Identifying Failing Banks in Emerging Markets

Signs of distress: Common themes in troubled financial institutions: excessive growth, over-concentration, volatile earnings sources, asset and liability mismatches, dependence on unstable funding, Symptoms of banks’ credit standing: financial, non-financial and market indicators Operating Environment: This section will identify the key macro-economic trends which can erode credit worthiness and the interconnectedness of the economy and banking system. Key Financial, Political and Regulatory Issues: Asset quality in the loan book, Expected NPL levels geographically and between middle and low income countries, Companies in crisis: recognizing weak management and lack of integrity, Quality of risk management, Assessing earnings: quality and volatility, Assessing funding: diversity of funding sources, Capital buffer: stress testing quality and adequacy of capital to withstand write-downs and ensure continued solvency Rescue options when Banks fail: This section will focus on the support and rescue options open to regulatory bodies.