The influence of globalisation on banking business is expressed, mainly, in an increasing number of mergers and acquisitions which are occurring in the banking and financial services industries. Firstly, it is the result of abolition of restrictions for foreign financial institutions’ entrance into domestic banking markets. Also, consolidation of banking capital is the result of a global crisis. Therefore, bank managers, directors and shareholders need to have a sense of the bank's value in order to make an informed decision about whether to remain independent or combine with another institution. In addition to evaluating an offer to sell, there are other instances in which institutions should know their market value. The value-based management skill is one of the main components of successful doing business today. Owners and managers should know whether their company is able to enhance value with the existing organisation structure. However, the concept of value makes sense only if it is possible to estimate it. Therefore, the problem of business valuation becomes extremely actual both for potential investors, and for owners of business. The objectives of the paper are to (i) study the experience of other countries in the area of valuation of commercial banks, (ii) identify most suitable valuation methods for application in emerging markets and (iii) develop a methodology of applying these methods to the valuation of a Latvian bank taking into account the specifics of Latvian banking sector. The publication includes description of the method of Discounted Cash flow (DCF method). The DCF methodology values a bank as the present value of the cash flows which the bank may distribute to shareholders. Thus, a valuation of a financial institution is undertaken by projecting the after tax business cash flows available to equity holders and discounting these cash flows at the cost of equity. Using this method, special attention should be paid to the following components: Cash flow forecasts. The DCF valuation is dependent on the accuracy and reliability of the forecasts used to generate the projected distributable cash flows. Various scenarios should be created in order to understand the impact on valuation of different outcomes and the value drivers which most heavily impact valuation. Distributable cash flow. The distributable cash flow is defined as the maximum amount which the bank may pay to its shareholders in any given year. The maximum distributable amount is determined by (i) the bank’s required capital ratio (capital divided by risk weighted assets); and (ii) the cash flows generated by operations. If a bank grows its risk weighted assets, it must retain at least part of its earnings to increase its capital thus reducing the distributable cash flows. Discount rate. The discount rate reflects the “riskiness” of a bank. It is the rate of return which an investor would expect from an investment into the bank. In the given paper two methods of discount rate determination are examined: Capital Assets Pricing Model (CAPM) and build-up approach (method of risk summation). Terminal Value. The bank continues to generate valuable cash flows after the end of the forecast period. These cash flows are valued as the present value of perpetuity. The authors of the given article suggest practical recommendations for bank valuation considering specificity of Latvian banking business: (1) Algorithm of valuation using DCF method; (2) Model of factors influencing projected cash flows; (3) Recommendations for calculation of discount rate are given; (4) The express method for checking the reliability of the estimated value is suggested. The following recommendations can be used in any country with undeveloped stock market, and/or in case, if company’s shares are not quoted.