kaplan financial markets · knowledge of the financial markets and banking environment is assumed....

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Kaplan Financial MarketsIn-Company Training Curriculum

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Our learning solutions are designed to solve the common issues faced by our clients. We work with you to ensure you are:

• Improving technical competence

• Driving commercial success

• Increasing your return on learning

We offer a range of tailored programmes, workshops,and masterclasses that provide a uniquely holistic, personally challenging, and professionally relevant learning experience.

All of these components are necessary and interwoven to provide a complete professional development framework for your organisation. They collectively set us apart from, and above, anyone else in the industry.

Welcome

We offer a range of tailored programmes, partnering with you to ensure you reach your business goals.

Our approach:

Understanding your business objectives and challenges

Refinement of the programme through a partnered approach

Post programme measurement

Continuous feedback to ensure we meet your aims

Implementation through a range of

delivery tools

Tools and assessments to

diagnose skills gaps

Building collaborative and customised

programme design

Continuous engagement

Find out more:www.kaplanfinancial.co.uk

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Contents

Risk and Asset Liability Management

Financial Product and Trading Knowledge

Investment Management and Private Banking

Project Finance

Trade Finance

Financial Modelling and Valuation

Credit

Reporting, Compliance and Regulatory

Financial and Business Analysis

Full Course Index

6 – 20

21 – 42

43 – 54

55 – 62

63 – 69

70 – 83

84 – 93

94 – 102

103 – 119

121 – 123

Classroom: Traditional in-country instructor led delivery.

WeBex Group: Delivered to groups of delegates situated in the same location(s). This option is suitable when groups are required to work through case studies.

Level 1: Introductory

Level 2: Intermediate

Level 3: Advanced/Specialist

Delivery Options

Definitions

Level of Content

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Risk and Asset Liability Management

Learning Pathway

Level 1

Foundation in Banking Risk An Introduction to Asset & Liability Management

Level 2

Operational Risk Management

Enterprise Risk Management

(ERM) for Corporates

Risk Management for

Managers

Market Risk management

Credit & Counterparty

Risk Management

Market, Liquidity

and Asset Liability Risk Management

Level 3

Advanced Asset and Liability Management

Value at Risk for Non-Quant Treasury & Financial Professionals

Advanced Operational Risk Management

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Delivery Options Duration

Classroom 2 days

WebEx Group Three, 3-hour Modules

OverviewFrom the Board of Directors to business line staff, it is vital for an organisation to ensure all employees have a clear understanding of the basic functions of the financial system and the management of risks assumed by their institution. As regulators and researchers develop new ways to address shortcomings in risk management tools, all individuals working in the financial profession must remain current on the issues surrounding risk and regulation.

This is a two day programme, which can be run over consecutive days or run as two one-day modules designed around globally acknowledged risk management concepts and international regulatory standards. The purpose of this course is to ensure a basic understanding of risk-related issues so that employees are better equipped to recognise problems or trends and address them appropriately. The programme will also improve your knowledge and understanding of the risk management processes from the point of view of international experience.

ContentFunctions and forms of banking

• Banks and banking • Different types of banks • Banking risk • Forces shaping the banking industry

Managing banks• Bank corporate governance • Balance sheet and income statement • Asset and liability management • Loan losses

Banking regulation• From liquidity crisis to bank panics• Foundations of bank regulation• International regulation of bank risks• Deposit insurance• The road ahead

Credit risk• Introduction to credit risk• Lenders• Borrowers• Characteristics of credit products• Types of credit products

The credit process and credit risk management• The credit process • The credit analysis process • Portfolio management • Credit risk and the Basel II Accord

Market risk• Introduction to market risk • Basics of financial instruments • Trading • Market risk measurement and management • Market risk regulation — the 1996 market

risk amendment

Operational risk• What is operational risk? • Operational risk events • Operational loss events • Operational risk management • Basel II and operational risk

Regulatory capital and supervision under Basel III• Bank regulatory capital • Basel III minimum capital requirement • Beyond regulatory capital • Banks, bank risks and regulation

Foundations in Banking Risk

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Classroom 1 day

WebEx Group Two, 3-hour Modules

OverviewThis one-day course will provide delegates with an understanding of the main activities undertaken within a bank’s treasury area including funds transfer pricing, rate risk management and liquidity risk management.

Delegates who attend the course will leave with a better understanding of the core disciplines within ALM – and how major banks address the challenge of optimising balance sheet structure in a changing regulatory world.

The instructor will run a number of exercises throughout the course with delegates working either independently or in small groups. The course does not assume any previous direct experience of ALM. Only a basic general knowledge of the financial markets and banking environment is assumed.

The following list is not restrictive, but the course is relevant for those working for commercial banks, investment banks, buy-side asset management firms, accountants, lawyers and consultants. In terms of job function, the course is suitable for those working in the following areas: Operations, middle office, finance, IT, compliance, risk, legal, analysts, and sales.

An Introduction to Asset Liability Management

ContentBank balance sheet structure• Assets on a bank balance sheet• Deposits, bonds and equity• Risk Weighted Assets (RWA) and the “Basel ratios” –

Tier 1 capital• Basel 3

Key metrics• Net interest income / Net interest margin• Return on equity and others

Funds transfer pricing (FTP) and interest rate risk• Why banks implement FTP• Using benchmark swap rates and LIBOR as a basis

for FTP rates• Net margin and business line attribution• Centralised management of interest rate risk• Hedging rate risk within the ALM unit

Liquidity risk• Lending long and funding short – a view of some

major bank balance sheets• Product behaviour – effective maturity compared

with contractual maturity• Stress scenarios and normal business conditions• Including liquidity cost within the FTP process

Basel 3 liquidity ratios• The Liquidity Coverage Ratio (LCR)• Net Stable Funding Ratio (NSFR)

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Classroom 2 days


OverviewOperational risk lies within every area of a company and impacts all a firm’s people, processes and systems as well being impacted by external events.

The Professional Risk Manager International Association (PRMIA) has developed the Operational Risk Management Certificate (ORM) covering the core knowledge and skills in operational risk.

The course does not require any previous background or experience in risk or the Basel Risk Regulations. The course is relevant for all risk related roles, processing and systems related roles and compliance roles. An awareness of operational risk is increasingly important throughout financial institutions.

ContentRisk governance• Governance• Origins of corporate governance• Risk governance and strategic planning• Risk governance principles• Risk management process• People / roles and responsibilities• Process• Risk governance developments

The risk management framework• Risk capacity• Risk appetite• An example risk appetite statement• Risk policies• Risk pricing• External partners• Risk culture• Function in risk culture

Risk assessment• Risk assessment• Risk scenarios (‘top down’)• Process models (‘bottom up’)• Operational risk issues• Actions plan• Additional risk assessment topics

Risk information• Introduction• Loss investigations• Key risk indicators (KRIs)• Framework• Risk reporting & toolsets

Insurance mitigation• Insurance mitigation• Introduction• Risk taxonomy and mapping• Qualification criteria of• Insurance mitigation• Calculation of capital relief

Risk modelling• Capital & risk pricing• Risk capital

Operational Risk Management

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Classroom 2 days


OverviewTraditionally, organisations have managed the risks of different business unit using the “silo-by-silo” approach, which refers to the groups of tall storage bins or “silos” seen on farms and used for grain storage. The various credit, market, and operational risks faced by the business units of an organisation were separately managed. This programme is designed to present the perspectives, concepts, benefits, limitations, best practice and directions inherent to the enterprise risk management (ERM) process.

ERM risks and opportunities are discussed. The roles and responsibilities of stages and players of the ERM process are detailed. Best practice for the risk response plans/strategies and risk measurement functions associated with the ERM process are presented. Risk and capital allocation and risk reports and limits at the enterprise level are discussed. The programme closes with comments on future directions and open ERM challenges.

ContentDefining the main inherent risks • Market risk• Liquidity risk• Credit risk• Operational risk

Analysing the behaviour of each risk• Comparing the behaviour of each risk• Analysing the similarities and differences• Interrelationships between the risks• Correlations• Common approaches to the management of each risk

The Enterprise Risk Management (ERM) process – perspectives and fundamentals• Banana skins: surveys of risk management slip-ups • Rationale for ERM – managing risk

interdependencies versus “silo-by-silo” approaches • Firm-wide risk categories and the components of an

effective enterprise risk management function

ERM cost/benefit tradeoffs • Risk and opportunities from an ERM perspective • Role of senior management and other players in

setting implementing erm strategic policies • ERM event identification, • Assessment / measurement / mapping

• Establishing a firm wide risk register and risk response planning

• Establishing an effective risk culture from an ERM perspective

Establishing best practice of an ERM function at different organisational levels• Policies and strategies for risk management in

an ERM context • ERM risk mapping, simple risk indicators and risk

factor sensitivities measures • Selecting and setting risk limits and factor

sensitivities for a ERM function • Capital-at-Risk (CaR) • Other risk-adjusted capital-based

performance measures • COSO-based control and monitoring in an

ERM framework • Guidelines for developing and using effective ERM

risk reporting • Basel and its impact on ERM

Applying enterprise risk management (ERM) best practices• Assess risk sinks and sources at the firm wide level

and take advantage of possible synergies • Risk communication• Reporting procedures between business units • Benefits of managing an organisation as a portfolio

of business units

Enterprise Risk Management (ERM) for Corporates

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Classroom 2 days


OverviewThe programme focus is on interpreting and implementing the risk measurement, modelling and management processes in practical settings. Delegates will gain an understanding of how to identify the fundamental notions underlying the exposures, risks, and to address the issues inherent to credit, market, and operational risk management faced by organisations and how to apply the underlying strategies to the risk management process.

This course would be suitable for Asset/Liability Managers and ALCO Members, Credit, Market and Operational Managers, Treasury and Capital Markets Managers, Central Bankers, Auditors, Market Regulators and Bank Supervisors.

ContentGetting started: identifying risks, loss events, and risk factors• Normal and extreme market events• Uncertainty• Exposures• Opportunities, risks, losses• Costs of risk

Risk-based decomposition of loss distributions – interpreting expected, unexpected and extreme losses • A historical perspective on risk

measurement techniques • Defining capital, economic risk capital,

and regulatory capital and risk-adjusted performance measures

Stages of the risk management process• Risk registers • Checklists for risk identification• Recognition / retention• Assessment, and measurement• Basic risk response techniques – acceptance

avoidance, diversification and transference• Risk mitigation, loss control, risk monitoring, risk

reports, audits and reviews

Risk measurement, modelling & management procedures• Market risk measurement, modelling &

management procedures• Identifying the influential loss categories and risk

factors for market risk• Modern approach to market risk measurement –

benefits and costs of Value-at-Risk (VaR)

Credit risk measurement, modelling & management procedures • Evaluating credit quality• Ratings and scores• Credit migration probabilities• Decomposing credit risk • Loss categories• Loss distributions• Default probabilities and correlations• Loss given default• Recovery rates• Portfolio effects • Credit-at-risk

Operational risk measurement, modelling & management procedures • Operational risk characteristics • Loss categories• Frequencies

• Severities• Drivers and triggers

• Operational risk measurement, management and control procedures

• Comparing credit, market and operational risks issues

• Risk control, setting risk limits, and risk reports • Basel accords, and their impact on credit, market

and operational regulatory risk charges• Overview of the three-pillar approach to assessing

credit, market and operational regulatory capital charges

Risk Management for Managers

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Classroom 2 days


OverviewMarket Risk Management is an intermediate level course exploring underlying market risk exposures in equities, bonds, commodities and derivatives. This course explores many aspects of market risk and applies market risk measurement tools to quantify and manage risk exposures.

Much of the technical content within this course is benchmarked to the Chartered Financial Analyst (CFA) and Financial Risk Manager (FRM) designations. The course aims to apply the concepts via exercises and case studies to consolidate knowledge and give the opportunity of learning from each other. It is not necessary to have expertise in derivatives, equities, bonds or commodities to attend this course. The course builds knowledge in the more technical areas of market risk and derivatives.

ContentOverview of market risk and return• Market risk and return objectives• Setting constraints• Risk and return appetite

Market conditions vary• Total risk, systematic risk, specific risk and

systemic risk• Normal, non-normal markets • Long term expected returns v short-term

realized returns• Economic cycles, credit cycles, shocks and

negative events• Flights to quality

Market risk measurement tools • Degrees of loss: expected losses, unexpected losses

and catastrophic losses• Exposure mapping: risk factors and correlations• Standard deviation: strengths & weaknesses• Return distributions: skewness, kurtosis,

extreme value theory• Risk sensitivities• Value at Risk (VaR)• Expected shortfall• Stress testing and scenario analysis

Market risk and equities• The IPS – defining risk and return objectives

and constraints• Risk appetite: long v short, hedged v unhedged,

instruments, markets• Passive, semi active and active approaches• Beta v alpha• Relative v absolute performance• Style specific benchmarks• Traditional v alternative investment approaches• Mean Variance Optimization (MVO)• The Capital Asset Pricing Model (CAPM)• Risk-adjusted return measures• Market risk and leverage• Market risk and correlation assumptions• Concentration risks• Emerging market risks• Consolidation case study – equities

Market risk and fixed income• Interest rate risks• Risk management using duration• Risks of embedded options• Links to credit risk• Consolidation case study – fixed income

Market Risk Management

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Market risk and commodities• Exposure to commodities• Commodity futures• Commodity markets• Case study – Metallgesllschaft

Market risk and liquidity risk • Asset v funding liquidity• Liquid markets, illiquid markets and a liquidity crisis• Factoring in liquidity to market risk measures• Liquidity stress testing and scenario analysis• Basel 3 liquidity coverage ratio & net stable

funding ratios

Market risk and operational risk• Background to operational risk• Implementation risk• Op risk and derivatives• Case study – rogue traders

Market risk and credit risk• Interconnectedness• The trading book – MBS / CDO’s• Collateral, re-margin periods, Credit valuation

adjustments (CVA’s)• Case Study – lessons from the crisis

Market risk management using derivatives (with examples)

• Equities: increasing / decreasing beta exposure• Equities: synthetically changing asset allocations• Fixed income: increasing / decreasing duration• Fixed income: synthetically changing asset allocations• Risk management using option strategies• Risk management using swaps• Risk management using credit

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Classroom 2 days


OverviewThe course explores a range of risk assessment techniques, risk management information and explores key modelling techniques of credit risk measurement. The CCRM course is designed to deliver a deep, practical understanding of credit risk analysis frameworks and how to deploy them.

The CCRM course does not require any previous background or experience. It is relevant for all risk related roles within financial services in particular Credit risk staff, Financial Controllers, Operations and Technology Managers as well as Compliance and Legal Officers.

