Millennium BCP: Portuguese banks: Equity Investment Report

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Finance from the NOVA – School of Business and Economics

The impact of banks dimension on profitability, sustainability and efficiency: An analysis for the Iberian financial system

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Management from the NOVA – School of Business and Economics

Design of a balanced scorecard-type management system for a back-office department in a bank

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Finance from the NOVA – School of Business and Economics

The effect of ownership concentration on management behavior in Belgian banks: A case study

Double Degree. A Work Project, presented as part of the requirements for the Award of a Master’s Degree in Finance from NOVA – School of Business and Economics and a Masters Degree in Management from Louvain School of Management

Rethinking the Portuguese banking sector in a post-crisis context

As the financial crisis hit the Portuguese banks, the profitability of the whole sector squeezed to historical minimums. Reinventing the banking business model in the post-crisis context is an overriding issue to achieve sustainable profits and a low cost-to-income ratio. We propose banks to adopt a true multichannel approach, proceeding to a branch network reformatting and a relocation of services to online channels; adopt a true customer-centric approach and reduce the product and services portfolio complexity; finally, industrialize operations and rationalize the structure. With these measures in place, Portuguese banks will become leaner and more efficient, aspiring to a cost-to-income ratio below 45%.

Portuguese banks and the economic adjustment programme: balance sheet adjustments and impact on profitability

Double Degree. A Work Project presented as part of the requirements for the Award of a Masters Degree in Management from the NOVA – School of Business and Economics and a Masters Degree in Finance from Louvain School of Management

The role of deposit insurance and bank’s asset size in the 2008 financial crisis

In this paper we analyze the role of deposit insurance in providing the market with liquidity in times of financial turmoil. To do so, we look at the variation in insured and uninsured deposits between 2005Q3 and 2011Q3, controlling for liquidity, solvency and capital adequacy indicators, and find evidence that deposit insurance does provide some confidence in keeping funds in banks in times of turmoil. Additionally we follow an event study methodology to assess the impact of deposit insurance oriented policies on bank holding companies stock market returns, and find a TBTF effect.

Determinants of Portuguese bank’s provisioning policies: Discretionary behaviour of generic and specific allowances

In this paper we test for the impact of the regulatory environment on a bank’s discretionary provisioning practices. We develop a model that structures the dynamics of the provision policy for the two classes of provisions: generic provisions and specific provisions. The model is tested using a comprehensive database of all financial institutions operating in Portugal for 1990-2000. This unique dataset comprises banks subject to the Portuguese rules as well as bank subsidiaries subject to their home-country regulation and we were able to identify distinct behaviours between them. Our results show the importance of handling he two types of provisions separately. They support the hypothesis that banks have a discretionary behaviour in setting up their provisions, and find evidence of income smoothing and capital management. We also find that the regulatory regime impacts on discretionary provisioning policies because banks when forced to increase one type of provision react by reducing the iscretionary component of the other, a finding we designated as a substitution effect.

Banks and sovereigns: An econometric analysis of an entangled relationship

In this discussion OLS regressions are used to study the factors that influence sovereign yield spreads and domestic bank indeces for a set of euro area countries. The results show that common factors explain changes in bank indeces better than in the yields. Moreover, although there is some country differentiation, a common pattern among all is visible. A contemporary spillover effect between banks and sovereigns emerged after bank bailouts and became stronger with the burst of the sovereign debt crisis. The vicious cycle between the two has contributed to the escalation of spreads and to painful austerity measures.

Is the Basel III Leverage Ratio countercyclical? A study for Portuguese banks

This work analyses how the leverage ratio behaves through the cycle, vis-à-vis other capital ratios. For a sample of the largest Portuguese banks, the Basel III leverage ratio is indeed countercyclical. This result is relevant from a regulatory perspective, since the introduction of a limit on the leverage ratio will function as a restriction in the banks’ balance sheet size, reducing the economic costs associated with the excessive growth of leverage in periods of economic expansion followed by aggressive deleveraging in the downturn. However, one cannot exclude that restrictions on banks’ leverage incentivize its transference to less regulated intermediaries.

Universal banks and corporate control: Evidence from the global syndicated loan market

We investigate the effects of bank control over borrower firms whether by representation on boards of directors or by the holding of shares through bank asset management divisions. Using a large sample of syndicated loans, we find that banks are more likely to act as lead arrangers in loans when they exert some control over the borrower firm. Bank-firm governance links are associated with higher loan spreads during the 2003-2006 credit boom, but lower spreads during the 2007-2008 financial crisis. Additionally, these links mitigate credit rationing effects during the crisis. The results are robust to several methods to correct for the endogeneity of the bank- firm governance link. Our evidence, consistent with intertemporal smoothing of loan rates, suggests there are costs and benefits from banks’ involvement in firm governance.

Radiographic aspects and angioarchitectural arrangements in corrosion casts of the blood supply to the human sternocleidomastoid muscle by the sternocleidomastoid branch of the occipital artery

The contribution of the sternocleidomastoid branch of the occipital artery (superior arterial pedicle - SAP) to the irrigation of the sternocleidomastoid muscle (SCM) was evaluated in fresh human cadavers by injecting radiological dye and a resin for microvasculature corrosion casts. From its insertion in the mastoid process of the temporal bone, the SCM was divided into superior, medium, and inferior thirds. In most of the SCM, The SAP are formed by two longitudinal parallel branches. In all specimens, the radiological dye injected into the SAP reached or trespassed the middle part of the studied SCM. The SAP was poorly distributed in the lowermost region of the inferior third of the SCM, suggesting the contribution of other arteries or pedicles. The corrosion casts of the microvasculature showed a profuse network of microscopic vessels in those levels where the SAP was detected.

Comparative analysis of Spanish Banks’ Standalone credit profile

The paper studies the relationship between four differently rated bank’s financial profile and their standalone credit rating issued by Moody’s. The comparative analysis shows an example that despite their pricing power and geographical coverage, larger banks do not necessarily have better credit ratings. Instead, business model and risk appetite seem to be the defining factors of banks’ vulnerability to shocks, such as the Spanish real estate crisis. The risk-return relationship is also identified in the banks’ fundamentals meaning that while expansionary strategy in riskier asset classes enhances margins, it also potentially distorts the credit risk profile.

Basel III: The impact of new capital requirements on profitability of Portuguese Banks

This empirical study aims to explore the impact of increased capital ratio requirements, on the ROE of the Portuguese banking sector. The paper employs both a quantitative- and qualitative approach, with the qualitative approach as the main method of research. The method adopted to conduct the qualitative research was semi structured elite interviews with banking executives. Higher capital requirements decrease the ROE of banks in Portugal, but huge impairments charges, macroeconomic factors and increased costs of deposits are clearly the dominant reasons for the reduced levels of ROE the past years. Among the measures taken to increase capital ratios, reduction of RWAs and non-core assets have been the main focus, but the issuance of CoCos is regarded as the most expensive measure due to high interest payments. However, the CoCos will not have any effect on the ROE in the long term. It is difficult to draw any conclusions on the impact of more equity in the balance sheet on the ROE of Portuguese banks, as many banks currently don’t generate enough money to pay back on shareholders´ investments.