MSc Banking

This module will provide you with an appreciation of the underlying theoretical frameworks and concepts behind financial reporting, along with a sufficiently detailed knowledge of its processes, to enable successful analysis of complex financial statements. The focus is on key accounting issues and their impact on the interpretation of financial statements, as opposed to the mechanics of bookkeeping.

The module provides a broad base from which to explore further modules in the programme and is designed to build your confidence and capabilities in dealing with and discussing financial information.  

This module aims to:  

• Explore the purpose, nature and objectives of financial reporting
• Examine the conceptual and regulatory frameworks of financial accounting, including the international context
• Introduce you to critical thinking skills through the critical analysis of the key qualitative characteristics of financial reporting and fundamental assumptions
• Develop understanding of the process of generating financial statements and how transactions are recorded and reflected
• Develop ability to interpret financial statements, building the means to critically assess, draw effective conclusions and make decisions from that interpretation
• Increase appreciation of contemporary issues in financial reporting
• Develop your financial literacy, skills and confidence to discuss financial information

In avoidance of these adverse effects financial institutions, such as banks or insurance companies, devote considerable resources for the development of the financial risk management process, including corporate governance. We present the existing and proposed approaches, discussing their usefulness and limitations. Attention is paid to regulation, accountability, ethics and professionalism.

We show that the existing feedback between financial markets and real economy may translate small shocks into large and persistent consequences. Moreover, we show that these feedback effects are important in understanding financial crises.

• Demonstrate the need for financial risk management in a broad macroeconomic context, encompassing good corporate governance and risk sensitivity
• Present recently developed models describing how the mutual feedback between financial markets and real activity magnifies shocks to the economy
• Examine the implications of Basel II for financial institutions
• Discuss the roles played by financial market regulators (FED, FSA, UKLA)
• Reinforce the concepts of accountability, ethics and professionalism
• Explore the foundations of risk management, considering both market risk and credit
• Analyse professional techniques and applications including mathematical issues in the measurement and management of credit and market risks
• Equip you with the ability to use methods of risk measurement
• Provide opportunities to acquire key quantitative skills in risk management

This course will introduce you to a branch of structured finance focussed on transferring risks from one entity to another through the structuring of securitisations, and how this also provides enhanced liquidity and a source of revenue for investment banks.

Especially because the recent financial crisis developed from underperformance within structured products, you can benefit from a thorough understanding of the mechanics of securitisation, the complexities of the instruments and the global business, market and regulatory environments within which this financial activity operates.

For both investors and corporations, such knowledge will be useful in recognising the opportunities and threats present in the bid to manage risk and returns through innovative products and processes.

This module aims to:

• Develop a deep understanding of securitisation and the wide application of its use in finance and investments
• Analyse the various methods of credit enhancement as well as the structures forming the foundation of structured products
• Illustrate the global market and regulatory environments affecting the development of this industry, linking it with the prospects for the finances and investments of corporations and banks
• Instil an analytic understanding of the political and economic framework in the various global transactions between public and private institutions, including the rating agencies

This module aims to provide a strong foundation in understanding the various ways unlisted companies can be built and valued. It is designed to expose the students to many different kinds of situations involving critical evaluation of a business, for the purposes of establishing value and seeking financing. It shows how the various financing and investment activities can have an impact on the structure and operations, as well as the future of the business.

This module aims to:

• Provide you with an overview of the entrepreneurial deal making process and the various elements involved from both the management as well as the investor point of view
• Develop your skills in addressing financing and investment issues within the company and how to approach the market and the investors
• Enhance your appreciation of how financing activities and structure could impact operational and management structure as well as growth of the entrepreneurial business
• Develop your skills in valuing unlisted companies at various stages of growth
• Develop your ability to use financing methods as a strategic tool for growing an entrepreneurial initiative

Core topics will include:

• Using Excel to build financial models, including useful functions
• Modelling integrated financial statements and cash flows
• Valuation models
• Investment appraisal using Excel
• Modelling refinancing, debt and private equity buy outs
• Modelling buy-outs and acquisitions
• Model integrity and audit

Over the past 15 years, there has been a tremendous boom in the private equity industry. The pool of US private equity funds' partnerships specialising in venture capital, leveraged buyouts, mezzanine investments, and distressed debt, has grown from $5 billion in 1980 to over $450 billion in 2007.

Private equity's recent growth has outstripped that of almost every class of financial product. While the growth in private equity has been striking, the potential for future development is even more impressive. Despite its growth, the private equity pool today remains relatively small.

For every dollar of private equity in the portfolio of US institutional investors, there are about $40 of publicly traded equities. The ratios are even more uneven for overseas institutions.

Recent economic events have had a strong impact on the PE industry. Deal volume has fallen dramatically as credit has tightened, and the types of deals now being done are very different from those done just two years ago. But, even in difficult times, there are opportunities, some outside the realm of traditional buyouts.

This course is designed to help you develop the skills to exploit these opportunities. In addition, there will be a detailed discussion of the phenomenon of Sovereign Wealth Funds. They have become an extremely important source of investment money, they apply a number of investment techniques from sophisticated PE firms and they are very controversial: is there only an economic interest at play? This topic also extends the international dimension of discussion on PE.