ContentIntroduction• History of credit risk• Securitisation• Derivative products• Funding structures (e.g. repos)• The OTC derivatives market• Impact of the global financial crisis

Products, markets and contractual terms• Products

• Loans / Mortgages/ Bonds / Repos and reverse repos / Interest rate swaps / Cross currency swaps

• Markets• Contractual features

Collateral and security• Nature of collateral• Impact of collateral• Types of collateral• Collateral in derivatives

Credit exposure modelling• Definition of credit exposure• Impact of netting and collateral• Modelling credit exposure• Default probability quantification• Historical default experience• Structural models• Risk-neutral default probabilities• The credit risk premium• Banking book and trading book

Credit portfolio modelling• Default co-dependency• Expected and unexpected losses• Copula approaches• Loss distributions and securitisation• Failure of the Gaussian copula approach

Credit value adjustment (CVA)• Market and credit risk• Definition and use• Accounting• Treatment in banks• Comparison to traditional lending

Credit and counterparty risk capital requirements• Role of regulatory capital• Return on capital• Credit risk capital• CVA capital charge

Future trends• Regulation• The central clearing mandate

• The bilateral margin requirements• The leverage ratio• The net stable funding ratio (NSFR) and liquidity

coverage ratio (LCR)• The SA-CCR• The fundamental review of the trading book (FRTB)• Development of xVA

Credit and Counterparty Risk Management

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Classroom 2 days


OverviewThe course is designed to deliver a deep, practical understanding of market risk, liquidity risk and asset liability risk within financial institutions. The underlying MLARM upon which the course is based has been written by an all practitioner author team from around the globe. The MLARM course does not require any previous background or experience. It is relevant for all risk related roles within financial services in particular Market Risk staff, Treasury Staff, Financial Controllers, Technology Managers as well as Compliance and Legal Officers. The session involves a mix of trainer-led instruction, group discussions and practical consolidation exercises and quizzes.

ContentIntroduction • Typology of market risk exposures• Asset liability management• Funds transfer pricing• Industry best practices• Content of market risk section

Market risk governance and management• The post-crisis, risk-regulatory framework• True market risk governance• Committees: market risk appetite and • Market risk limits• Oroles and responsibilities in practice• Market risk limits and limit policies• Risk management systems• Risk management data• Monitoring market risk• What is the role of the audit function?• Model risk governance• Valuation in a marked-to-market• World during low liquidity• Conclusion: steps to success

Market risk measurement• Value at risk — overview• Advanced VaR models — univariate• Advanced VaR models — multivariate

Market risk in the trading books• Business-specific context• Contextual introduction to bank trading• Activities & historical development of financial

product markets• Fixed income• Fx and rates trading• Equity market trading

Commodities market risk management• Introduction• Market participants• Key products and instruments• Risk implications of physical nature of commodities• Price risk management

Market risk stress testing — beyond the VaR threshold• Introduction• Dangerous unknowns• Stress testing: static and otherwise• Beyond comparative static analysis• Systemic risk lessons from beyond finance• Moving beyond value at risk• Practical and organisational considerations• Challenges of stress testing

Market, Liquidity and Asset Liability Risk Management

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An introduction to asset liability management• Alm overview• An introduction to gaps• In focus: contagion between risk types• Banking book versus trading book• Alm objectives• Roles within alm

Interest rate risk• Overview• Components of interest rate risk• Measurement and management

Liquidity risk• Fundamentals of liquidity• Measurement and management• Recent developments

Balance sheet management• The alco• Capital management• Strategy and products• Crisis management and the

contingency funding plan

Bank funds transfer pricing (ftp)• Introduction• Ftp governance and management• Ftp methods and historical development• Other ftp challenges• Conclusion

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Classroom 2 days


ContentCommercial bank asset/liability structure• Assets • Bank book • Trading book • Liabilities and funding • Capital • Off-balance sheet instruments

Types of major risks• Credit risk • Market risk • Interest rate risk • Basis risk • Options risk • FX, equity and commodity risk • Liquidity risk • Operational, legal and reputation risk

Regulatory issues• Economic capital• The role of capital• Regulatory capital requirements for Banks

Organisation and responsibility of asset/liability management• ALCO structure – board and senior

management oversight • ALM process • Risk measurement • Risk monitoring • Internal controls

Interest rate risk measurement and modelling• Gap • Core deposit assumptions • Notional value • Present value, duration and convexity • Pvbp and dv01 • Value at Risk (VaR)

Off-balance sheet market risk management• Derivative instruments • Forwards, fras and futures • Swaps • Options • Caps, floors and collars • Balance sheet hedging strategies

Balance sheet capital management• Mortgage backed securities (MBSs) • Asset Securitisation (ABSs) • Credit Derivatives

Advanced Asset and Liability Management

OverviewThis 2-day course aims to enable treasury executives to understand the management of a treasury asset and liability portfolio. Specific areas that will be covered are gap analysis and risk identification. By the end of this programme, participants will be able to describe the characteristics and market risks of the major debt capital market products, confidently discuss credit, market and operations risk issues relating to balance sheet management.

Background knowledge about market terms and structures is assumed and a glossary can be provided prior to the course on request. This course would be suitable for but is not limited to; Management and members of Asset and Liability Committee (ALCO), Treasury executives, Treasury operations and regulatory reporting executives.

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Classroom 2 days


OverviewThe following programme is designed for bankers and other professionals involved in financial risk management who wish to deepen their understanding of the workings of Value at Risk systems. As well as to contextualize their individual roles in the corporate cultures at all functional levels of the philosophy, policies, and implementation topics which go beyond the pure mathematical models.

Participants will learn about the regulatory mandate surrounding organisational use of VaR risk control methods. Be able to function knowledgeably within a VaR management framework, know the main policy factors underlying VaR implementation, choice of methodology and understand the regulatory capital implications regarding Value at Risk.

Value at Risk for Non-Quant Treasury and Financial Professionals

Content

Introduction and objectives• Regulatory context of market risk• Risk-based capitalization under Basel• Review of balance sheet risk-weighting • Capital classification• Exercise: capitalizing risk-adjusted assets

Examination of trading risks• Trading asset classes under the 1996 amendment • Factor sensitivity for classes of instruments • Liquidity risk • Default risks

Exercise: identifying and classifying risks

Price risk and the normal distribution• Probability • Volatility • Correlation • Diversification

Exercise: mathematical verification of diversification

Parametric VaR and simulation• Assumptions • Front-office input • Back-office input • Risk management input • Correlation matrix • Liquidity’s influence • Organisational implications/separation of

responsibilities in a robust VaR environment

Exercise: simulation

Review of VaR management uses• Management reporting • Limit allocation • Profitability measurement• Regulatory capital

Exercise: allocation of regulatory capital to market risk

Problems with and alternatives to parametric VaR• Assumptions as to linearity of delta • Non-normally distributed price risk • Additional dimensions in price risk

Full-valuation VaR methodologies• Alternatives to parametric VaR• Historical valuation • Monte Carlo simulation

Keeping VaR Real• Stress-testing • Back-testing

Course summary and conclusion

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Classroom 2 days


OverviewOperational Risk lies within every area of a company and impacts all a firm’s people, processes and systems as well being impacted by external events. This practical two day course applies Operational Risk Management principles, tools and techniques to a series of case studies developed as part of the Advanced Certificate in Operational Risk (ACOR) examination in the UK.

The case study driven content is designed as a follow on to the Operational Risk Management (ORM) course and is targeted towards staff who already have some experience/knowledge in risk or work in a control environment. The course is applicable to a wide variety of operational roles from risk, compliance, operations, treasury, financial reporting ALM, IT and Management Information.

Delegates will have the opportunity to assess each case study individually and in small groups to facilitate sharing operational risk approaches and developing workable solutions. This approach triggers real life examples giving those attending the opportunity to learn and gain insights from their peers. The case studies have been designed to explore a wide range of operational risk events and to challenge those attending to develop effective KRI’s, Controls and Implementation Strategies as risk responses.

The key learning objectives of the Advanced Operational Risk Management Course builds upon and applies the theory contained within the Operational Risk Management Course (ORM):

• Gain an appreciation for the role of risk management in the post crisis financial services industry• Gain an appreciation for the role of corporate governance in an organization and of the participants, elements

and relationships within risk management governance• Gain an understanding of the different roles in risk governance and the place of reporting and the use of various

elements of a risk framework• Gain an understanding of the theory and process of risk management and the expected results from a

successful risk management process• List and discuss a set of developments in the governance of risk management, with an introduction to the area

of risk culture• Describe the elements of a risk management framework and choose the elements to implement in their

own workplace• Manage an operational risk assessment programme and apply it in their workplace• Understand how to capture, report and investigate operational risk events, how to produce meaningful Risk MI

including Key Risk Indicator (KRI) data and trend analysis, and how to implement operational risk appetite• Be able to recognize how operational risk management can assist the overall business and add value

Advanced Operational Risk Management

Content• Culture• Operational risk management process• Policy for managing operational risk• Operational risk identification• Operational risk assessment and measurement

• Operational risk mitigation• Operational risk monitoring and reporting• Causes, events and effects of operational risk• Enterprise wide risk management

Financial Product and Trading Knowledge

Learning Pathway

Level 2

Using Technical Indicators to Identify & Analyse

Trading Opportunities

Practical Pricing & Applications of FX

Derivatives

Derivatives – Pricing and Applications Further Bonds

Level 3

Distressed Securities – Valuation & Trading

Advanced Interest Rate & Currency Derivatives

Exotic Options – Strategies & Applications Securitisation

Level 1

Insiders Guide to the Global Financial

MarketsLife Cycle of a Trade

Introduction to Foreign Exchange

and Money Markets

Derivatives in Action

Introduction to Bonds and Fixed

Income

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Classroom 1 day


OverviewThis is a foundation programme covering the main aspects of the Financial Markets, including its structure and the key roles of the various market participants.

The course describes banking, the equities and debt markets, and also introduces derivatives and foreign exchange.

New employees to the financial markets would benefit from this comprehensive introductory Programme as would those people who want a wider perspective of the financial world. This would include new joiners in support functions including sales, marketing, IT and investment operations. It will also be beneficial to firms that support the financial markets including accounting firms, legal firms, consultancy firms, recruitment operations.

Insider’s Guide to the Global Financial Markets

ContentEquity markets• Role of the stock markets• Who buys equity?• Role of investment banks• The importance of asset allocation• Collective investment• Active versus passive management• Market indices• Types of shares• Investor ratios

• PER• Dividend yield• Dividend cover

• Dealing procedures• SETS (order driven)• SEAQ/NASDAQ (quote driven)• Hybrid markets

• IDBs and SBLIs• Share issues

• Rights, Scrip, Placing and introductions• Junior markets

Bond markets• What is a bond• Features of government debt• Other Government Bonds (US, Germany,

France, Japan)• Price and yield on bonds• Issue process• Strips• The importance of credit ratings• International markets

Money markets• Introduction to the money markets• Investors and issuers• CDs, CP and T Bills• Gilt repos

Foreign exchange• Size of the market• Key players• Foreign currency quotes

• Bid and offer• Spot and forward rate

Futures and options• Basics of options

• Premiums• Call• Put

• Basics of futures• Long• Short• Why they are used

• Hedging• Speculation• Arbitrage• Margin

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Classroom 1 day


OverviewThis one day session outlines the trading, settlement and operations processes used in investment banks. It links the divisions and departments involved in a trade process and provides an understanding of the key steps that combine to create the life cycle of a trade.

Life Cycle of a Trade

ContentThe secondary market and execution• Roles: analyst, sale/sales trader: obtaining and

executing the order

Soft commission• Regulatory perspective

Executing the trade• Order driven vs. Quote driven markets• Order types and characteristics

Trade and transaction reporting Settlement• Book entry transfer• Clearing houses and CSDs• The settlement process• Title: change of ownership• Payment and registration• CCP: function and benefits

Other settlement features• Stamp Duty and Stamp Duty Reserve Tax (SDRT)• Corporate actions: the payment of dividends

Derivatives settlement• The role of the clearing house• Novation• Initial margin• Variation margin• Exchange Delivery Settlement Price (EDSP)• Delivery and settlement

Custody services• Global custody• What is a custodian bank• Role of a global custodian• Corporate actions

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Classroom 1 day


OverviewThis course will give an overview of how the currency markets work and who uses them. It will introduce the trading methods and explain how money is won and lost in currency transactions.

This course will be useful to anybody involved with foreign currency and foreign currency markets. It is principally for new joiners or people working in support roles who need to have an understanding of how currency markets operate. It will also benefit joiners to asset management operations where assets are held in non-domestic currencies. Corporate Treasurers and Corporate Finance Executives dealing with cross border transactions would also find this course useful.

Introduction to Foreign Exchange and Money Markets

ContentHow is Foreign Exchange quoted?• Why is it confusing?• How are exchange rates quoted?• American and European terms• Other possible quotes• Pips and big figures• Nick names • Spot transactions• Forward Transactions

Market participants and influences on the exchange rate• Principle participants• Size of the market• Rates – what causes them to move?• Macro-economic policy and exchange rates

Triangular arbitrage between spot rates• Inferring a cross rate• Triangular arbitrage• Effect of bid-ask spreads

Forward Rates• Bid ask spreads• Premiums and discounts• Interest rate differentials

Interest rate parity• Formula• Covered IRP

Purchasing power parity and international Fisher

Foreign Exchange Options• How premiums are quoted

Swaps• Currency swaps• Motivation• FX swaps

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Classroom 1 day


OverviewA practical jargon-busting day that introduces how derivative instruments are traded, used and valued. No matter how exotic they may appear, all derivatives contracts can be reduced to the basic building blocks of the forward contract and the option contract, so this course focuses on gaining a clear understanding of the characteristics of forwards and options, together with futures (effectively standardized forward contracts) and swaps (which can be viewed as ‘bundles’ of forward contracts).

Individuals wishing to obtain a general understanding of derivative products and an insight into why they are used by the various market participants would benefit from attending this course.

Derivatives in Action

ContentForwards and futures• Basic characteristics of forward contracts• Physical settlement and NDFs• Possible underling assets (e.g. commodities,

equities, indexes, etc)• Futures – exchange-traded standardised

forward contracts• The clearing house and futures margin• What factors determine the price of a

forward/future?• Applications to hedging and speculation• Leverage

Options• Basic characteristics and exposures• Possible underling assets (including

futures contracts)• Basic option strategies and their usage

(e.g. straddles, spreads, protective puts and covered calls)

• An overview of option pricing• Interpreting the ‘Greeks’• An introduction to embedded options and

structured products

Swaps• Basic characteristics and usage:

• Interest rate swaps• Currency swaps• Equity swaps• Commodity swaps

Do derivatives threaten the stability of markets?

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Classroom 1 day


OverviewThis course looks at the predominantly focusing on money market instruments and bonds. This course outlines the basic features of bonds and fixed income market, the benefits and potential risks of investing in them and the basic yield calculations used to quantify returns. It will cover the different product types and their associated jargon. The course will also look at how they are used and how they are valued.

Those joining the debt division of major financial institutions would undoubtedly benefit from this course. Staff operating in a support function to these divisions would also find this course useful.

Introduction to Bonds and Fixed Income

Content

Fixed income• Debt versus equity• The fixed income markets• Money market instruments

• Characteristics• Types• Uses• Issue methods

Bonds • Characteristics• Types• Uses• Factors affecting valuation• Corporate versus government bond• Yield calculations and their meaning• Credit ratings

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Classroom 3 days

WebEx Group Six, 3-hour Modules

OverviewThis 3-day programme is designed to give you a full understanding of technical trading and to provide a framework for its appropriate application in the real world. The main objective of the course is to provide the tools necessary for traders to be able to identify and analyse the risk profile and trading opportunities of financial markets price trends, in order to execute and manage with high confidence trades in the markets. This course aims to refresh the theory behind a number of trading philosophies & methodologies, provide a critical analysis of the appropriateness of each of these techniques, gives insight into their real world use and present new thinking on the application of the various methodologies.

