-153
  7. Federico Beltrame, Daniele Previtali
    Pages 175-225
  8. Back Matter
    Pages 227-242

About this book

Introduction

Bank valuation is one of the most difficult topics to address in corporate finance. The application of standard valuation methodologies can be limited and heavily influenced by the varying specifics of regulation, business process, equity and debt capital function (among others) among banks. Generally, these limitations result in the application of a simplified equity-side approach based on dividends. Yet, dividends represent a synthetic measure of cash and, therefore, often do not present an accurate view of the value creation process in terms of cash flows.

This book aims to overcome the limitations the variations in bank-specifics impose by providing a bank-specific valuation theoretical framework and a new asset-side model. The book includes also a constructive comparison of equity and asset side methods. The authors present a novel framework entitled, the “Asset Mark-down Model”. This method incorporates an Adjusted Present Value model, which allows practitioners to identify the main value creation sources of a particular bank: from asset-based cash flow and the mark-down on deposits, to tax benefits on bearing liabilities. Through the implementation of this framework, the authors offer a more accurate and more specific approach to valuing banks.

Keywords

Capital Valuation Equity Value Mark-Down Asset-Side Valuation Value of Deposits Tax Benefits Market Multiples Europe Italy Capital Markets

Authors and affiliations

  • Federico Beltrame
    • 1
  • Daniele Previtali
    • 2
  1. 1.University of UdineUDINEItaly
  2. 2.Luiss Guido Carli UniversityRomeItaly

Bibliographic information

  • DOI https://doi.org/10.1057/978-1-137-56142-8
  • Copyright Information The Editor(s) (if applicable) and The Author(s) 2016
  • Publisher Name Palgrave Macmillan, London
  • eBook Packages Economics and Finance
  • Print ISBN 978-1-137-56141-1
  • Online ISBN 978-1-137-56142-8
  • Buy this book on publisher's site
Industry Sectors
Finance, Business & Banking