This module is ideal if you are intending to specialise in the area of entrepreneurial finance and as such is compulsory for students taking this specialism. The module must be taken together with the Corporate Finance module, to benefit fully from its valuation and financial analysis aspects.

The module seeks to deepen your understanding of corporate finance: it emphasises the relevance of the intellectual frameworks used to analyse corporate finance problems (incomplete contracting theory, agency problems, etc.) for the private equity industry.

The teaching approach is analytical rather than mathematical, with intuition and practical application (including the heavy use of case studies) of theoretical concepts emphasised throughout. However, this module introduces a wide array of valuation methodologies, which by nature are highly numerical.

These range from approaches commonly seen in practice (e.g. the use of comparables and the 'venture capital' method) to those less frequently employed but likely to be useful nonetheless (the use of Monte Carlo simulations and option pricing techniques). The course emphasises not only the mechanisms employed, but also how to clearly communicate the strengths and limitations of each approach.

The module has been designed to:

• Provide an analytical framework for evaluating the strategic and financial impact of private equity (PE) and venture capital (VC) in a modern economy
• Present a critical examination and analysis of the practical management and exit issues related to PE
• Present the PE and VC 'life cycles', from selection of targets, to valuation techniques to exit strategies
• Review and apply the key concepts and tools of corporate finance in the context of the private equity industry
• Build an appreciation of the valuation process in the private equity setting
• Assess the new phenomenon: Sovereign Wealth Funds and their role in the world economy

On the one hand it promotes a deep understanding of the theoretical construct of portfolio management, but provides a solid foundation for understanding fund management in general given various different types of objectives, e.g. for pension funds, for mutual funds and for private individuals.

It exposes the world of the portfolio manager, including the surrounding business and regulatory environment. It will give you hands-on experience in implementing these techniques, through a simulated trading platform especially designed to promote team work.

The module covers:

• Principles and policy, construction, management and protection of portfolios
• Asset Allocation: strategic vs tactical
• Overview of problems faced by portfolio managers: liquidity, risk management, benchmarking and alpha, regulatory environment, portfolio construction
• Introduction to Style Investing
• Implementing a portfolio: Introduction to StockTrak
• Case study: Boots PLC Pension Funds (set in early 2000)
• Portfolio construction: overview
• Active vs passive investing
• Portfolio risk,  risk budgeting and performance measures
• Return attribution
• Portfolio protection: hedging
• Absolute return strategies
• Manager selection, fund of funds
• Value Investing, Quantitative approach
• Passive investing:  Principles of ETF
• The Asset Management Business
• Creating financial products
• Behavioural Finance, ethics, SRI, and marketing of financial products
• Investment planning: personal and family offices

This is an introduction to the analytical process that allows assessment of the intrinsic value of a financial asset. To evaluate this, a wide range of inputs is used, including a range of primary information about the issuing firm and its environment.

• A systematic understanding of how the financial and strategic position of a business is reflected in the company's financial statements
• Finding, selecting and organising relevant corporate data for a given company
• Conceptual understanding and technical competence in developing and using a comprehensive range of valuation techniques for equity valuation
• Assessing and evaluating the relative merits and limitations of different valuation tools in a given business context, and the ability to make informed pragmatic judgements about the quality of the resulting value estimates
• Conceptual recognition of typical behavioural patterns in financial markets, and hence a personal awareness of potential sources of mis-pricing and the need for strong mental discipline
• Conveying complex financial information in a concise format that effectively communicates key findings to the investor

The teaching approach is analytical rather than mathematical, and the intuition and practical application (via the heavy use of case studies) of theoretical concepts is emphasised throughout the module. Through the selection of case studies, the module introduces various dimensions of international business. You will compare the Anglo-Saxon business model with a continental one (based on Schneider-Square D case), analyse accounting, operating and transactional exposure risks created in international aspects of corporate finance and apply rigorous analytical project appraisal methodologies (developed by LEK Consulting) to companies of your choice.

The discussions on valuation and financing of corporate finance take into account the changed risk expectations of investors after the Credit Crunch.

This module aims to:

• Develop a framework for corporate financial decision-making
• Provide a solid grounding in the principles and practice of financial management
• Analyse the various sources of finance available to organisations
• Develop the understanding of the role of capital markets as a source of finance for organisations
• Analyse the optimal capital structure of firms
• Create an understanding of models used in valuation of fixed income instruments, such as bonds
• Equip you with the ability to select and apply appropriate corporate valuation techniques
• Alert you to international aspects of corporate finance transactions
• Provide you with technical tools to analyse international M&A transactions
• Enable you to consolidate and extend the seemingly different skills acquired in managerial decision-making and perational strategy to apply in practical business context
• Provide opportunities to acquire key quantitative skills

Core topics will include:

• An overview of Basic Principles of Valuation
• An overview of alternatives to NPV (IRR rule, pay back rule)
• Bond pricing
• Company Valuation
• Cost of Capital
• Mergers and Acquisitions
• International Finance and cross-border valuations
• Decision Trees and real options: valuing managers' flexibility