To understand and apply the theory and principles of Technical Analysis delegates should be generally familiar with equity, currency, derivatives, Bond & Money markets.

ContentAssumptions of technical analysis• Compared & complimented with

fundamental analysis • Chart construction • Dow theory restated • Analysis of the US equities market • Recent major Dow reversals

Short term bar analysis• Analysing the day and hour bar • Role of volume and ranges• Short term reversal signals

Case study: Exercise in finding turning points on daily and intra-day charts using a live data trading simulation

Long term bar analysis• Trend swing analysis • Fibonacci ratios • Trend lines • Support and resistance • Gap analysis • Volume and open interest

Case study: Working out Fibonacci ratios by magnitude and timeframe

Case study II: Real time exercise in trend swing chart construction and intra-day live data trading simulation

Chart pattern recognition• Reversal patterns • Continuation patterns • Finding patterns • Evolution of a pattern• Lessons and consequences: of dreaming up patterns

Other graphical analysis techniques• Point and figure method • Japanese candle sticks • Market profile • Point and figure: defining the support and

resistance levels• Measuring the price targets from break outs

Mathematical approaches• The single moving averages • Types of averages and models • Filters, use & abuse • Picking your favourite model – Do's and don’ts!

Trending indicators • Double & triple moving averages • Directional movement indexes

Case study: A core trading model explained and applied to a variety of markets

Using Technical Indicators to Identify and Analyse Trading Opportunities

29

Non-trending & other momentum models• RSIs, Stochastic & Bollinger Bands • Their application in different market conditions • Options strategies & volatility • Review of a trade – getting the signals right

Trading Systems & capital management• Design and construction • Criteria and system optimization • Risks of ruin • Approaches to capital management • Dynamics of trades

Case study: Group exercise of trade planning and risk management – 1 Planning stage, 2 – Actions during the trade and profit objective achievement

Esoteric theories• Gann analysis • Elliot Wave analysis • Cycles, Krondratieff, Astro, Business Cycle analysis • Doing an Actual Elliot wave count – do it – Don’t

hallucinate it!

Intermarket technical analysis• Relative strength charts • Asset allocation strategies • The link with the real world financial market trends • Identifying main market risks and how they will

impart YOUR market

Summary & Construction of Analysis & Trading Plan• Trading strategies • Further study • Questions

Overall Application to Markets• What factors cause funds to liquidate positions? • Practical trading considerations and ideas • Trading equities, interest rates, energies, soft

commodities and metals • Applying technical analysis to Asian

financial markets

30


Classroom 2 days


OverviewThis 2-day course is designed to provide participants with a comprehensive understanding of Foreign Exchange derivatives. Targeted at traders, sales specialists, client advisors, private bankers, corporate treasury professionals, and risk professionals, the programme focuses on providing participants with a practical methodology to develop an understanding of the product characteristics, market circumstances & client motivation that lead to the usage of particular FX derivatives.

Wider perspective and insight into the likely future trends of FX derivative development and opportunities.

ContentQuick review of spot FX

Forwards• Pricing • Applications • Quoting and dealing • Forward contract credit equivalent risk • Determining the forward price curve

FX Swaps• Pricing and quoting • Dealing • Various applications of FX swaps

• Tom-next• Funding synthetic FX deposits• “War-chest” for speculation

• Covered interest arbitrage funding strategy

Non-deliverable forwards• Features • Dealing and settlement • Implied off-shore Interest Rates • Directional trading using NDFs

FX option conventions, protocol, and terminology• Option P+L directionality

• Pay-off diagramming • Spot replication strategies • Hedge applications

Vanilla option combinations• Collars and risk reversals • Synthetic forward • Collar hedges • Straddles and strangles • Put and call spreads • Using option combinationsParticipants will undertake a series of exercises to re-enforce how options combinations can be used

FX option risk management• Measuring and hedging option risks • Exposure to the underlying Instrument (Delta) • Time value (Theta) • Changes in Implied Volatility (Vega) • Movement in delta (Gamma) • Interest rate risk (Rho) Simulation: Gamma and Delta-book P+L. A spreadsheet simulation of the evolution of P+L with spot action.• Garman Kohlhagen Model • Volatility definition and as a component of price • Issues with pricing Ringgit options • Other Pricing Issues

• Volatility skew and smile• Liquidity

Case study: Vega-weighted Curve Trading

Practical Pricing & Applications of FX Derivatives

31

Exotic FX options and structures• Digital options • Barrier options • Parity relationships • Static and dynamic replication • Pricing Issues that make exotics unique to

the FX market • Dual currency notes • FX range accruals • FX accumulators • Capital guaranteed FX-linked notes

32


Classroom 1 day


OverviewStaff who desire a more hands on and practical knowledge of the use of derivatives and a thorough understanding of how they are used by the various market participants.

The course assumes that delegates will already have attended the ‘Derivatives in Action’ day (or that they have a comparable level of knowledge).

We combine an examination of the principles of derivatives pricing with a more detailed examination of specific types of derivative product than was possible in the introductory course. Equations are unavoidable, at this level, but the focus throughout is on clear explanation of the underlying principles that are embedded in the formulae – at no point do we use maths more complicated that adding, subtracting, multiplying and dividing. The purpose of studying the pricing relationships is that we thereby gain a fuller understanding of the price behaviour of derivatives, and a clearer picture of how they relate to their underlying cash markets.

ContentDiscounted cash flow and present values• Discrete and continuous discounting

The no-arbitrage principle

Pricing versus valuation

Pricing and valuing forward contracts• Cost of carry• Cash and carry arbitrage• Examples of forward pricing and valuation

• Equity forward contacts• Stock index forwards• Forward rate agreements (FRAs)• Bond forwards• Currency forwards and interest rate parity

Pricing and valuing futures contracts• Similar to forwards, but margin makes a difference• Examples of futures pricing

• Stock index futures• Bond futures (including the role of the CTD)• Eurodollar futures

Options pricing• Put-Call parity

• The equivalence of protective puts and fiduciary calls

• Arbitrage trades: conversions and reversals• Discrete-time valuation: the Binomial model (Cox-

Ross-Rubinstein)• Binomial lattices• One-period pricing• Risk-free hedges and delta• Martingale probabilities• Multi-period models• Valuing American options• Binomial interest rate trees• Application to caps and floors

• Continuous-time valuation: the Black-Scholes-Merton (BSM) model• Significance of the underlying assumptions• What lognormal means• The basic BSM model• Extensions to assets paying a return (Black’s

model, and the Garman-Kohlhagen model for currencies)

Derivatives – Pricing and Applications

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Swaps pricing• The equivalence of an interest rate swap

and two bonds• The valuation of floating rate notes• Par yields and swap rates• Pricing and valuing interest rate swaps• Pricing and valuing currency and equity swaps

Introduction to swaptions• Usage and pricing

Introduction to credit derivatives• Types of credit derivatives and their usage

Introduction to exotic options and their usage• Path dependence and path independence• Average price options• Basket options• Barrier options• Bermudan options• Binary or Digital options• Exchange options

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Classroom 2 days


OverviewThis course is intended to give delegates a good understanding of bonds and money market instruments. The course starts with a description of the key features of these instruments – what they are, who uses them, and how they are traded. The variety of bond structures is explained, including topics such as securitisation. Basic yield calculations are then introduced, leading to a consideration of the relationship between risks and yields, and an explanation of the yield curve. The fundamental features of DCF are explained, as a prelude to an examination of the pricing of both bonds and money market instruments, and the relationship between expectations and the yield curve is covered. Those with a good basic grounding in the bond market but are seeking a more in depth coverage of the key industry related issues would benefit from this course.

ContentInstruments and markets• Forms of borrowing• Money market instruments

• Deposits• T-bills• Commercial paper• CDs

Bonds• Terminology• Clean and dirty prices

• Types of bond• Plain vanilla• Zero coupon• FRNs• Callable• Convertible• Index linked• Mortgage, and Asset-backed

• Bond market segments, incl. gilts• Basics of swaps and comparative advantage• Bond yield calculations

• Interest and redemption (approximate) yields• Bond risk, credit ratings, and yield• The yield curve• Compounding and discounting

• Principles and formulae• NPV• IRR and yield

• Pricing bonds• Pricing and yields for money market instruments

• T-Bills• CDs

• Realised compound yield (bond horizon return)• Spot rates and bootstrapping• Forward rates• Relationship between forward, spot, and redemption

(par) yield curves• Principles of pricing FRNs and swaps

Bond risk analysis• Sources of risk• Volatility of zero coupons• Duration• Modified duration• Duration of portfolios• Convexity• Predicting price changes using duration

and convexity

Bonds with embedded options• Callable and puttable bonds• Options refresher• Caps, floors, and collars• Analysing embedded options

• Static and option-adjusted spread

Bond portfolio management strategies• Active management

• Riding the yield curve• Bond swaps

• Passive management• Index matching, Immunisation and Cash matching

Bond currency risk

Further Bonds

36


Classroom 3 days


OverviewThe programme is a technical examination of the corporate valuation process, distressed securities markets (bank debt, bonds and equities), and an introduction to portfolio management principles. In this course, delegates will examine how the markets and securities trading work, including valuation, dealing, settlement, market conventions and terminology. How to value and evaluate distressed companies and to deconstruct financial performance of issuers through their reported financial statements.

N.B Delegates are provided with a financial calculator for this course – the HP 17BII or TI Business Consultant II.

ContentAn Overview of the corporate capital structure• Capital structure components explained • Rank/level of corporate “ownership” • Priority in case of bankruptcy

What is distressed debt?• High yield Vs. distressed Vs. defaulted

• Traditional/market definitions• Common causes of distress• Trading considerations

• Types of distressed securities• Capital Structure outline• Where to invest• How to invest• Optimal investment style and approach

• Distressed securities market participants• Sovereign wealth funds• “Vulture” funds• The role of hedge funds• Investment banks• Private-equity• Market-makers

Case studies: Movie Gallery, Mirant, Enron, WR Grace

Global distressed security analysis• US market

• Chapter 7 vs. 11• Opportunities in:

• Asia• Europe• BRICs• PIGS

• Recent supply and demand issues • Current credit concerns and impacts

• Sub-prime “crisis”• Investment bank bailouts• Commercial paper market

Investing: The re-organisation process

Restructuring the entity• In Court • Out of court (Pre-packaged) • Value leakage

Impact of financial distress• Buyers • Suppliers • Finance • Financial restatements • Transparency Issues in distress

Distressed Securities – Valuation and Trading

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Activist and passive investment strategies• Direct and indirect investment • Investing in distressed hedge funds • Capital structure arbitrage • Conflicts of interest

Case study: Activist investors – Carl Icahn, Wilbur Ross; Passive investors – Warren Buffet

Impact on Capital structure• Buyers • Suppliers • Finance • Financial restating • Transparency issues in distress

Management reporting and marking Issues

Legal and regulatory aspects

Operational issues

Distressed security valuation and trading• Valuation Considerations

• Asset Sales • EBITDA estimation • Enterprise valuation • Debt recovery • Equity valuation

• Valuing distressed securities• Bank debt • Bonds • Equity • Holding period and exit strategy

• Risk considerations• VaR estimation • Portfolio market risk models

Computer exercise (case study): Current and recent distressed issuers will be selected and participants will undertake an evaluation of their capital structure.

38


Classroom 3 days


OverviewManagement of currency and interest rate risks have once more been seen as a critical tool in today’s markets for offering a vehicle for hedging or for providing profit opportunities in difficult markets. This advanced course will provide a comprehensive analysis of Interest Rate and Currency Derivatives with focus on pricing, structuring and sales skills.

By the end of this programme, successful delegates will be able to: Advise on the use of interest rate and currency derivatives for risk control in an end user setting Understand the principles of pricing interest rate and currency. derivatives to approximate using a ‘back of an envelope calculation’ and recognise risk management strategies for interest rate and currency derivatives

ContentDerivatives overview• Derivatives as a side agreement • Common interest rate derivatives • Common foreign exchange derivatives • Derivative example: Interest rate swap

Revision of Yield Curves• Yield curves • Bond and par curves • Zero curve

Case Study: Building a zero curve: delegates will examine the process of building a zero curve from an available data set.

• Exercise: valuing using zero coupon rates • Forward curve

Case study: Building a forward curve• Interpolation methodology

Risk Measures of interest rate derivatives• Price/yield relationship for an IRS • PV01/BPV/PVBP/DV01/$Volatility/tick value • Macaulay and modified duration • Convexity

Exchange traded derivatives• Interest rate futures • Currency futures • Exchange traded options

OTC interest rate derivatives• Forward rate agreement • Interest rate swap

OTC currency derivatives• Forward foreign exchange • Cross Currency Swaps • Non-Deliverable Currency Products • Exercise: Non-Deliverable Forward Application

and Settlement

Interest rate swap pricing, hedging and application• Interest rate swap pricing • Hedging

Non-generic interest rate swap structures• Notional principal variations • Forward start swaps • Complex coupon arrangements • Basis swaps

Cross currency swap structures• Applications, concepts and pricing principles • Coupon only swaps • Principal only swaps

Interest rate options• Bond options • Swaptions • Caps, floors and collars • Greeks • Digital caps

Advanced Interest Rate and Currency Derivatives

39

Foreign exchange options• FX options • Modelling • Exercise: Managing currency risk using options • Trading FX options: OTC Vs ETO

Overview of exotic options• Exotic options • What they are, how they work and pricing principles

Asset and liability swaps• What asset and liability swaps are and how

they are used • Single currency asset swaps • Cross currency asset swaps • Exercise: Swapping a US dollar bond to Japanese yen • Creating and swapping structured debt

Packaged products• Creating packaged product • The basic product: dual currency investments • Exercise: Creating inverse and super floaters • Exercise: Creating arrears rate set floaters

Course summary and conclusion

40


Classroom 3 days


OverviewThis workshop is targeted at participants who have a strong knowledge of financial markets and working knowledge of options. The workshop has a strong practical component and will use current market exotic structured products to understand the unique risks, profit opportunities and pricing methodologies that are used in relation to exotic options. The course will use numerous local and regional examples combined with recent product innovations and trade ideas from a range of international markets. The course will also analyse various theories, models and approaches to option pricing and risk management focusing on the practical application and limitations of those theories and models and to recognise risk management strategies for interest rate and currency derivatives.

