Product details

By continuing to use our site you consent to the use of cookies as described in our privacy policy unless you have disabled them.
You can change your cookie settings at any time but parts of our site will not function correctly without them.
Authors: Laurent Herve (NEOMA Business School)
Published in: 2010

Abstract

For years Grupo Banco Popular was one of the star performers in European banking. Its business model was characterized by being concentrated on domestic banking, highly focused on marketing to individuals and SMEs, and a remarkable operating efficiency. But the dependency on the Spanish economy, which was a strength for a decade, reveals itself with the impact of the financial crisis on Spain, a major weakness, with non performing loans surging and Banco Populars results significantly impacted. The case, presents in this context, the decisions, that two different types of bank analysts could have to take: Should short term lines of credit granted by a correspondent bank be renewed? Should an equity analyst, recommend the purchase or even maintaining an investment in Banco Popular shares? The case has been prepared to serve several objectives: (1) measure the financial performance of a bank through the analysis of its activity, its profit generation, its cost of risk, its solvency and liquidity position, using financial ratios and other key performance indicators and basing oneself on the information presented in the annual report of a public company; (2) determine the impact of a bank''s strategic choices and the economic environment on bank performance; and (3) acknowledge the specific financial analysis performed for financial institutions and performance measurement indicators selected, in the case of a liquidity / solvency review such as for the renewal / cancellation of credit lines by a correspondent bank and in the case of an equity research analysis, performed by brokerage and investment bank analysts, so as to give an opinion on client existing or future investments. The case can be used in financial analysis courses, so as to identify the specificities of an industry but also in all commercial banking curriculae, bank and risk management classes, so as to underpin through a true case study, the effect of an economic slowdown and strategic choices, on the financial performance of a bank. The case is particularly adapted to graduate students (MBA, Masters in Finance) and for executive education.
Location:
Industry:
Size:
Assets of EUR130 billion
Other setting(s):
2009, 2010

About

Abstract

For years Grupo Banco Popular was one of the star performers in European banking. Its business model was characterized by being concentrated on domestic banking, highly focused on marketing to individuals and SMEs, and a remarkable operating efficiency. But the dependency on the Spanish economy, which was a strength for a decade, reveals itself with the impact of the financial crisis on Spain, a major weakness, with non performing loans surging and Banco Populars results significantly impacted. The case, presents in this context, the decisions, that two different types of bank analysts could have to take: Should short term lines of credit granted by a correspondent bank be renewed? Should an equity analyst, recommend the purchase or even maintaining an investment in Banco Popular shares? The case has been prepared to serve several objectives: (1) measure the financial performance of a bank through the analysis of its activity, its profit generation, its cost of risk, its solvency and liquidity position, using financial ratios and other key performance indicators and basing oneself on the information presented in the annual report of a public company; (2) determine the impact of a bank''s strategic choices and the economic environment on bank performance; and (3) acknowledge the specific financial analysis performed for financial institutions and performance measurement indicators selected, in the case of a liquidity / solvency review such as for the renewal / cancellation of credit lines by a correspondent bank and in the case of an equity research analysis, performed by brokerage and investment bank analysts, so as to give an opinion on client existing or future investments. The case can be used in financial analysis courses, so as to identify the specificities of an industry but also in all commercial banking curriculae, bank and risk management classes, so as to underpin through a true case study, the effect of an economic slowdown and strategic choices, on the financial performance of a bank. The case is particularly adapted to graduate students (MBA, Masters in Finance) and for executive education.

Settings

Location:
Industry:
Size:
Assets of EUR130 billion
Other setting(s):
2009, 2010

Related