Valuing a Bank in Going Concern

Alessandro Santoni and Federico Salerno
Additional contact information
Alessandro Santoni: European Central Bank
Federico Salerno: European Central Bank

A chapter in How to Value a Bank, 2023, pp 15-44 from Springer

Abstract: Abstract In common with other financial institutions, banks exhibit some specific features relative to industrial companies. This has led the analyst community to opt for certain valuation methods rather than others, over the years. In this chapter, we investigate the most common methodologies used by analysts in valuing Banks in going concern status. The warranted equity value (WEV) method, an adaptation of the EVA approach, is used to value both the entity as a whole or individual business areas in a sum-of-the-parts. It responds to the need to take a bank’s capital absorption and capital position into account. The DDM is a universal method which suits banks as well as industrials. And so is the free cash flow to equity (FCFE), in a sense an expansion of the DDM in that it adds potential dividends to actual dividends.

Date: 2023
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:sptchp:978-3-031-43872-1_3

Ordering information: This item can be ordered from
http://www.springer.com/9783031438721

DOI: 10.1007/978-3-031-43872-1_3

Access Statistics for this chapter

More chapters in Springer Texts in Business and Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().