ContentExotics option products• Path dependent options

• Asian options• Average rate/strike options• Lookback options• Ladder options

Case study – Asian options

Digital options: Current market applications• Digital options • Barrier digital options • Contingent premium options • Barrier options

• Knock out / In options• Types of barriers

• One touch / Multi touch / Parisian

More exotic option products• Time Dependent options

• Forward start options• Chooser options• Cliquet options

• Multi-factor options• Compound options• Rainbow options• Quanto options

• Variations on the norm• Bermudan options• American options• Issues related to Illiquid or non-standard products

• Exotic weather derivatives • Electricity options• Ringgit options

• Modelling volatility of a pegged to unpegged exchange rate

Exotic option risk management• Hedging infinite gamma • Impact of volatility, time, price, correlation, interest

rate changes on exotics • Movement in Delta (Gamma) • Interest rate risk (Rho) • Relationship between the Greeks

• How volatility changes affect Delta and Theta• How changes in expiry effect Gamma and Rho• How changes in the underlying price

affect exposures

Exotic Option Pricing & Trading Considerations• Volatility smiles and skews • Illiquid markets • Highly volatile markets • Exotic option pricing models

• Limitations • Counterparty credit risk

Structuring exotic option products• Equity linked FX notes • Range accruals • Callable and puttable bonds • Hybrid products • Extendable and cancellable swaps

Case Study – Designing Exotic Option Products

Exotic Options – Strategies and Applications

41


Classroom 2 days


OverviewThis course will cover the principles of the securitisation market including credit enhancement. It looks at the major product groups including credit derivatives. We will also cover how securitisation issues can be analysed by looking at cash flows including prepayments, price yield behaviour and valuation issues relating to MBS and ABS instruments

This course will have a wide appeal and will be of major benefit to those working in the following areas. Primary Issuers, participants in bank loan and bond origination, syndication, sales and trading staff, investors, lawyers and support staff. Structured finance departments would find this useful in introducing the securitisation market.

ContentOverview • Basic principles• SPV and SPE• Ratings and cost of finance• Credit enhancements• Mortgage backed (pass through) securities• Agency pass through securities• Prepayments• Collateralised Mortgage Obligations• ABS – Asset Backed Securities• CBO – Collaterialised Bond Obligations• Credit risk and ABS/MBS• Securitisation in the UKThe story of Enron

Credit Derivatives• Credit Options• Binary credit options• Credit spread puts• Credit spread calls and credit forwards• Credit default swaps

Analysing – Mortgage cash flows

Prepayments• Estimating rates• Measuring rates• Effect of prepayment on MBSs• Non-constant prepayment rates• Pass-through flows• Weighted average life• Price yield behaviour• CMO

• Sequential pay tranches• Accrual bonds• Structured interest only tranches• PAC tranches (planned amortization)• Price behaviour of IOs (interest only) and POs

(principal only)• Floaters and inverse floaters

Valuing MBS and ABS• YTM• Cash flow yield• Nominal spread and Z spread• Spreads and embedded options• Option adjusted spread• Effective duration

Securitisation

Investment Management and Private Banking

Learning Pathway

Level 1

Introduction to Investment Management

Introduction to Alternative Investments

The Essential Guide to Hedge Funds

Level 2

Effective Asset Allocation for Private Banking Clients

Technical Competence for Wealth Managers

Wealth Management – Hedge Funds and Private Equity

Level 3

Fund Management Techniques Structured Investments – Suitability Based Selling

44


Classroom 1 day


OverviewFund (or Asset, or Investment) management encompasses tactical and strategic decision making, administration and performance assessment. This course will be of particular benefit to those starting within the investment management industry and those acting in a support role to the primary players in the financial services industry. It is aimed at those wanting to develop a broad understanding of the investment management industry and the role that it plays in modern financial markets including clear explanations of the theoretical concepts (such as portfolio theory).

Introduction to Investment Management

ContentThe bigger picture• What fund managers do• Researching, selecting, trading and reporting• Top down versus bottom up approaches

Importance of measuring performance• Are market efficient?• Key parameters of investment management

• Risk• Return, and• Diversification

• Active management:• Stock selection and market timing

• Passive investment• What is it and what are the benefits?

Using derivatives in fund management• What products can be used?• How are they used?

Introducing investment manager firms • Retail versus institutional• Current trends in the market• Industry drivers • Industry development, ownership and structure

The investment management process • Establishing investor objectives • Risk tolerances and investment constraints • Portfolio construction and risk management • Performance evaluation – measurement

and attribution • Portfolio monitoring and administration

Principals of portfolio construction • The importance of correlation and covariance• Diversification benefits and the efficient frontier • Strategic asset allocation • Tactical asset allocation • Indicative weightings and a stylised investment cycle • Principal asset class characteristics – expected

return and volatility (risk)

Key market operators• The dealing desk • The manager• The 'buy-side' analyst • Asset allocation committee • The trustee board & consulting actuaries

Managing an equity portfolio • Styles: Growth, income, value, technical etc • Active equity investment strategies – motivations

and characteristics • Passive equity investment strategies – motivations

and characteristics • Methods: replication, sampling, optimisation

and synthetic • Using hedge funds

45

Managing a fixed income portfolio • Styles of fixed income portfolios

• Passive investment strategies – motivations and characteristics

• Methods: Replication, sampling, optimisation and synthetic

• Active equity investment strategies – motivations and characteristics

Investment Products – An overview • Pension funds – defined benefit and contribution • Insurance funds – especially life assurance• Investment trust companies • Collective investment schemes – mutual funds, unit

trusts & OEICS• Wrappers – ISA’s and PEPs • Exchange Traded Funds (ETFs) • Private client wealth management• Hedge funds – as new asset class?

46


Classroom 2 days


OverviewThere is no doubt that alternative investments are becoming an increasingly important aspect of the investable assets landscape. Asset and portfolio managers have become aware of the fact that these alternative investments can offer attractive returns without significantly adding to the risk of their portfolio, in fact due to their correlation with conventional asset classes it can be demonstrated that they could reduce the overall risk of the portfolio. This course is suitable for anyone who is exposed to alternative investments or who is interested in learning about this important and growing sector within the global capital markets.

Introduction to Alternative Investments

ContentExchange traded funds• What are ETFs?• Advantages and risks

Property – real estate• Characteristics• Valuation of real estate

Venture capital • Stages in VC financing• Characteristics of the investment• NPV • Structure of VC firms• Role of general partner

• How this changes over the investment cycle• Importance of institutional investors to the VC market• How do VCs add value?• Dealing with conflicts of interest among

• Entrepreneur, the VC and investors• Reputation is critical in the VC market

Hedge funds• Definition of a hedge fund• Benefits and drawbacks of hedge fund investing• Leverage and unique risks• Hedge fund performance• Asset allocation and hedge funds

• Advantage of using hedge funds• Hedge fund allocation within a broader portfolio• Implied hurdle rate and hedge fund evaluation

• Managing a portfolio of hedge funds• Difficulty of defining the universe of funds• Evaluating hedge funds• Difficulties in constructing a portfolio

of hedge funds• Monitoring a portfolio of hedge funds

Private equity market• Importance of the markets• Role of private equity• Structure of private equity market

• Market structure• Structure of the firms

• The firm and its portfolio companies• Limited and general partners

Distressed debt investing• Factors that have increased the size of the market• Investment objectives• Turning distressed debt into private equity• Process for investing in distressed debt

• Converting distressed debt to private equity in a pre-packaged bankruptcy

• Use of distressed debt in a takeover• Distressed debt as an undervalued security• Distressed debt arbitrage

• Distribution of returns• Risks

Investing in commodity futures and commodity futures in a portfolio context• The nature of investing in commodities

• Event risk and return• Inflation impacts• Compare event risk impacts on commodities to

other financial assets• Characteristics of an ‘investable’ commodity

futures index• Sources of return• How can an investment manager use commodity

futures indexes• Adding commodity futures to the portfolio

48


Classroom 2 days


OverviewThe purpose of this course is to demystify the dynamic, diverse and complex world of hedge funds, where they come from, who they are, what they do and why they do it. It has proved particularly insightful to those who work within this absolute return environment and those who are drawn into servicing this new class of investors.

At the end of the course participants will be able to: Understand the difference between hedge funds and traditional funds and how hedge funds utilise the capital markets and derivative products and how hedge funds manage risk and identify and consider the major hedge fund strategies.

The Essential Guide to Hedge Funds

ContentDefining a hedge fund• Why invest in a hedge fund• Assets under management• Key differences

• Mutual funds versus hedge funds• Mutual funds versus private equity• CTA versus HFM

• Fees structures• Common mistakes of the hedge fund manager

Types of hedge fund• Long/short• Equity arbitrage• Equity pairs trading• Equity market-neutral funds• Risk Arbitrage or merger arbitrage• Event Driven strategies• Convertible bonds• Fixed-Income arbitrage• Mortgage arbitrage• Emerging markets• Distressed securities• Global macro funds• Futures funds• Fund of funds

Portfolio impacts of investing in hedge funds• Investment Techniques in the hedge fund industry

• Technical Investment Techniques• Fundamental Investment Techniques• Non-directional trading strategies• Nonparametric Investment Techniques

• Measuring the performance of hedge fund investments• Return including money weighted and time

weighted rate of returns• Calculating returns on:

• Short positions• Leveraged positions• Derivative instruments

• Measuring risk with standard deviation• Semi variance and target semi variance• CAPM• Measures of risk adjusted return including:

• Sharpe• Sortino• Roy’s safety first• Treynor• Skewness and Kurtosis• Jensen’s alpha

• Coefficient of determination versus benchmark• Other measures to compare hedge funds

• Measuring drawdown• Percent winning months• Largest monthly gains/losses• Risk of loss

49

Hedge fund risk management• Liquidity risk• Credit risk• Model risk and pricing risk• Counterparty risk• Legal risk• Manager risk• Asset class specific risk management (non-

probability dependent)• Fixed-Income management

• Duration, modified duration and convexity• Currency risk management• Equity risk management• Futures and options risk management

• Risk Models utilising probabilities• VAR• Portfolio VAR• VAR and skew

• Unique risks for hedge funds• Settlement risk• Short squeeze• Short financing risk• Ability to borrow funds

50


Classroom 2 days


OverviewThis programme examines asset allocation strategies that family office investors and private wealth managers can use in the economic environment. As private wealth managers adapt to global market turmoil, the job of consistently demonstrating risk-weighted long-term returns for high-net-worth clients has taken on greater complexity. Transitioning from outmoded investments, evaluating new opportunities, and counselling worried clients through this process require greater resources and discipline.

After completing this programme, participants will have a more practical understanding of: The impact of macro-economics on financial markets for private investors including the factors affecting the investment decisions of investors, the process of constructing a strategic asset allocation and to measure its performance.

ContentPresentation of the main asset classes• Equities/bonds

• Revision: types of bonds and equities• Valuation methods• Stock-Index: indices production, use and utility of

indices, index-weighing methods• Alternative assets • Private equity in the asset allocation decision• Private equity a distinct asset class • Long-term return patterns in private equity • Hedge fund fundamentals: Trends and popular

misconceptions• Key industry trends: Bifurcation, specialization, and

institutionalization • Opportunities and risks for hedge fund investors

Role of real assets (gold, commodities, real estate) in your portfolio• The argument in favour of real assets in the asset

allocation decision • The different real asset sectors and their current

fundamentals • Implementing a strategy that includes an allocation

to real assets

Psychological influences on investor decisions• Using (inadequate) current tools for optimising

private client portfolios • Understanding changing client needs and risks

over a lifetime • Developing a goal-oriented approach to

asset allocation

Asset allocation process• Phases: objective and constraints,

benchmark definition • Strategic asset allocation • Definition and main techniques: risk premium,

multiple scenarios • Tactical asset allocation: passive,

dynamic, insurance • Rebalancing • Derivatives in asset allocation

Performance Measurement• Measure of attribution • Sharpe, Treynor and Jensen ratios

Conclusion• Pros and cons of asset allocation • Success factors

Effective Asset Allocation for Private Banking Clients

51


Classroom 2 days


OverviewThis course presents the key technical competencies for wealth managers to effectively carry out the financial planning process. It also presents the core areas of financial planning and what is required of you in each of the core areas. The emphasis is on the practical aspects of financial planning. At the end of the course, participants will be able to: Apply the concept of time value to determine return and value investments. Understand the core areas of financial planning to construct asset allocation strategies for different individuals with their respective objectives.

Content• Time value of money concepts

• Tools and conventions • Present value of single cash flow • Future value of single cash flow • Concepts of annuities • Concepts of perpetuities • Concepts of amortization

• Practical applications of time value of money concepts

• Exercises: Time value of money calculations• Understanding and analysing the personal

financial statements• Gap analysis in financial planning• Tax planning• Debt and cash management

Case study: Cash flow and debt management

• Insurance planning

Case study: Insurance planning calculations

• Investment planning

Case study: Portfolio construction and rebalancing

• Retirement planning

Case Study: Retirement planning calculation

• Course summary and conclusion

Technical Competence for Wealth Managers

52


Classroom 2 days


OverviewThis programme is an intensive and practical training programme designed to enhance and consolidate participant’s knowledge of current wealth management processes and techniques, advice and relationship management.

This course is the second module of the series of Alternative Investment seminars and can also be taken as a standalone module on its own. If taken together, is a follow-up of the Introduction to Alternative Investments course and seeks to build on the foundation knowledge of the first seminar, but goes into greater depth in explaining and highlighting asset allocation theory and portfolio construction models. At the end of the programme, participants will walk away with a set of skills to enable them to: Fulfil the role of an advisor to the client, analyse structured products and alternative investments to formulate innovative wealth management solutions.

ContentIntroduction to private banking and wealth management• The wealth management market

• Key wealth drivers• Private banking defined• A private banking roadmap

• Clients• Key characteristics• Client segmentation• Client value management

• Organisational challenges• Managing conflicts of Interest• Compliance

• Portfolio construction • Strategic asset allocation • Tactical asset allocation

• Performance measurement and client reporting

Case studies and exercises

Asset management in private banking• The Investment process • Financial planning

• Client profiling • Identifying risk and return objectives • Writing the investment policy statement

• Global asset classes • Traditional investments• Alternative investment• Suitability for private banking clients

Investment solutions in private banking• Traditional Investments

• Equity • Fixed income• Convertibles and other hybrids

• Hedge funds • Types of hedge funds and their

investment strategies• Ways of investing in hedge funds

• Private equity • Venture funds• Buy-out funds • Ways of Investing in private equity

• Real estate investments • Commodity investments • CDO’s, derivatives and structured products

Investment solutions: case studies• Core-satellite investing • Carry trades • Investing in fixed income structured products • Strategies for protecting principal

• Principal protected notes • Constant proportion portfolio insurance

• Investing in• CDO’s and synthetic CDO’s• In Inflation-linked notes • Hedge funds and private equity• Mortgage-backed and asset-backed securities

• Outlook: The future of the wealth management industry

Wealth Management – Hedge Funds and Private Equity

53


Classroom 2 days


OverviewThis course is aimed at individuals currently working in, or supporting, the investment management function. The course is suitable for anyone who has attended 'Introduction to Investment Management' or has a relevant level of knowledge and seeks a more in depth coverage of the investment management process. Market participants working in sales will also find this course beneficial. The course will be focussed and relevant through the use of 'case study' exercises. The theoretical areas, such as DCF, Duration, and CAPM will not be shirked, but will be covered in a way which stresses 'how they work' rather than number-crunching.

