Course Objectives
Participants will be equipped to:
- Use a structured approach, incorporating financial, qualitative and market indicators, to identify strong and weak performers
- Recognise early warning signals of credit deterioration in full and limited disclosure situations
- Understand impact of key economic, political, regulatory and supervisory issues
- Use credit analytics to identify relative value and business development opportunities
- Assess counterparty risk in order to set facilities and exposure limits.
Target Audience
Credit risk management, fixed income and banking professionals. This workshop is targeted at an intermediate level. The two day workshop 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 Intensive Bank Analysis: Community & Regional Banks cover a similar analytic approach but with a focus on specific types of institution. Other complementary workshops include Risk Management in Banks & the Capital Implications, Trading Risks in Financial Institutions and Bank Failures: Applying Lessons Learned & Early Warning Signals.
The majority of Fitch Training programmes are offered at an intermediate and advanced level. There are no specific prerequisite courses to attend our programmes, however some topic knowledge maybe required. Please refer to the target audience to see what level of prior knowledge is required for a specific course.
Case Studies
FitchTraining workshops are based around case studies and exercises designed to illustrate the analytic approach and / or specific learning points. Our case studies are chosen for relevance, topical interest and disclosure quality and are a combination of strong and weak performers. They vary according to the location of the workshop and are constantly updated, using public and market information. Case studies are subject to change without notice.
Content
Analytic Overview
- Structured approach to credit analysis - purpose payback model
- CAMEL (capital, assets, management, earnings & liquidity)
- Rating agency approaches: issuer ratings, individual / financial strength and support ratings
- Market perspective on credit - equity indicators, credit default swap and bond market indicators
Operating Environment
- Impact of macro economic variables on performance
- Sub-prime and other drivers of credit crunch
- Competitive and structural issues
- Regulation and supervision
- Basel I and II and local interpretations
Financial Fundamentals
Statement logic
- Relating business mix to balance sheet and income structure
- Accounting policies and disclosure quality: IFRS and local GAAP standards
Business risk
- Loan quality - portfolio analysis, problem loans and reserve adequacy
- Trading, investment and derivatives risk
- value at risk (VaR), stress testing and other disclosure
- Fair value accounting
Financial risk
- Funding risk - stability and variety of funding sources, contingency funding
- Gap and liquidity management
- Capital adequacy - size, quality and adequacy of capital base
- Economic capital management
Performance risk
- Balancing the risk / return profile: net interest, trading, commission, gain on sale
- Income stability and expense control
Early warning signals
- Financial and non-financial indicators
Managememt. Franchise & Ownership
Management
- Strategy, systems, skills, structure
- Risk management
Franchise
- Franchise - sources and measures
- Strength of banking business model
Ownership structure
- Bank holding companies, conglomerates, double leverage
Support
- Solvency versus liquidity problems
- Lender of last resort
Structure
- Key inter-bank exposure risks
- Ranking, collateral sub-limits and other safeguards
- Features of bank securities: senior, subordinated debt and hybrid capital; tier 1,2 and 3 capital securities
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.