Edward BonelloEdward Bonello

Edward Bonello was awarded a distinction after following a Master’s in Financial Risk Management from the University of Reading.

Mr Bonello has been working in various risk roles within HSBC Bank both in Malta and in London over the past five years. His first degree was a BSc (Hons) in Mathematics and Statistics from the University of Malta and he also holds the FRM certificate, which is the gold standard certificate in financial risk management.

Financial risk management has grown immensely over the past 10 years, since banks are legally obliged to track and report how much capital they require to cover for various financial risks, such as market, credit and operational risks.

Moreover, due to the recent financial crisis and major changes in the financial services industry worldwide, skills in financial risk management are, more than ever, of great importance around the world and now even in Malta.

Mr Bonello’s role within HSBC Bank is to build credit risk models used to calculate probabilities of default, loss given default and exposures at default for the bank’s clients. These models are in turn used to calculate the amount of capital the bank needs to hold to cover up losses that arise from obliger defaults.

The first part of his Master’s degree included introductory courses in finance, such as financial markets, financial products and quantitative methods in finance. The second part included more specific courses directly related to financial risk management, such as market risk, credit risk and complex derivatives used in hedging.

In part fulfillment of the degree, Mr Bonello submitted a research project discussing the Merton Default model with Stochastic Volatility.

The classical Merton Default model is the first structural model based on the Black-Scholes option pricing theory. The model demonstrates that the equity of a firm can be modelled as a European call option on the firm’s assets with the strike price being equal to the value of its debt.

Mr Bonello’s degree was partially funded by the Strategic Educational Pathways Scholarship (Malta). This scholarship is part-financed by the EU – European Social Fund (ESF) under Operational Programme II – Cohesion Policy 2007-2013, Empowering People for More Jobs and a Better Quality Of Life.

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