The banking industry in South Africa is facing three main challenges, namely: continuous change, foreign competition, and increasing levels of risk. These problems flow mainly from cultural diversity, globalisation, and rapid technological development in systems and communication. Decreasing predictability stems to a great extent from a lack of foreknowledge of how globalisation will develop, and how it can influence the South African banking industry in general and holistic risk management (HRM) in particular. Management of the South African banking industry therefore need to rely on crucial intelligence and foreknowledge concerning events, trends and development of (HRM) that affect the profitability and future strategic viability of the whole South African banking industry. At the onset various concepts and processes were emphasised in this study, namely operational risk management, strategic risk management, the risk management culture in the banking industry, the role of risk management in the banking industry, the role of risk management process in the banking industry, corporate governance in the banking industry in South Africa. However, the main purpose of this study was to explore the need and the dynamics of managing risk in the banking industry in a holistic manner. To this end the development of, and trends in (HRM) as part of good corporate governance in the banking industry were researched and documented. The practical aspect of the study was firstly based on the definition and analysis of different categories of risk in the banking industry. The definition and analysis was done in order to cover a broader range of risks the banking industry is facing. Secondly the risk management culture in the banking industry was investigated. Thirdly the role of risk management in the banking industry was explored in detail. Fourthly the risk management process in the banking industry was investigated and explained. Fifthly the link between risk management and corporate governance was explored. Sixthly models developed by Kloman (2000), Lam (2003) and Regester and Larkin (2005) were used as a benchmark to develop a framework for the management of holistic risk in the banking industry. It was concluded that in view of the need in the South African banking industry for a structured means of managing risk holistically, and in view of HRM constituting such a process, there is relevance for the implementation of HRM in the four big banks of the South African banking industry. However, small and unlisted banks do not manage HRM as suggested by the HRM framework. In this regard a number of recommendations were made with respect to managing HRM proactively. A framework based on empirical research and earlier work by Kloman (2000), Lam (2003) and Regester and Larkin (2005) was furthermore suggested for the implementation of HRM in the South African banking industry in the belief that this framework, and the overall research reported in this study could be of theoretical as well as practical value for risk managers in the South African banking industry. / Dr. D. J. Theron (UJ) Dr. T. P. v/d Walt (ABSA)

Please read the abstract (Thesis Summary) in the section, 00front of this document / Thesis (PhD (Engineering))--University of Pretoria, 2008. / Industrial and Systems Engineering / PhD / Unrestricted

The aim of this study was to suggest ways to use enterprise risk management (ERM) effectively towards achieving strategic objectives at East London Industrial Development Zone. The results of the research will contribute to the set of tools which business can utilise in effective business planning and achieve sustainability of enterprises. Enterprise risk management provides stakeholders with reasonable assurance that management has taken due care in drawing up strategies aligned with their appetite for risk. The objective was to investigate the utilisation of Enterprise Risk Management at East London Industrial Development Zone. The literature review revealed shortcomings of the traditional risk management strategy. Examples of the shortcomings are its preoccupation with hazard risks and its disconnection with other functions in an organisation. ERM has emerged as the organisation wide approach to the handling of risk. Effectively integrated with strategy-setting and performance management, ERM strengthens opportunity-seeking behaviour by helping directors and managers develop the confidence that they truly understand the risks inherent in the organization’s strategy and have the capabilities in place to manage and monitor those risks. The assessment of risks after the strategy formulation process results in defective risk management. The result could be strategic objectives that are unrealistic and risk management that is just an appendage to performance management. The empirical study consisted of face-to-face interviews using semi-structured questionnaires. The respondents were Business Unit Managers at East London Industrial Development Zone who advised on current practice of ERM in the organization. The main findings of the empirical investigation revealed that ERM started with organisational survival in mind but ended up being a compliance activity. Also, ERM is under-resourced as there are no dedicated ERM financial and human resources. The organization’s unstructured and informal approach to ERM could place the strategic objectives at risk. Recommendations conclude the investigation and address the shortcomings and improvements that can be made to the utilisation of ERM within the organization. The recommendations are ensuring strong commitment towards ERM and widening the participation of all employees in ERM; developing an ERM road map; allocation of resources to ERM initiative; development of a business case for ERM; training of all managers and all employees on ERM; and focusing on low-hanging return, which may result in quicker realisation of the value added by ERM to the organization.

