Part I of this book introduces the subject of banking, with a look first at the main products, and then proceeds to discuss all the key aspects of a bank business: namely, customer service, credit assessment, trading and hedging techniques, the yield curve, regulatory capital, and the money and capital markets. This part is the “primer” on banking and is essential reading for all practitioners.

We begin with a look at the fundamentals of banking business, products and customer service, and the different elements of bank capital. This is essentially an introduction to the nature of banking. We then consider further elementary finance background, with a look at the basics of financial statements. The contents of this chapter may appear more at home in a textbook on accounting, but an understanding of ratio analysis is vital for the bank practitioner, who is concerned with issues such as return on capital as well as balance sheet sustainability.

This is followed with more detail on credit risk and credit assessment, and the basics of trading and hedging.