Topic: capital risk and liquidity risk

THE ASSIGNMENT IN BRIEF
This assignment requires you to compare two banks according to the major balance sheet risks that they take. Specifically you

are asked to compare them on the basis of:
1- Capital risk
2- Liquidity risk
The Two major Australian Banks that you required to compare are: Australian and New Zealand Bank (ANZ) and the Commonwealth

Bank of Australia (CBA).

REQUIRED TASKS FOR each ASSIGNMENT part:
1- You are asked to provide an analysis of CAPITAL RISK using the following format:
1.1. An Introduction:
– Give a brief conceptual overview of this risk.
– Comment on how this risk has been measured in the information available to you.
– Comment on whether you feel there is a better way to measure this risk.
1.2. Analysis:
– A detailed comparison of the two banks in terms of their respective levels of this risk.
– Clear statements of why there are these differences/similarities between the two banks. This may involve you in commenting

on the characteristics of each bank in terms of the type and relative importance of the business that it undertakes.
1.3. A Conclusion
2-You are asked to provide an analysis of LIQUIDITY RISK using the following format:
2.1. An Introduction:
– Give a brief conceptual overview of this risk.
– Comment on how this risk has been measured in the information available to you.
– Comment on whether you feel there is a better way to measure this risk.
2.2. Analysis:
– A detailed comparison of the two banks in terms of their respective levels of this risk.
– Clear statements of why there are these differences/similarities between the two banks. This may involve you in commenting

on the characteristics of each bank in terms of the type and relative importance of the business that it undertakes.
2.3. A Conclusion:
(The assignment need to be in approximate length of 2,500 words)

1- OVERALL OBJECTIVE
The objective of the assignment is to give you some practical experience in comparing the capital risk and liquidity risk of

two Australian banks. The underlying theme of your analysis is that banks are involved in a risk-return trade-off: they earn

higher returns by taking higher risks. As part of this comparison of the two banks, you will need to be able to read the

financial statements of the two banks, including the detailed notes to these statements. For some of you, this will be the

first time that you have looked in detail at the financial statements of a major listed corporation, such as a bank. The

skills that you develop in doing this will be important practical skills that should be useful in your business career.
2- WHERE TO SOURCE INFORMATION
Each bank has a website that contains annual report information. This information is typically contained under a heading of

shareholder information. The annual reports are downloadable in PDF format. You will make your comparisons between the two

major banks on the basis of information contained in their respective 2011 Full Annual Reports. This full annual report

includes all the full financial statements including all the notes relevant to the financial statements. Most of these annual

reports are well over 100 pages long so that you may need to be selective in the information that you print. As much as

possible you should try to work off an electronic copy. In addition, you should look to access any other information that is

available. Some of this information may be in the form of broker’s reports available on the web. The KPMG site (as mentioned

in the course outline and accessible at is another source of information.

Other information may be accessed through CD searches in the library.and also can use some text books such as : Gupp, B. E.,

Avram, K., Beal, D., Lambert, R., & Kolari, J. (2007). Commercial banking: The management of risk. Milton: John Wiley & Sons

Australia
Ltd.
Hogan, W., Avram, K. J., Brown, C., Degabriele, R., Ralston, D., Skully, et al. (2004). Management of financial institutions

(2nd ed.). Brisbane: John Wiley & Sons Australia Ltd.
3- FORMATTING OF THE ASSIGNMENT:
A- Headings: Format all your headings as styles. 10%
B- Table of Contents: Create an automated Table of Contents 10%
C- In-text Referencing: Do all your in-text referencing via Endnote. 10%
D- Reference List: Create an automated list of references at the end of the document using EndNote.10%
E- Tables: include at least 2 tables in your assignment. Properly format each table with a title that is formatted as a

?Caption? in Word.10%
F-List of Tables: Provide an automated list of tables using Word.10%
G- Figures: include at least 2 figures in your assignment. Properly format each figure with a title that is formatted as a

?Caption? in Word.10%
H- List of Figures: Provide an automated list of figures using Word.
4- Use of Tables
It is a requirement of the assignment that you include tables in each part of the assignment that you submit. The purpose of

these tables is to organize any data that you want to present to the reader. Here is an example of a properly constructed

table which has a title that includes a number and a date, as well as quoting the source of data in the table.
Table 2 Macquarie groups Impaired Assets for the year ending 2006
Impaired Assets with specific provisions for Impairment 166
Less specific Provisions 78
Total Net Impaired Assets 88
Source: Macquarie Bank Limited, 2007, p. 29
5- A List of Tables
You are asked to provide an automated list of your tables using styles. An example is
List of Tables
Table 2.1 Information on Major CBA National research €¦€¦€¦29
Table 2.2 Classification of attitude segment towards money and retirement€¦..32
6- Use of Figures
It is a requirement of the assignment that you include figures in each part of the assignment that you submit. The purpose of

these figures is to organize information in a visual way that you want to present to the reader. Where you are presenting

information as a figure, you are asked to properly construct your figure with a title that includes a number and a date, if

relevant; as well as quoting, if relevant, the source of the material in the figure. Here is an example of a properly

constructed figure.
7- List of Figures
You are asked to provide an automated list of your figures using styles.
8- CHARACTERISTICS OF A GOOD ASSIGNMENT
The goal of this assignment is to conduct a high quality analysis involving a comparison of the two major banks. The best

assignments will collect the relevant information and then provide a comprehensive analysis of how the two risks are similar

and different between the two banks. A large part of that analysis will deal with explaining why these similarities and

differences exist