M.Comm. (Strategic Management) / Due to dramatic changes in the organisational landscape, organisations have had to review and amend risk management frameworks, processes and principles more regularly. Consequently, organisations now require an approach to risk management that enables the achievement of strategy, objectives and business activities. Risk management has to be implemented with the consideration of both the internal and external business environment on an enterprise-wide basis. The latter should result in a competitive advantage that drives organisational performance and reduces the total cost of risk. A pro-active approach to managing the effects of uncertainty on objectives has become a necessity for remaining competitive in constantly changing business environment. This study investigates the context and ideology through which risk management can be implemented. The purpose of the research was to identify, customize and recommend a sound methodology which can be incorporated in order to implement risk management as a business enabler. By adopting an exploratory approach, the researcher conducted qualitative research, in the form of an in-depth case study, on a multinational financial services organisation. Structured interviews were held with senior individuals in order to gather data regarding the risk management practices of the organisation.

Corporate turnaround, in comparison to financial distress, is not substantially researched either internationally or locally in South Africa. This study attempts to explore this area of research by developing models that identify financially distressed companies with a potential for turnaround. This analysis examines listed companies on both the JSE Securities Exchange ('JSE') and Alternative Exchange ('AltX') for the period 2007 to 2014 by using available data from iNet BFA. The financial distress model, Taffler's Z-score, is used to identify companies that fall within the sample. Multiple linear discriminant models with interaction variables are used as part of the process to derive the turnaround models. The first model shows that efficiency is a key driver for a successful turnaround. The second model reveals that JSE-listed companies are more likely to survive than AltX companies. This study contributes to the existing research by identifying significant factors for corporate turnaround and summarizing its findings in a practical manner.

During 2006, AAL adopted and implemented its first share repurchase program, which continued up until its suspension in 2008. While management stated that share repurchases would only be done in the interest of shareholders, the repurchase program was disastrous for shareholder value. Management also stated that share repurchases provide the firm with flexibility regarding its capital structure. We investigated the capital structure of AAL for the years 2004 to 2012 from an optimal capital structure perspective. Using a CAPM approach, we find no evidence that AAL targeted or implemented a capital structure, which could be considered optimal.

Includes bibliographical references / This paper provides an assessment of Africa's first "bad bank", the Asset Management Corporation of Nigeria (AMCON) and its role in resolving non-performing loans (NPLs) in the aftermath of the 2008 financial crisis. It is a case study that primarily investigates the effectiveness of AMCON in addressing the banking crisis in Nigeria based on evidence from different sources ranging from economic indicators to media reports and newspaper interviews. The establishment of AMCON in 2010 helped to resolve the non-performing loans crisis in Nigerian banks, through a transparent removal of toxic assets and by providing the affected banks with a fresh start, while eliciting a minimal moral hazard effect as far as financial institutions were concerned . Other African countries such as Ghana are now considering adopting a similar "bad bank" solution. However, the AMCON solution has been at a considerable cost to the Nigerian taxpayers as AMCON has been running at a huge loss, partly funded by the taxpayer through the government. Data analysed in the study cover the period from 2008 to 2013. The analysis showed that the AMCON solution was successful as the balance - sheet sanitization effort helped to neutralize many of the banking sector 's n on - performing loans, and spurred improvements in the sector's aggregate loan book quality with in its first two years . As at December 2012, AMCON had purchased more than 95% of the banking sector's NPLs, leaving the industry's NPLs at less than 5%. This offered banks a fresh start and the leeway to concentrate on building new and sustainable lending models. This outcome of this study supports prior empirical work which only examined bad banks in developed economies (the US A and Europe) and in the Asia Pacific. It should be noted that the "bad bank" concept is new to Africa and so there is very little empirical work on this topic. This study contributes to the discussion by its exposition on the overall positive trends in Nigeria's banking sector post - crisis and the impressive growth in bank credit , GDP and the equity market after the financial crisis.