ContentThe major asset classes – a reminder• Bonds

• Fixed and variable coupon• Fixed and variable maturity• Issuers: governments, corporates• Securitisation

• Equities• Equity and debt compared

• Property• Commodities• Cash/money market• Derivatives

Basic investment mathematics• Non-discounted methods

• Return on capital employed• Payback

• Discounted cash flow• Simple interest and compound interest• Compounding and discounting• Annuities and perpetuities

• Internal rate of return• IRR as yield

Bond valuation• Bond prices and yields• The yield curve• Measuring exposure to yield shifts

• Duration and Convexity

Equity valuation• How does a fund manager pick shares? • Technical analysis and fundamental analysis• Identifying value

• Cash flow valuation

• Value measures• Review the wide field of measures including;

earnings per share; Book value; Dividend yield; P/E ratio; Price/Book; Price to Cash Flow; momentum.

Macroeconomic influences• Fiscal policy• Monetary policy• Exchange rates

• Including the 'parity' relationships that link spot exchange rates to inflation rates, interest rates, and forward exchange rates.

Risk and return• Measuring risk

• Standard deviation• Sharpe measure• The market• Beta• Treynor measure• Alpha

Portfolio construction• Active versus passive approaches to

investment management• Traditional versus 'quant' approaches

• Asset allocation• Strategic and tactical

• Features of emerging markets• Stock selection• Currency overlays• Calculating returns and attribution analysis

Illustrative approaches• Theory into Practice – examining the variety of

approaches to portfolio construction.

Fund Management Techniques

54


Classroom 2 days


OverviewThe main consumers of these products have been affluent retail customers, typically referred to as private banking or wealth management clientele. Indeed the products often have compelling convenience and value-proposition, but due to the complexity and popularity, such investments have ended up in portfolios of investors ill-suited to either understand or bear the risks. This has been the downfall of investors and private bankers who recommended certain ones which have performed exceptionally weakly.

The approach is de-constructive in nature, using term sheets from recent deals. The course participants review the term-sheets with a focus on determining where the investor’s value proposition is served (if at all) and importantly in determining the risk concentrations which could turn performance negative. Typically such features include over-gearing of price directionality, short volatility positions, credit exposure or concentration or features interfering with liquidity.

By the end of this programme, successful delegates will be able to: Intuitively reduce structured investments to their component instruments to recognise fair value proposition for their clients in structured products. Avoid over-priced investments and those with high implicit concentrations of risk and leverage. Vet clients for product suitability and to reality-check risk and pay-off scenarios in common structures.

NB: Delegates are provided a financial calculator for this course. We recommend the HP 17BII or TI Business Consultant II.

ContentPrincipals of structured investments• Capital protection • Yield enhancement • Access/performance • Leverage • Structure vehicles

Case study: structured investment

Currency-linked investments• Currency-linked investments • Exotic variations

Equity-linked investments• Range binary structure • Multi-asset options • Barrier options

Tutorial on barrier option types• Accumulators

Exercise – margin trading issues regarding accumulator products

Interest rate-linked investments• Review of interest rate derivatives • Inverse floaters

Case study – target redemption and inverse floaters

Focus on range accruals• Concept and features• Target redemption with interest rates • Target redemption with equities

Case study – competitor example

Credit-linked investments• Credit-linked investments

Tutorial on credit default swaps

Exercise – Lehman mini-bond example: What lessons have been learned?

Course wrap-up

• Tying it all together

Exercise – Re-visit to first day’s case for a full de-construction of the product into its component parts, and use of this to determine risk and suitability for distribution.

Structured Investments – Suitability Based Selling

Project Finance

Learning Pathway

Level 1

Principals of Project Finance

Level 3

Advanced Project Finance

Level 2

Power Industry Project Finance Project Finance for Infrastructure Project Finance in the Oil & Gas Industry

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Principals of Project Finance


Classroom 3 days


OverviewThe modular nature of the programme will provide students with an understanding of project finance techniques followed by the development of skills in specific industry sectors such as infrastructure, power and oil & gas.

The course leader will take highly practical approach to provide you with all the tools you need including borrower/sponsor responsibilities, debt sizing, risk analysis and project finance documentation and before moving onto the specific issues relating to the financing.

The final advanced project finance module, takes students into a deeper understanding of the subject, developing and honing skills. It will also look at the monitoring and control of project finance transactions, once the initial euphoria of closing the transaction has passed.

Case studies will be used to reinforce interactive nature of the courses.

ContentWhat is project finance and discussion of the major differences from corporate finance.• Definition of project finance • Where it is used• Contrasting PF to corporate finance

Explanation of the terminology used in project finance – become an insider and learn the jargon and understand what the terms mean• Debt Service Reserve Account (“DSRA”)• Annual Debt Service Cover Ration (“ADSCR”)• Loan Life Cover Ratio (“LLCR”)

Why sponsors, countries and investors use PF• There are a myriad of reasons why PF (or PF

methodology) is used. We will examine the motivations of participants including• Modest corporate clients • Equity / infrastructure funds• Major multinational groups • Host governments

The project sponsor • The key to a successful project finance is the

experience, competence and financial strength of the project sponsor(s). The course will examine and evaluate

• The multiple roles that are expected from the project sponsors:• Financially robust • Technical competence• Project & contractor management• Relationship building – host governments,

offtakers and suppliers • The relationship between multiple sponsors

and the complimentary (and in some cases, adversarial) relationships

Project finance risk analysis – The core of project finance • Market / Offtake risk. In any transaction, a detailed

review of the underlying market dynamics is required, together with an understanding of the economic drivers of the project. Even if the project is contract based, this contract is likely to be in place for 15–20+ years and an understanding of the underlying drivers of the industry is a vital tool in managing the long-term project risks.

• Credit quality of the offtaker• The interaction between supply and

offtake contracts• Construction & technology risks. Managing the:

• Capital costs• Timing of construction• Quality and performance of the project

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• Country risks – Nationalisation, currency convertibility and transfer, civil unrest and associated perils

• Overarching infrastructure – The institutional framework under which the project is developed. This includes the:• Legal & regulatory basis of the project • The competence, experience and motivation of

government / host country staff • Ability to enforce contract law

Risk mitigation in project finance• An examination of the techniques used to mitigate

the project finance risk• Sponsor quality• Low cost projects• Transferring construction risk to EPC

contractor or sponsors• Ensuring EPC contracts are all encompassing• The role of liquidated damages• Avoiding new technology• Experienced, credit worthy contractors• Robust offtake provisions, with strong

counter parties• Controlling cashflow – during construction

and operations• Secure fuel supply and appropriate cost

pass throughs• Documentary / structural protections• Control accounts• Security

Power, infrastructure and natural resources• The key areas that drive project finance volumes• An introductory evaluation of the key industrial

sectors that use project finance and their impact on financing structures

• Greater detail is available within the industry specific course

Cashflow forecasting• Reviewing the financial model

• Is it fit for purpose and comprehensible?• Audit• Reflect the due diligence

• Challenging the assumptions that underpin the financial model

Debt sizing • How does a lender determine the debt capacity

of a project?• Cashflow volatility / risk drives the cover

ratios required• The tenor of available debt and the tenor of the

underlying offtake positions• Debt equity ratio

Documentation • A review of the structure of facility agreements• The key structural controls that differentiates PF • Control accounts • Direct agreements• Security • The inter-play between the financing documents and

the projects documents

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Power Industry Project Finance


Classroom 1 day


OverviewThis course will provide students with an understanding of the basic dynamics of generating and transmitting electrical power and a review the structure of power purchase agreements. The structure of the industry leads to a specific contract base that is required for private sector investment which will also be examined.

The Principals of Project Finance can be supplemented with a module that reviews project finance for Industry specific project finance. Modules can either be delivered:

• In combination with the Principals of Project Finance course to create a focused, industry specific course over a 3 – 5 day period.

• As a highly focused one-day course to participants that have already attended the Essentials of Project Finance course or to students that already have an established understanding of project finance.

Content• Capacity element & variable cost elements –

thermal plant• Fixed price off take and priority despatch provisions

– renewable energy • LD’s • Minimum power production provisions / fuel

contract take or pay provisions • Pass through provisions• Interconnection issues• Credit enhancement of the offtaker• Currency risks and indexation• Fuel price risks• Interface with system operator and granularity of

dispatch instruction• Termination provisions impact depending on which

party has triggered the default

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Project Finance for Infrastructure


Classroom 1 day


OverviewThis course will look at the characteristics of infrastructure financing. Different contract models will be reviewed to understand how they impact on financing and how contract or concession will drive the financing structure.

The course also examines why a market risk based transaction will support a far lower level of debt than an availability based contract and what is contained in a concession contract and how do they vary.

The course is designed as a supplement to Principals of Project Finance to review project finance for the infrastructure Industry. Modules can either be delivered:


• As a highly focused one-day course to participants that have already attended the Essentials of project finance course or to students that already have an established understanding of project finance.

ContentInfrastructure contract models • Concession contracts• BOOT / BOT contracts• PFI & PPP• Availability based payment• Tolls and other forms of user fees

Elements of infrastructure including inter-alia• Road & bridge concessions (toll and shadow toll) • Accommodation style projects • Prison & hospital • Ports & airports

Industry review• The institutional framework that underpins the host

country support• Procurement process undertaken by the

commissioning authority – Competitive tender, and Value for Money assessment

• Construction risk management – EPC contracts and sponsor pre-completion support

• Long term operation and maintenance• Availability regime• Secondary trading in Infrastructure assets

Whilst not strictly within the remit of infrastructure finance, the course can be extended industrial sectors that are based on a Regulatory Asset Base (“RAB”) such as water or electricity distribution.

• Road & bridge concessions (toll and shadow toll) • Accommodation style projects• Prison & hospital • Ports & airports

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OverviewThis course will review oil & gas financing from the development and production of oil & gas through to the wholesale refining and transportation of hydrocarbons. The range of products and structures will cover the risks associated with volatile hydrocarbon prices.

The course is designed as a supplement to Principals of Project Finance to review project finance for the infrastructure Industry. Modules can either be delivered:


• As a highly focused one-day course to participants that have already attended the Essentials of Project Finance course or to students that already have an established understanding of project finance

Project Finance in the Oil and Gas Industry


Classroom 1 day


ContentUpstream Reserve Based Lending (“RBL”)• A review of the production profile and the role of the

Independent Reservoir Consultant • What lenders will end against and where they

will push back• Capex programmes• Portfolio of producing fields vs single

asset development• Debt sizing driven by NPV of cashflow over loan life

and project life rather than using the ADSCR• Debt sizing games that borrowers and lenders play

LNG (liquefaction, LNG tankers & regasification)• LNG based transactions are some of the largest

transactions undertaken within project finance, with debt sizes of up to USD 20 billion. The structural basis of these transactions is robust and attract significant liquidity

• Whole development finance vs liquefaction plant finance and toll structure

• Sponsor dynamic• Country risk• Financing review

Refinery & petrochemicals • Refinery and petrochemical’s are driven by the

refinery margin. This is not a homogenous measure. It is driven by:• Refinery location• Access to competitive feedstocks• Refinery complexity • Strategic aspirations of host country

• What are the key contractual positions that are required to finance a refinery

• Debt capacity is driven by the expected margin in a market scenario – how much debt can the project assume

Energy infrastructure (tank farms, pipelines etc)• Oil and gas needs to be stored and transported. This

section will review:• Gas pipelines • Oil pipelines• Oil storage tank farms• LNG tankers • LNG regasification facilities• Can these assets be financed on a market risk basis

or are firm offtake contracts required

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Advance Project Finance


Classroom 2 days

WebEx Group x Two, 3-hour Modules

OverviewThis course is aimed at participants that have a strong existing base in project finance or who wish to continue their development after attending the Essentials of Project Finance Course. The Advance Project Finance Course can include the following elements.

ContentProject finance refresher• The level will be determined in

discussion with client

Cashflow model review and debt sizing exercise• Impact of debt structuring in a bid situation and

how financing can effect the tariff/ price that a bidder can offer

In depth documentation review• Project documents• Finance documents

Insurance – construction, operation & political risk

Structuring & syndication• How do sponsors and lenders handle the process of

structuring the transaction • How do sponsors and lenders handle the process of

syndicating a transaction to multiple lenders • The role of the financial advisor • Advisor to Arranger – the benefits and the pitfalls

The impact of liquidity and competition on financing structures• Liquidity and competition gives sponsors the ability

to improve the financing structure

Time to close • The process of getting to signing and then

financial close • How to plan • Do not underestimate the parallel processes and the

time delays that can occur

Project finance monitoring and control• What are the mechanics that allow monitoring and

control to be undertaken• What happens when a project goes wrong? • A case study exercise for a transaction

that went wrong

Trade Finance

Learning Pathway

Level 1

Essential of Trade Finance

Level 2

Identifying and Risks in Trade Finance

Level 3

Structured Trade Finance – Principles, Practices and Cases

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Essentials of Trade Finance


Classroom 3 days


OverviewThis 3-day intensive course has been systematically designed to provide participants with the basic techniques in Letter of Credit operations in examining L/Cs and L/C applications and avoiding discrepancies on. It will examine in detail the rules of L/C operations under the Uniform Customs & practice for Documentary Credits by the International Chambers of Commerce, Paris and other methods of payments & types of bank guarantees. Lastly, the Financing aspects for pre-shipment and post-shipment instruments will be examined, as well as how to manage key risks in international trade.

ContentLetters of Credit

Operations• Letters of Credit • Definition of an L/C

Duties & responsibilities of• Issuing/advising bank • Confirming/negotiating bank • Reimbursing bank

Types of Letters of Credits

Revocable/irrevocable • Confirmed L/C • Red-Clause L/C • Revolving L/C • Transferable L/C • Back-to-Back L/C • Standby L/C

L/C application – key terms• Shipment terms • Transport documents • Description of goods • Transhipment/partial shipments • Special conditions

L/C Negotiation• What to look out for when L/Cs are received

Shipping documentation• Drafts/invoice • Packing list • Bills of lading/air waybill • Insurance certificate • Inspection certificate • Certificate of receipt

Compliance with UCP 600• Documentation checklist

Common discrepancies• How to handle discrepancies

UCP 600 & other payment methods

Uniform Customs & practice for documentary credits• The latest revisions • Implications • Summary

Other methods of settlements• Advance payment • Open account • Collections • Letters of credit • Standby L/C

IncoTerms 2000• Exporter/importer obligations

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Guarantees• Tender bonds • Performance bonds • Retention bonds • Advance payment guarantee • Customs bond • Shipping guarantee

Legal framework• Responsibilities of banks to customers • Implication of Independence of credit from Goods • Effect of fraud on bank’s obligations under credits

Financing Of imports & exports & managing trade risks• Financing Products/Instrument• Trust receipts/bills purchase • Bills discounting • Bankers acceptance • Factoring/forfaiting • Warehouse financing • Packing credit

Risks Encountered by buyers/sellers• Performance risk • Commercial fraud • Exchange rate risk • Interest rate risk • Government regulations • Political risks • Non-acceptance risks • Transportation risk • Non-payment risk

Risks encountered in trade finance products• Collections/trust receipts • Documentary credits • Back-to-back credits • Revolving credits • Red-clause credits • Trust receipts

Measures to mitigate risks• Credit checks • Confirmed L/Cs • Export credit insurance • Marine insurance • Inspections by surveyors • Foreign exchange contracts • Bank guarantees

Course Summary & Conclusion

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OverviewThis course is the second module of the series of trade financing seminars and can also be taken as a standalone module on its own. If taken together, is a follow-up of the Trade Finance Essentials course and seeks to build on the foundation knowledge of the first seminar, but goes into greater depth in explaining and highlighting the risk areas where Exporters and Importers commonly are faced with and how to manage such risks. This course also aims to explain how the different aspects of risk and frauds that are encountered in trade finance by the banks, through actual fraud cases and how to mitigate such risks.

