1. Banking and Financial Institutions
Guy Hargreaves
ACF-104

2. Recap of yesterday
Understand various components of an Australian commercial banking business
Review of important functions of a commercial bank including liquidity, capital, margins, revenues, strategy by studying ANZ
Form a sound understanding between the theory of banking and practice by studying ANZ bank case

3. Theory versus practice: how does a real commercial bank operate in 2015?

4. Today’s goals - continued
Understand various components of an Australian commercial banking business
Review of important functions of a commercial bank including liquidity, capital, margins, revenues, strategy by studying ANZ
Form a sound understanding between the theory of banking and practice by studying ANZ bank case

5. ANZ Banking Group Top 20 global bank by market capitalisation
One of four major banks in Australia
Good commercial bank to study

6. Regulatory Capital – important!

7. Balance Sheet composition

8. Remember Basel BIS III?
Increases Required Capital – Tier 1 up from 4% to 6%
Introduces Leverage Ratio – ratio of Tier 1 capital divided by “total exposure” to be a minimum of 3%
Introduces Liquidity Cover Ratio (LCR) – High quality liquid assets divided by net cash outflows over the next 30 days >100%
Introduces Net Stable Funding Ratio – Long Term Stable Funding divided by Long Term Assets (> 1-year) > 100%

9. LCR is operating at ANZ