SAPPI Limited ("SAPPI") is a company that was established in South Africa in the 1930's and has grown into a global player in the paper and pulp industry, as well as the chemical cellulose industry. Historical financing decisions made in the growth phases of the company's life cycle left it with the need to refinance debt obligations payable in the early 2010's. In order to meet these obligations, four callable bonds with high coupon rates denominated in Euro and US Dollar were issued in 2011 and 2012 below investment grade. This study examines the cost at which these high yield bonds were issued by SAPPI and discusses the potential reasoning behind the decisions made by SAPPI in the process to obtain further financing. Financing solutions within the South African market are discussed with the conclusion that the South African listed high yield corporate bond market was not adequate for SAPPI, given its credit rating being below investment grade and the value of funding required. In addition, SAPPI's exposure to foreign currencies through global operations made the Euro and US Dollar denominated bond issues favourable to the business. To illustrate the cost of the bonds issued in both Euro and US Dollar, the second part of this study consists of an analysis of the option‐adjusted spreads at which these bonds were issued. Our analysis involved taking into account the probability of the call provisions being exercised by SAPPI at the date of issue through a detailed application of the option‐adjusted spread methodology and the use of a recombining binomial lattice. Through a quantitative example of the process followed and a discussion of the spreads determined, we indicate the true cost at which finance was obtained by SAPPI for each bond issued. A brief discussion on the hedging decisions taken by SAPPI management on the issuance of the debt has also been included. Furthermore, the retrospective performance of the foreign exchange hedging decisions made have been assessed through movements in global financial markets from the time hedging decisions were enacted up until 30 September 2015.

In this thesis, we study random bridges of a certain class of Lévy processes and their applications to credit risky asset pricing. In the first part, we construct the compound random bridges(CLRBs) and analyze some tools and properties that make them suitable models for information processes. We focus on the Markov property, dynamic consistency, measure changes and increment distributions. Thereafter, we consider applications in credit risky asset pricing. We generalize the information based credit risky asset pricing framework to incorporate prematurity default possibilities. Lastly we derive closed-form expressions for default trends and intensities for credit risky bonds with CLRB as the background partial information process. We obtain analytical expressions for specific CLRBs. The second part looks at application of stochastic filtering in the current information based asset pricing framework. First, we formulate credit risky asset pricing in the information-based framework as a filtering problem under incomplete information. We derive the Kalman-Bucy filter in one dimension for bridges of Lévy processes with a given finite variance.

The purpose of this study is to investigate the determinants of technical efficiency, using data envelopment analysis and the Tobit regression model, of the six largest listed South African banks for the years 2008-2018. An input-oriented intermediary constant-return-to-scale approach was followed to determine technical efficiency scores. After technical efficiency scores were obtained, a binary data set was created by assigning a score of 1 to all observations that were regarded as technical efficient, whereas all observations that were regarded as technically inefficient were assigned a score of 0. Thereafter, a Tobit regression analysis was performed to test the following hypotheses: skimping hypothesis, diversification hypothesis, bad management hypothesis and the funding hypothesis. The results of the regression analysis show that the skimping, diversification, and bad management hypotheses were not relevant for the six largest South African banks over the period under review. Regression results pointed towards the funding hypothesis being applicable to the six largest listed banks over the review period. It can therefore be suggested that the banks under review were generally well managed with a keen focus on expense control and thorough underwriting. To ensure the efficiency of large listed banks, it is proposed that regulators continue to monitor large banks as evidence of the study suggests that as deposit bases grow, a deterioration in technical efficiency is experienced. Generally, the results of the study indicate that the six large listed banks are overall relatively efficient over the review period.