Identifying and Mitigating Risks in Trade Finance


Classroom 3 days


ContentOverview of international trade finance • Key risks areas in trade financing • Trade finance internal control guidelines • Risks and fraud possibilities in the different

payment terms • 20 Traps in LC operations

Identifying risks in the different types of Letters Of Credit • When do risks get transferred from sellers to

buyers (Incoterms) • Documentation used in trade financing

• Functions• UCP/ISBP 2003 requirements and relationship

to Incoterms

Import & export financing facilities• Types of import facilities• Types of export facilities

Risks faced by buyers/sellers• Performance risk• Commercial fraud• Exchange rate risk• Interest rate risk• Government/political risks• Non-acceptance risks• Transportation risk• Payment risk• Documentary risk

Risks & controls in trade financing• Risks encountered in different trade finance

products By banks

Characteristics of frauds • Parties involved in frauds • Documentary frauds • Maritime frauds • Measures to minimize frauds

• Credit checks• L/C confirmations export credit insurance• Marine insurance• Inspections by surveyors• Foreign exchange contracts• Bank guarantees

Fraud cases studies & discussions• Local LC fraud• SBLC – inside job fraud• Shipping guarantee fraud• Solo industries US300 million fraud• The blind leading the blind case

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Classroom 3 days


OverviewThis advanced trade finance programme aims at raising competencies of trade finance professionals and corporate bankers in structured trade financing. Participants will acquire the technical knowledge and global perspectives of financing mechanisms in breadth and depth so that they can be deal makers in executing complex structured trade finance transactions for their clients.

By the end of the course participants will be able to apply the knowledge of trade, risk analysis and structured trade finance techniques in structuring trade finance transactions on back-to-back deals in commodity trade financing and without recourse trade financing and combine trade financing with project financing techniques for sophisticated deals.

ContentUnlocking the secret of structured trade finance in back-to-back trade financing• Overview of trade flow and its relationship to

structured trade finance• Review of Letter of Credit (L/C) – finding the ground

rules for structured trade finance • L/C Confirmation

• Open confirmation versus “silent confirmation” • Risks to silent confirming bank

• Review of documentary collection – finding the ground rules for structured trade finance

• Classical trade finance versus structured trade finance

• Principles of export finance• Financing structures• Export Credit Agencies (ECAs)• Supplier’s credit and buyer’s credit

• Revolving L/C structure – import financing for manufacturing company

• Bankers’ acceptance financing• Concept• Structure• Flow

• Back-To-Back L/C transactions and structure• Financing middleman • Trading and commodity companies

• Structured trade finance techniques in back-to-back financing• The structure• Flow • Term sheet

• Short case study: A trading company needs structured trade finance facilities based on back-to-back L/C concept and structure

• Syndicate case study: A large trading house needs structured trade finance facilities based on back-to-back trade arrangement with underlying contracts either on documentary collections or documentary credits

Applying structured trade finance techniques in commodity trade finance• Risk analysis of commodity flow • Credit assessment techniques in structured

trade finance • Warehouse receipts financing

• Structure• Flow• Term sheet

• Flow and practice• Pre-export finance – packing credit• Red clause L/C – pre-export finance

• Flow and structure• Compensation trade• Counter-purchase

• Escrow account and clearing currency – mechanism • Tolling financing – financing self-liquidating

trade transactions involving primary processing of commodities with confirmed buyers for processed goods

• Asset-backed financing: the structure, practice, solution and flow

Structured Trade Finance – Principles, Practices and Cases

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• Off-balance sheet financing concept – without recourse financing through confirmed L/C and other forms of without recourse export financing

• Short case study: A commodity company requires packing credits as pre-export financing

• Syndicate case study: Asset-backed commodity finance required by a coal mining – commodity company

Applying Structured Trade Finance in Sophisticated Financing Structures• Funded participation through confirmed L/C and

discounting supported by commodity transactions: flow, structure and allocation of country risk

• Syndicated risk participation agreement on L/C confirmation – sharing risk scheme in trade finance

• Forfaiting – structured export financing without recourse• Concepts• Instruments used• Flow and techniques• Practices and cost of financing

• Borrowing based trade project finance• Special Purpose Companies (SPCs) for

structuring financing• Credit risk containment• Delivery risk• Market risk• Negotiation• Cost structure• In\out trade flows• Credit facility structure

• Securitization of commodities• Combining asset securitisation • Tap the capital markets for commodity

trade finance• Theory, flow and practice

• Short case study: A leading commodity company arranged to finance a shipment of commodity through funded participation on a without recourse basis

• Syndicate case study: A leading regional bunkering company needs term financing to finance the construction of two vessels amounting to US $36 million of which drawdown of the term loan is by way of documentary letter of credit

Financial Modelling and Valuation

Level 1

Analysis of Financial Statements

Excel Features for Financial Management

Introduction to Financial Maths

Valuation Toolkit

Level 2

Financial Statement Modelling and Valuation

Introduction to VBA Programming for Excel

Financial Modelling with Excel

Building a Valuation Model

Learning Pathway

Level 3

Advanced Analysis of Financial Statements

Excel Modelling for Financial Analysis: Options and Regression

Advanced Equity Analysis and Valuation

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Analysis of Financial Statements


Classroom 2 days


ContentAccounting fundamentals • Brief recap on the key financial statements and

concepts: Accounting equation, format of financial statements, accounting principles, accounting regulation and contents of published accounts

The analysis framework • Profitability measures• Liquidity measures• Efficiency measures• Business and financial risk

Tangible fixed assets • Accounting for cost • Depreciation – methods and calculation• Disposals – including profit and losses on disposal• Revaluations – impact on the accounts• Impairments – how do they get reflected in the

financial statements• Investment properties

Intangible fixed assets • Goodwill – how does it arise• Amortisation • Other intangibles

• Research & development

Working capital • Current assets and current liabilities • Calculating and analysing a company's cash

conversion cycle

Other efficiency measures• Profitability – margins • Sales growth

Basic DuPont analysis• Earnings per share• Basic and fully diluted • ROCE – Return on capital employed • Profit & loss account• Format• Segmental information• Exceptional and extraordinary items

Liabilities & provisions • Creditors • Accruals • Provisions

Contingent liabilities

Financing • Debt versus equity • Assessing financing structure • Types of share and share issues • Share buy-backs

Liquidity • Balance sheet measures

Cash flow statements

Introduction to group accounting • Group accounts • Acquisition accounting

OverviewFrom the Board of Directors to business line staff, it is vital for an organisation to ensure all employees have a clear understanding of the basic functions of the financial system and management of risks assumed by their institution. As regulators and researchers develop new ways to address shortcomings in risk management tools, all individuals working in the financial profession must remain current on the issues surrounding risk and regulation.

This is a two day programme, which can be run over consecutive days or run as two one-day modules, is designed around globally acknowledged risk management concepts and international regulatory standards. The purpose of this course is to ensure a basic understanding of risk-related issues so that employees are better equipped to recognise problems or trends and address them appropriately.

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ContentConditional functions• Nested IF() statements, COUNTA(),

COUNTIF(), SUMIF()• SUMPRODUCT()

• This is a much more powerful function than might be suspected from reading the Excel help screens and allows for highly sophisticated conditional calculations

Lookup functions• Basic lookup techniques

• VLOOKUP(), HLOOKUP()• Trapping errors via ISERROR()/IFERROR()

• Non-exact lookups into bands of values• The use of MATCH() and INDEX()• Data tables based on lookups• Dynamic charts (content of chart selected from

list by end-user)

Managing lists and tables• Sorting• Filtering• Grouping & subtotals• Forms• Introduction to PivotTables & PivotCharts

Manipulating text• Functions

• LEN(), LEFT(), RIGHT(), MID(), FIND(), SEARCH()• Examples of splitting/combining text strings

• Using the above functions• Using "text to columns"

Excel Features for Financial Management


Classroom 1 day


OverviewAnyone who wishes to move beyond a basic competence with Excel, or who wants to refresh or consolidate their existing knowledge, would benefit from the course. A basic familiarity with Excel is assumed. The majority of people who use Excel do so without having received much, if anything, in the way of formal training.

For most of us it is a matter of picking things up as we go along, which means that many of the powerful, but not particularly advanced, features of the programme go unexploited. This is a much more powerful function than might be suspected from reading the Excel help screens and allows for highly sophisticated conditional calculations. As such anyone who is involved in data manipulation

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Introduction to Financial Maths


Classroom 1 day


ContentSimple and compound interest

Compounding and discounting single sums

Present values and future values

Discount factors

Ways of quoting interest rates/yields• Discrete rates quoted on a simple basis• Discrete rates quoted on a compounded basis• Continuous rates

Dealing with annuities and perpetuities• Formulae• Calculator and spreadsheet functions

Net present value

Internal rate of return

Bond pricing and yields• The yield curve and the term structure• Pricing from spot rates• Yield to Maturity (YTM)• YTM and spot rates• Spot and forward rates

Overview of equity valuation via DCF• Discounting of dividends – with and without growth• P/E ratios as ‘concealed’ discount factors• Discounting free cash flow

Overview of property valuation via DCF• Capitalization rates• NPV valuation

Applications of DCF in financial statements analysis• Accounting for bonds• Leasing

OverviewPeople coming to the financial services industry for the first time will benefit from this course. It forms the basis of determining how financial products are priced. Good numeracy skills are critical in today’s markets and this course will help attendees to establishing a strong knowledge base in this area

All financial valuation ultimately boils down to the technique of discounted cash flow (DCF) – the idea that any instrument is worth the present value of its forecast future cash flows. Even apparently unrelated ratio-based approaches, such as P/Es as used for equities, can be shown as equivalent to discounting. This course explains the fundamental principles of DCF and demonstrates how these simple principles have been developed into a hugely powerful set of tools for the estimation of value and yields. The course will cover the use of financial calculators and will also demonstrate the range of financial math’s functions that are built in to Excel.

Note: Delegates will be provided with the Texas BAII Prof calculator

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ContentWhat factors impact on valuations?

It is not all about the numbers?

Valuation overview

Basic investment appraisal• Payback period• Return on Investment (ROI)• Case study 1

Discounted cash flow• PV of single cash flows, annuities and perpetuities• NPV• IRR• Case study 2

Changing discount rates

Yields

Application to bonds• Bond valuation • YTM/GRY• Case study 3

DCF applied to equities• DVM• DVM – two stage• Case study 4

Determining a required rate of return• Cost of capital• WACC• Case study 5

Valuation multiples• Price to earnings• Price to sales• Price to book• PEG ratio• Case study 6

Interpreting multiples

Valuation Toolkit


Classroom 2 days


OverviewThe purpose of this two day course is to introduce delegates to the valuation process. It is designed for those with no prior knowledge of valuation methodologies. It will provide participants with the basic toolkit that is required to make simple valuation estimates of financial assets especially debt and equity. The course has a number of case studies embedded into to the content to ensure the course has a significant practical basis.

Anybody requiring an understanding of valuation tools will benefit from this course. This will include equity analysts, fixed income analysts, those working in corporate finance. It would also provide useful tools and techniques for those joining the private equity market or looking to value assets for hedge funds.

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ContentIntroduction to modelling and income statement modelling • Worked example: Income statement modelling • Overview: Uses of financial statement models; Brief

recap of meaning of each if income Statement, balance sheet, cash flow statement

• Typical approaches and methodology: Drivers, policy decisions and balancing items; methods for projection of income statement items; Methods for projection of balance sheet items; Alternative modelling approaches (introduction); dealing with inflation: nominal and real values; use of named ranges; dealing with circular references

• Introduction to modelling: Objectives of financial models; best practice modelling principles (overview); basic sensitivity analysis (introduction)

Modelling the balance sheet and cash flow statement • Worked example (cont'd): Balancing the Balance

Sheet; Structure of Cash Flow Statement (reminder); Basic reconciliation items (indirect format)

Further analysis of forecast statements, and modelling possibilities • Basic ratio analysis, key measures and

feasibility checks • Refinement and adjustment possibilities:

Alternatives for modelling depreciation tax and selected other issues

Introduction to cash flow valuation • Sensitivity analysis • Worked example (cont'd) • Introduction: Overview of valuation methods

and their relative merits; Principles of cash flow valuation; Recap of key concepts: target financing structure, capital asset pricing model (CAPM), cost of capital (WACC), and discounted cash flow (DCF); Alternative terminal value assumptions (introduction)


Classroom 1 day


Financial Statement Modelling and Valuation

OverviewThe purpose of this one day course is to give individuals who work in investment/commercial banks, asset management firms, consultancies, corporate and project finance firms, private equity and hedge funds, who are required to produce financial statements in Excel, the necessary skills needed to carry out this essential task. The course would be especially beneficial to equity analysts who are building valuation models as well as corporate finance individuals looking to value a potential acquisition or price an IPO

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ContentGetting started• Launching the VBA editor• Inserting and renaming modules• Creating subroutines• Objects, methods and properties

Working with cells• Changing cell values• Changing fonts and backgrounds• Applying multiple actions to the same range using

With statement• Selecting, copying and deleting cells,

rows and columns• Working with dynamic ranges• Adjusting column widths to fit data• Using the Find method to search a range for a

specific string

Working with worksheets• Selecting single and multiple worksheets• Adding, copying, deleting, moving,

renaming worksheets• Hiding and unhiding worksheets

Working with variables• Non-declared variables• Explicitly declared variables and their advantages• Data types• Variable scope• Object variables• Constants

• Logical Tests• If...then...else statement• Select case statement

Working with loops• For...next statement• For...each...next statement• Do...while statement• Do...until statement

Working with functions• Calling functions• Creating parameters• Optional parameters

Working with arrays• Static arrays• Two-dimensional arrays• Dynamic arrays

Handling run-time errors• Using If statement to catch errors• Using on error statement to catch errors

Events• Accessing object events• Workbook and worksheet events


Classroom 1 day


Introduction to VBA Programming for Excel

OverviewVisual Basic for Applications (VBA) is a programming language that allows users to automate repetitive operations or tasks that they perform frequently in Excel. It allows users to create custom procedures to carry out operations that would otherwise be extremely time-consuming to perform with Excel alone.

This one-day introductory course is aimed at delegates with no prior programming knowledge who use Excel at work and would like to achieve greater Excel flexibility that comes with VBA programming. The course will take users through a variety of simple examples to illustrate each concept and build sufficient foundational knowledge for users to be able to continue improving their VBA skills independently.

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Financial Modelling with Excel

OverviewThe purpose of this course is to give individuals an enhanced understanding of, and exposure to, a wide variety of Excel functions useful in financial modelling applications.

This course is essential for anybody seeking to produce financial models in excel. It will prove invaluable to people in investment and commercial banks, asset management firms, consultancies, and corporates who build financial models in Excel.

