2010 Early Bird Offer - 2nd person 40% discount.
If you register 8+ weeks before the course date, the 2nd person gets a 40% discount.
*Terms and conditions apply.
Course Objectives
Participants will be equipped to:
- Use a structured approach to the analysis of banks, incorporating the CAMELS framework within the wider context of the operating environment and support.
- Identify strong & weak performers using a detailed analysis of financial statements within the context of local and international accounting and business norms.
- Identify financial, qualitative and market early warning signals of credit migration.
- Stress test bank capital and ability to withstand credit, market and liquidity risk.
Target Audience
Intermediate level workshop for credit risk management, fixed income, origination and regulatory professionals. The two day Introduction to Bank Financial Statements is designed as a preparation for those with limited accounting and banking experience. The workshops Emerging Market Banks and Sovereigns and: Community & Regional Banks cover a similar analytic approach but with a focus on specific types of institution. This workshop is recommended as a preparation for our advanced level workshops: Bank Failures and Advanced Bank Analysis.
Content
ANALYTIC OVERVIEW
- Overview of the frameworks and tools of bank analysis: operating environment, financial fundamentals, management, support
- Rating agency approaches: issuer ratings, individual / financial strength and support ratings
- CAMELS (capital, assets, management, earnings, liquidity, sensitivity to market risk)
- Market perspective on credit: equity indicators, credit default swap and bond market indicators
- Purpose and payback model: a structured approach to credit analysis.
- Key issues in exposures to banks: exposure profile, seniority, safeguards, pricing.
OPERATING ENVIRONMENT
Macro economic and systemic issues
- Impact of macro economic variables on performance
- Bank systemic risk: macro prudential indicators
- Sub-prime and other drivers of credit crunch
- Competitive and structural issues of the banking system.
Regulation and supervision
- Key regulations: purpose and implementation
- Liquidity: quantitative and qualitative measures
- Capital: Basel I and II: Pillar I, II and III
- Standardised and advanced approaches
- Types of capital: core vs. hybrid; tier one, two and three
- Internal capital adequacy assessment process (ICAAP).
FINANCIAL FUNDAMENTALS
Statement logic
- Relating business mix to financial statements
- Accounting policies and disclosure: IFRS and local GAAP; fair valuation - securities, derivatives, own debt
Business risk
- Loan portfolio analysis: uncovering the risk profile of the loan portfolio; key differences between types of bank
- Loan quality: impaired loans and reserve adequacy
- Off balance sheet exposures: lending commitments, SIVs, conduits and other special purpose vehicles
- Trading risk: assessing securities and derivatives portfolios, use of value at risk (VaR) models
- Investment risk: valuation and accounting policies, hidden reserve or black hole.
Performance risk: earnings
- Balancing the risk/return profile: strategy and risk appetite
- Income stability and diversity: earnings at risk
- Control of expenses: targets and peer comparisons.
Financial risk - liquidity
- Funding risk: stability and variety of funding sources, contingency funding
- Liquidity of assets: identifying truly liquid assets, stable funding of illiquid assets
- Liquidity of liabilities: stability of deposit base, dependence on short-term wholesale funding, inter-bank market, key challenges of repo and CP funding
- Cash capital, stress testing and other tools to control liquidity risk
- Gap management: using the tenor and interest rate mismatch tables to highlight re-pricing and refinancing risk
- Securitisation vehicles: accounting and credit implications.
Financial risk - solvency
- Leverage ratios: benchmarks and challenges
- Capital adequacy: measuring size, quality and adequacy of capital base; regulatory capital ratios and assessing regulatory capital for non deposit takers
- Stress-testing capital for market and credit write-downs.
Early warning signals
- Financial and non-financial indicators of distress
- Market indicators: equity, CDS and bond indicators
- Lessons learned from failed banks
MANAGEMENT, FRANCHISE AND OWNERSHIP
- Management: strategy, systems, skills, structure
- Risk management
- Franchise - strength of banking business model
Ownership: holdcos, conglomerates, double leverage
SUPPORT
- Reliance on support: rating floors, which creditors are supported, loss absorbing capability of hybrid capital
- Solvency versus liquidity problems
- Regulatory responses to banking crisis: recapitalisation, guarantees, bad banks, insurance.
Workshop Times
Below are typical timings for our courses; upon registration we shall advise you if these have changed.
Breakfast: 8.30am Course Start: 9.00am Course End: Between 5.00pm and 5.30pm
Lunch starts between 12.30pm and 1.00pm, and lasts no longer than 1 hour. Short breaks of 10 - 15 minutes are taken mid morning and mid afternoon.
*Terms and Conditions:
This applies only to two people from the same company registering for the same course on the same dates at the same time. The on-line registration form must be submitted 8+ weeks before the course start date. This offer is only applicable to new registrations, it cannot be applied retrospectively to existing participants and no refunds will be given. It can not be used in conjunction with any other offer.