At the end of the course delegates will be able to be able to build financial models based on best practice modelling principles. Achieve a better understanding of key issues arising when building financial models, and the modelling options available and to conduct a variety of sensitivity and scenario analyses

ContentFoundations of modelling (I): • Modelling best practices • Core principles demonstrated using a hands on

modelling example • Common errors and simple improvements • Sensitivity, scenario and variance analysis: Data

Tables for sensitivity analysis; Using INDEX function to create scenarios; Variance analysis using scenarios

Foundations of modelling (II) • Improving speed with short-cuts • Finding and using links between workbooks • Use of named ranges • Dealing with circular references • Auditing an existing model: key process

steps and tools • Finding model inputs

Review of key Excel functions (I) (examples and self-worked exercises) • Look-up functions (e.g. MID, EXACT, UPPER etc) • Statistics functions (e.g. VAR, STDEV,

CORREL, Regression) • Self-worked exercises • Brief review of "core" functions for

financial modelling

Review of key Excel functions (II) (examples and self-worked exercises) • Further self-worked exercises • Further Excel capabilities (time permitting)

e.g.: Updating labels for cells and graph titles; Goal Seek and Solver; Introduction to array functions; Protecting models, conditional and custom formatting

• Database functions (reporting, filtering, and Pivot Tables)

• Text functions (e.g. MID, EXACT, UPPER etc)


Classroom 1 day


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OverviewA course very specifically designed for participants who are required to produce valuation models for equity investments and would be very pertinent to the corporate finance industry. This course will introduce the key building blocks required to develop a financial spreadsheet modelling a company’s performance and value. The course will bridge the gap between theory and practice by giving delegates a simple but comprehensive model to build.

ContentValuation overview • Why is valuation important?• Factors driving the value of companies• Valuation myths debunked• Enterprise value

• The principle• Detailed elements• Examples

• Alternative valuation approaches• Multiples• Cash-flow methods

• Valuation scenarios• Trading valuation• Take out valuation

Overview of the DCF methodology• Free cash flow valuation• Estimating growth rates• Forecasting future free cash flows• Terminal value calculations• Calculating free cash flow from EBIT• Which discount rate?

Cost of capital and DCF modelling • WACC

• The significance of risk• Cost of debt• Cost of equity• CAPM and beta, the problem of the equity

market risk premium• The effect of differing capital structures• Approaches to estimating the terminal value (the

forecast value of the business at the end of the explicit forecast period)

• Problems/shortcomings of DCF• An Excel model for financial modelling.• Interlinked forecast financial

statements including:• Profit and loss• Balance sheet• Cash flow• A WACC calculator• A free cash flow valuation

Key ratios• Profitability• DuPont• Momentum• Productivity• Value – enterprise and equity• Enterprise and equity-based multiples

• EV/Sales• EV/EBITDA• EV/EBITA• EV/EBIT• EV/FCF• P/E


Classroom 2 days


Building a Valuation Model

79

Contribution and financial effects• Contribution analysis

• What is it?• What inputs are necessary?• Methodology and worked example• We will deal with:

• Currency issues• Calendarisation• Likely accounting differences• Calculating relative contributions to the

combined group• Estimating a value for the combined companies

and hence the acquisition• Synergies• Financial effects analysis

• The impact of financing the deal on EPS (dilution versus enhancement)

• We will do some sensitivity of EPS to, for example:• Debt to equity ratio• Premium paid for the equity (above current

market price)• Construct a combined Pro-forma income statement

and calculate measures such as:• EBITDA interest cover• Combined EPS• Sensitivity analysis

• Review of excel functions• Table – good for sensitivity• Conditional formatting – good for

presenting results• Goal seek – again sensitivity

80

OverviewThis one day course is designed to build upon the two day introductory course (Analysis of Financial Statements), the content of which is a prerequisite for attending this programme. It focuses on more complex aspects of the financial statements, it will allow delegates to more deeply analyse a company’s performance and financial standing. These more complex accounting areas will also allow a more thorough assessment of potential risks facing the business

This course is designed for those seeking to understand the accounts in more depth. Equity and Corporate Finance analysts would find it incredibly beneficial. Those analysing accounts from a lending or credit risk perspective would benefit.

ContentGroup accounting • Subsidiaries • Associates • Joint ventures

Foreign exchanges issues• Temporal method• Current rate method

Corporation tax • UK corporate tax regime • Deferred taxation • Identifying and analysing a company's

effective tax rate • Impact of overseas taxation

Off-balance sheet financing • Operating leases • Other off-balance sheet financing arrangements

Revenue recognition• Long-term contracts

Employee benefits • Pension costs • Share options

Financial Instruments • Accounting for debt and equity • Financial assets & liabilities • Derivatives & hedging

Advanced Analysis of Financial Statements


Classroom 1 day


81

Excel Modelling for Financial Analysis: Options and Regression

OverviewThis course looks at two major areas of financial analysis – Options analysis and linear regression analysis – through the lens of Excel. It links theory and practice in an extremely useful way, and introduces new Excel techniques and functions as practical solutions to computational needs. This one day course is designed to build upon the one day intermediate course (Financial Modelling with Excel) or can be taken as a standalone course for anyone who is proficient with financial modelling in Excel.

ContentOptions analysis• The terminology of options• Moneyness & payoffs (intrinsic value)• Profits and losses• Valuation via the Black-Scholes model and

put-call parity• Excel features to be used include IF(), data

validation, Data tables, charts, goal seek and solver

2-variable regression analysis• Scatter plots and trend lines• Excel functions

• INTERCEPT(), SLOPE(), COVAR(), CORREL(), RSQ(), STDEVP(), STDEV(), FORECAST()

• The regression add-in• ANOVA tables

Multiple regression• Excel functions

• LINEST(), TREND()


Classroom 1 day


82


Classroom 3 days


OverviewThis programme trains equity analysts, corporate financiers, investors and fund managers to understand, value and forecast a business using modern cash flow multiples and ratio analysis as well as all aspects of fundamental valuation including free cash flow and EVA approaches. It also explains CFROI (cash flow return on equity), including the assumptions, methodologies, advantages and disadvantages of the technique. It builds on the concepts introduced in the Business Valuations course.

The course objective is to explain and apply classic and modern approaches to equity analysis and valuation to search for the true value creation potential of companies. The emphasis throughout the course is on the practical application of existing theories and many well-known texts.

This course is a good addition to ‘Valuation Toolkit’. This course should be considered by anyone seeking to build a fuller understanding of equity analysis and valuation techniques that are applied within the financial markets community

ContentIntroduction to advanced valuation• Focus on key value drivers covering sales growth,

margins, efficient use of capital and cost of capital

Standard Equity valuation ratios• EPS, PER, Forecast PER, Relative PER, PEG, Price to

book and sales

Contemporary measures – Enterprise value• Calculation• Dealing with tricky areas

• Minorities• Associates• OBSF (Off Balance Sheet Finance)

Assessing company performance• Return on capital employed• Core and non-core returns• Du Pont analysis• Key multiples

• EV based• Tobins Q

Weaknesses of traditional return measures• Problems in measuring earnings• Weaknesses of EPS

Focusing on shareholder value• Value creation • Value drivers

Measuring economic performance• Economic returns – ROIC• NOPAT• Invested capital• Adjustments covered include

• Capitalization and amortization of R&D• Capitalisation of operating leases• Dilution issues• Treatment of goodwill• Treatment of provisions

Advanced Equity Analysis and Valuation

83

Market value added

Spread measures• VCQ

Fundamental valuation• CAP and Fade• Sensitivity analysis

Valuation using Free cash flow• Definition• Methodology• Calculation of terminal value• Importance of the terminal value

Valuation using EVA

Cost of capital and WACC• CAPM• Equity Risk Premium• Risk free rates• Currency considerations• Impacts of gearing

ROIC-WACC spread• Methodology• Interpretation

Relationship to MVA

Relating spread to growth expectations

Identifying company types• Value adding – aggressive• Value adding – conservative• Value neutral• Value destroying

Using current market valuations to identify a growth rate

The importance of sensitivity analysis including:• Growth assumptions• Cost of capital estimates• CAP periods• Margin expectations• Asset turnover levels

CFROI• Holt’s CFROI• Calculating CFROI• CFROI and valuation

Learning Pathway

Credit

Level 1

Credit Risk Management – Credit Monitoring

Level 2

Effective Cash Flow Lending

Loan Syndication – A Practical Approach

Credit Risk Management – Structuring Term Lending & Capital

Expenditure Financing

Credit Risk Management – Structuring Working

Capital Financing

Level 3

Effective Credit Monitoring to Minimise Non Performing Loans

Advanced Corporate Credit Analysis & Debt Restructuring

85

Credit Risk Management – Credit Monitoring


Classroom 3 days


ContentManaging & monitoring the loan portfolio• Monitoring the utilisation of facilities • Maintaining communication with borrowers • Monitoring of account/periodic review • Collateral and documentation review • Identification of warning signs

Sources of Information available• Monitoring of internal exception reports/

past due reports • Keeping track of external information • The borrower’s financial and management

accounting and site visit

Causes of Credit Deterioration & remedies• Possible delinquent loan situations• Lenders contribution to delinquent loans• Common causes of business failures • Danger signs of red flags • Management weaknesses • Technical and commercial problems • Financial problems • Creative accounting

OverviewThis 3-day fundamental programme will enable delegates to manage loans effectively by focusing on risk and opportunities identified in the underwriting process and supported by loan documentation. Delegates will learn how to protect credit quality by recognising and responding to early warning signals and will learn how to evaluate and choose the best options of resolving a weak credit and exploiting a good credit. Understanding the loan workout and causes of loan failures and implementing practical solutions or resuscitation.

86

ContentUnderstanding the roots of cash flows• Operational or revenue cash flows using

operating cycle • Day to day trading cash flows • Effects of working capital on cash flows

• Capital or non-revenue cash flows using capital investment cycle

Effects of Investment/Divestment strategies on cash flows • Effects of financing decision on cash flows • Misconceptions of current & quick ratios as

liquidity ratios • Short term solvency ratios Vs liquidity • 3 pillars in assessing cash flows • Assessing cash flow in credit evaluation in a

credit initiation• Review of balance sheet & profit & loss analysis• Practical analysis of cash flow statement

Implications of Operating Activities • Implications of investing or strategic activities • Implications of financing activities

• Troubleshooting with cash flow statement

Case study: Emphasizing on how cash flow statement analysis enable lenders

Assessing Cash flows in loan structuring• Distinguishing a business’ short term cash needs Vs

long term cash needs• Cash flow justification on ability to repay• Use of cash flow projections to assess debt servicing

ability in structuring

Case Study: Ensuring that structuring considers the cash flow generating ability of the business in order to structure the tenor appropriately

Assessing cash flows in credit monitoring• Practical quick projection of cash flow in

annual reviews• Using cash flow to restructure to avoid default

Case study: To show how cash flow projection can be used to assess whether the business is expected to face potential cash flow problems in annual reviews & recommend appropriate preventive actions

Assessing cash flows in managing non-performing• Generic increasing cash inflows & reducing cash

outflows strategies • Business restructuring • Debt restructuring • Asset stripping

• Projecting cash flows incorporating proposed workout solutions

Case study: To show how cash flow projections can be used to assess the workability of proposed solutions


Classroom 3 days


Effective Cash Flow Lending

OverviewThis intermediate 3-day course looks at one of the most important aspect in lending. Assessing cash flow is an absolutely critical step throughout the entire credit process although it is not the only area of analysis in any credit. Cash flow must be assessed from credit evaluation in a credit initiation, loan structuring, and loan monitoring as well as managing a non-performing loan. Participants will be introduced to ways of assessing cash flow effectively in lending throughout the entire credit process.

At the end of the programme, participants will be able to: Appreciate the roots of cash flows including the revenue cash flows & non-revenue Cash flows. Correct the misconception of using current & quick ratios to assess cash flows and distinguish between short term solvency & liquidity.

87

Loan Syndication – A Practical Approach

OverviewThis 3-day programme covers the key areas of loan syndication process. Intensive training programme is designed to enhance and consolidate participant’s knowledge in the loan syndication market with practical considerations. Participants will be able to describe the various roles & responsibilities of the different participants in the syndication. Common types of syndicated facilities, term sheet & cost analysis, usefulness of LMA & secondary market in syndicated lending.

ContentOverview & background of the loan syndication market • Types of syndicated facilities

• Credit process• Types of credit facilities: term loans, working

capital, trade facility, project finance, etc• Additional features – transferability, multi currency

• Different roles of a syndication• Arranger, lead bank & participating bank• Roles & responsibilities• Relationship between borrower & banks• Fees & fair reward• Principles of allocation

• Term Sheet & cost analysis• Structuring a term sheet• Sample term sheet• All-in cost analysis

Pre-mandate phase• Identifying borrower's needs• Pricing the transaction• Negotiations with borrower• Issues in seeking approval

Post-mandate phase• Preparation of information memorandum• Instructing counsel• Book running• Negotiations with borrower• Signing

Post signing phase• After sales service• Loan administration• Portfolio management

Documentation• Problems with flexible structures• Drawdown period• Fee structures• Jurisdictional issues• Conditions precedent• Representations & warranties• Covenants• Material adverse change• Pari Passu provisions• Remedies for breaches

Secondary market• Transfer techniques• Loan market association

Case discussion


Classroom 3 day


88

ContentWhat is capital expenditure financing or asset based lending? • Key differences: Pawnshop Lending Vs asset

based lending• Physical control over collateral• Certainty of value of collateral• Quantum of financing

Determining the quantum of financing• Rationale of bank’s policy• Overall gearing position of borrower

Attributes of a quality asset financed • Proper collateralisation in asset based lending • Types of asset based lending

• Operational asset based lending• Productive asset based lending• Investment asset based lending

Method of capital expenditure financing or asset based lending: Term lending• Term loan including term revolving credit• Hire purchase• Financial lease • Respective 1st way out & credit considerations for

each type of asset based lending • Key areas of analysis in term lending

Use of cash flow projections• Distinction between cash flow & accounting profits • Methods of cash flow projection

• Detailed cash flow method – direct & indirect• Cash profit method

• Assessing debt servicing ratio • Structuring appropriate loan tenor

Understanding the concept of time value of money & its applications in credit• Future value of single cash flow: Capital

growth concept• Present value of single cash flow• Future value of annuities• Present value of annuities• Perpetuities• Amortisation• Applications of TVM concept in credit

Determining the appropriate methods of financing• Documentation costs• Effects of tax benefits


Classroom 2 days


Credit Risk Management – Structuring Term Lending and Capital Expenditure Financing

OverviewIn most businesses, fixed assets or capital expenditure may be required to support their daily operating cycles. It is important to appreciate where companies can source money to invest. Generally, the first line of defence would be their available cash as well as capital injection by the shareholders if possible. However, if these sources are insufficient then the banks can step in to finance the acquisition provided the companies are assessed to be able to service the loans that are structured to assist them in the asset acquisition. It is therefore imperative for bankers to appreciate how to structure such loans, how to justify the loans & how to assess such credit applications.

At the end of the programme, participants will be able to: Distinguish between asset based lending & pawnshop lending. Appreciate how quantum of financing is determined and the key credit considerations for the respective types of asset based lending and collateralise in protecting the bank’s interest in the asset financed. Project a borrower’s cash flow in assessing the ability to service and apply the time value of money concept in structuring.

89

Credit Risk Management – Structuring Working Capital Financing

OverviewWorking capital is probably the most used terminology in credit. It is often the purpose for which borrowers approach the banks. However, most bankers do not really have a good understanding of what working capital is. They simply attribute the loan purpose to be working capital related as it is a conveniently accepted purpose. It is critical for bankers to have a proper understanding of what is working capital so as to be able to suggest solution that enable the bank to properly mitigate the risks involved.

At the end of the programme, participants will be able to: Appreciate the rationale for structuring appropriately including risks & opportunities to the bank for the respective methods of payments. Distinguish between facilitating (or non-cash) & financing (or cash) needs of the borrowers and apply the concept of target utilisation rate & target share of business in structuring.

ContentConcept of facility structuring• Understanding from customers’ perspectives• Appropriate bank’s responses

Process of facility structuring• Understanding customers’ needs• Matching customers’ needs with banks’

products & services

Relating the operating cycle to business’ working capital & trade finance needs • Rectifying misconceptions about working capital • Computation of net working capital requirement • Methods of payments in International trade:

Relevant credit aspects• Cash terms• Documentary credits• Documentary collections• Open Account• Consignment• Risks & opportunities to the bank

Structuring appropriate trade finance facilities • Understanding & determining business’ cash needs • Import vs export lines • Overdraft requirement for financing value added

Understanding & determining business’ non cash needs• Letters of credit• Shipping guarantee• Banker guarantee• Foreign exchange

Determining appropriate tenor of financing to avoid double financing • Concept of target utilisation rate in structuring • Concept of target share of business in structuring


Classroom 2 day


90

OverviewIt is important for bankers to realise that credit does not end with disbursement of the loan or activation of the facilities. After the birth of each credit, it has to be monitored effectively to ensure that the bank is able to detect early signs of credit deteriorations. Often, it is misconceived that the quality of a credit relationship is only deteriorating when it starts to default on the obligations. This course will enable the participants to learn how to recognise credit deterioration even when the conduct of account is satisfactory.

At the end of the programme, participants will be able to: Appreciate the components of a good credit system & the required catalyst to make the system effective, effectively monitor the ongoing cash flows, profitability & relationships of the borrower to identify any signs of credit deterioration. Understand the embedded assumptions made at credit birth & how these are critical risk points to assess in credit monitoring.

ContentReview Credit Process or System• Good vs effective credit system• Components of a good system• Catalyst for an effective system

Understanding the embedded assumptions when credit is birth

Post disbursement or activation monitoring

• Critical risk points to assess in credit monitoring

Key areas to monitor to identify signs of credit deterioration• On going liquidity or cash flows of the business• On going profitability of the business• On going relationships of the business

Business' dynamics affecting its daily cash needs• Determining a business' networking capital or

daily cash needs• Dynamics that cause changes in daily cash needs• Circumstances of changes in business' dynamics• Effects of changes in business' dynamics• Communication of changes in business' dynamics• Signs of overtrading• Use of projected cash flow statement in

credit monitoring

Business' dynamics affecting its profitability• Basic terminologies• Examine effects of changes in volume, costs & price

on profitability• Determine breakeven or desired profit positions• Importance of sales mix

Implications of various generic strategies in profitability management

Effective Credit Monitoring to Minimise Non Performing Loans


Classroom 3 days


91

Advanced Corporate Credit Analysis and Debt Restructuring

OverviewThe training programme will be divided into two intensive workshop sessions of a day and half each, focusing on the key skills required for core corporate credit analysis and debt restructuring, respectively. In meeting its overall objectives, the workshop will address the specific areas of core corporate credit analysis that analysts will need to focus upon in analysing a potential corporate client before providing loan financing as well as in restructuring problem loans in a continuingly volatile corporate environment.

The programme draws primarily on the direct credit analysis and debt restructuring experience of the trainer throughout his 20 year banking career in emerging markets in Central Eastern Europe and the CIS. The learning techniques will be a mixture of formal presentations, written materials, assignments and case studies with a heavy emphasis on learning through analysing practical examples of corporate loan candidates.

ContentFundamental concepts in corporate credit analysis• Fundamentals principals in credit analysis• Identifying the principal source of debt repayment• Why the analysis focuses on cash flow• Three fundamental questions in assessing a client

company’s credit risk• The damage caused by loan foreclosure• Introduction to the credit analysis process• Identification of practical factors concerning

credit analysis of publicly and privately and family run corporates

• The importance of identifying the company’s Critical success factors and its exploits market opportunities successfully

• Fundamental concepts in Bank risk and return and to need to identify and mitigate risk

• Using SWOT analysis in credit analysis to create a clear view

Case study: The delegates will undertake a credit risk analysis of a private road and infrastructure contractor, using SWOT analysis

Identifying principal corporate risks and implementing strategies to mitigate credit risk• Introduction to different risks in emerging markets

and Southern Africa • Credit risk, business risk, operating risk,

management risk • Risk identification in developing markets• Risk profiling• Risk mitigation through different strategies• The use of the TARA model• Risks associated with restructuring SME’s• Dealing with risk exposure and mitigating bank risk

Case study: The delegates will undertake a credit risk analysis of a private construction industry supply company with global operations using the structured risk assessment and mitigation model covered in the session.


Classroom 3 days


92

Assessing internal financial risks in corporate credit risk analysis and fundamental concepts in quantitative analysis• Developing underlying assumptions of

quantitative analysis• Trend analysis and the importance of identifying the

trend in credit risk analysis;• Limitations in relying exclusively on company

accounts and the importance of identifying the issues in the detail;

• The limitations of financial reporting in credit analysis of privately run companies and how to read the financial and business ‘picture’ without reliably audited IFRS accounts

• Techniques in dealing with regional management and private / family run companies in developing markets

• Spotting off balance sheet items that will affect company risk profiles

• Spotting ongoing capital expenditure needs and identifying methods of financing

• Identifying potential corporate failure• The use of Z scores and A scores

Workshop: Delegates in groups will undertake and present a quantitative analysis of a company and assess the financial strength and weaknesses. Delegates will separate into the project groups and present their findings to the rest of the class acting as a mock credit committee.

Fundamental concepts in qualitative analysis in corporate credit analysis• Understanding the ‘big picture’ and potential pitfalls

for the company• Understanding a client’s general

business environment• The application of the PESTEL model

• Understanding the company’s SWOT• Assessing the competitive forces at work in a client’s

company’s industry with a view to understanding its ability to make profits• Application of Porter’s five forces

• The assessment of the strength of a company’s product and service portfolio and its chances of survival as a going concern• Product life cycle • Portfolio analysis using the BCG matrix

Workshop: Delegates in groups to undertake and present a qualitative analysis of a major corporate and the external and market challenges that it faces in a volatile business environment.

Concepts in structuring a new debt facility and creating a term sheet from a legal perspective. • Corporate structures suited to different types of

debt financing• Use of SPV’s in project financing• Parent guarantees• Use of escrow and other dedicated cash flow

accounts to ring fence repayment• Loan to Value and asset security• Assessing the loan documentation and identifying

financial covenants and conditions precedent to provide protection

• Creation of affirmative and negative pledges to reduce bank risk

Case study: Using a case study the delegates will identify undertake a qualitative and quantitative credit risk analysis of the company and structure a loan facility for the company including a term sheet of the principal control factors, covenants and pledges that will be required in protecting the bank’s exposure going forward.

Introduction to the fundamental principles of debt restructuring• Fundamentals principals in debt restructuring• Principal issues posed by non-performing loans• Introduction to the 10 point plan of debt

restructuring in developing markets• The challenges of name lending and restructuring in

developing markets• Assessing the fundamental impact on the bank of

non-performing loans• Impact on the client• Impact on shareholders and stakeholders• Loan foreclosure versus debt restructuring and

problems posed by name lending;• The importance of immediate action and the

risks of inaction• Organising the action committee• Managing internal relations at bank level• Overview of the debt restructuring process

Problem loan and restructuring workshop

93

Identifying problem loans before they turn bad – the early warning signals. • Understanding macro economic factors

affecting the company• Assess market problems and competitive forces• Reviewing the company’s strategy;• Understanding competitive forces in the industry

and client’s position in the market• Critical success factors and delivering success;• Poor corporate governance• Management inaction in debt restructuring. • The importance of trend analysis as part of

ratio analysis• Spotting off balance sheet items that will affect

company risk profiles;• Spotting ongoing capital expenditure needs and

identifying methods of financing;• Identifying potential corporate failure;• Ratio analysis as a key tool in early warning:

• Key financial drivers and the need for constant vigilance

• The problems with overreliance on the financial statements

Using forecast cash flows in problem loan sensitivity analysis and in debt restructuring• Creating forecast cash flows from the forecast

financial statements• Identifying key revenue and cost drivers for the

forecast cash flows• Undertaking sensitivity analysis to understand to

which factors the cash flows are most vulnerable• Understanding the problem company’s ability to

service debt from forecast cashflows• Creating the base case, upside and downside

forecast cash flows

Workshop: Having undertaken a full credit analysis of the problem loan during session 4 of day 2, the delegates will divide into their project teams in order to forecast the company’s cash flows based on their own varying assumptions. They will then undertake a full sensitivity analysis using these cash flows to assess to different

Assisting client companies in unlocking wealth and creating value as part of the restructuring process• Unlocking true value in the balance sheet• Revaluation of assets and asset disposal• Sweating existing assets and realising

additional wealth• Using real estate in the business• Joint venture development to increase

company worth• Patents/licenses with value• Secondment of company operations to

realise wealth• The hidden gems

Workshop: Restructuring the balance sheet of a highly leveraged family run problem loan using forecast cash flow analysis.

Summary, conclusion, course evaluations

Reporting, Compliance and Regulatory

Learning Pathway

Level 3

Case Studies in IFRS: Accounting for Financial

Instruments Under IAS 39

Case Studies in IFRS: Consolidation and

Group Reporting under IFRS

IFRS Forensics – Impact on Valuation Metrics

Level 1

Financial Reporting Basel III/CRD IV – Background and Implementation

Level 2

IFRS Update Markets in Financial Instruments Directive II

95

ContentNews round up • New UK GAAP refresher • IFRS standards – where they are in the world today • IFRS latest developments • IFRS pipeline • The FReM – latest developments

The disclosure initiative • Objectives • Amendments to IAS 1 and 7 • Progress with the materiality project • The link with integrated reporting

IFRS 15 revenue recognition recap • Brief review of the IFRS 15 5 step revenue

recognition model • Latest implementation developments

Lessee accounting under IFRS 16 • Background and effective date • Identifying leases and arrangements deemed

to be leases • Initial recognition of liability and right of use asset • Subsequent measurement and P&L

• Impact • Transition rules

Financial instruments and implementing IFRS 9 • Recap of what they are and the basic accounting

rules under IAS 39 • Identifying the main areas of change • The new classification and measurement rules • The new impairment (expected credit loss) model • The new (simplified) general hedge accounting rules

Some refreshers topics • Fixed asset accounting and impairment • Asset recognition rules • Tangibles and intangibles • Depreciation and amortisation models • Issues for infrastructure assets • Impairment methodology • Liability provisioning • Recognition rules • Measurement rules • Restructuring costs • Contingent assets and liabilities

Conclusions and close

Financial Reporting


Classroom 1 day


OverviewThis course is targeted at those who are new to IFRS, of use to preparers of financial statements, as well as auditors and those who need to understand the implications of IFRS adoption.

96

Basel III/CRD IV – Background and Implementation


Classroom 1 day


Content• Background to Basel • Introduction to Basel III / CRD IV• The structure of Basel III/CRD IV• Pillar 1, 2 and 3 overview• Focus on some technical areas

• The regulatory boundary – how this differs from IFRS

• Components of bank capital• Components of risk weighted assets• The leverage ratio – the capital and

exposure measures• The liquidity coverage ratio• The net stable funding ratio

• Interbank comparison of Basel III/CRD IV metrics• The FSB TLAC standard and the EU BRRD• Latest Basel IV changes• How does Basel III/CRD IV framework work for banks• Strategies to Meet Basel III/CRD IV requirements• Disclosures to date – compare and contrast• Overview of the financial stability board’s new

standards for globally systemically important banks (G-SIBs)

• Update on “Basel IV” changes

OverviewBasel III (or the Third Basel Accord) is the framework for banking regulation developed in response to the 2008 financial crisis. Although voluntary, the Accord constitutes THE global, regulatory standard on bank capital adequacy, stress testing and liquidity. Specifically designed to enhance bank and banking sector stability, Basel III will be fully in force by 2019 and will have a massive impact on banking business models.

It is therefore imperative that people working in the banking industry have an awareness of the content of Basel III and its implications for the business of banking. Basel III has been introduced into EU law through the Capital Requirements Directive IV (CRD IV).

Unfortunately Basel III/CRD IV does not make a “good read” for people working outside the “bubble” of the detailed mathematics that is financial risk management. Our one day course is therefore targeted at anyone who, in order to enhance their job performance, needs a clear line of sight through the fog of the detailed Basel III/CRD IV calculations and so gain a firm appreciation of its business implications.

97

OverviewIFRS continues to evolve at a rapid pace, both in response to the financial crisis and in pursuit of the US GAAP convergence agenda. The course is designed for those who are familiar with IFRS but require an update. It examines significant recent IFRS developments, and previews the substantial raft of rule changes coming into force in the period 2016 to 2019.

This is the course we have presented to many locations since 2013 but updated for changes and developments in 2015/16 The emphasis will be on the new financial instruments rules applied by IFRS 9 and the big intrusive changes introduced by IFRS 16 on accounting for leases by lessees.

Content• The current standard setting agenda• Overview of extant standards

• All Standards effective as at 1 January 2017• All IFRICs effective as at 1 January 2017

• Standards requiring mandatory adoption for years ended 31 December 2017

• The current state of the worldwide convergence agenda• EU endorsement status

• IFRS becoming effective in the next 3 years• IFRS 9: financial instruments• IFRS 15: revenue from contracts with customers• Revisions and amendments to existing standards• The annual improvements standards• The disclosure initiative (changes to IAS 1 and 7)

• Lease accounting and IFRS 16• The end of off-balance sheet finance for lessees?• Impacts on KPIs

• The Disclosure initiative • Developments relating to integrated reporting• Examination of all recent changes to IFRS• Examination of all IFRS changes in the pipeline

including insurance contract accounting


Classroom 1 day


IFRS Update

98

OverviewMiFID II – the Markets in Financial Instruments Directive II – will come into force in 2018. Its implementation will significantly alter financial services regulation in the UK, how firms operate their businesses and the way they interact with their customers. Most FSA-regulated firms carrying on investment business are likely to be affected, whether or not that business falls within MiFID’s scope.

The Directive is currently undergoing changes with practitioners suggesting that some complex trading environments could be making its implementation more difficult. To overcome these weaknesses, the EU Commission is attempting to make the playing-field more level by improving the regulation of financial instruments. Implementation is therefore a major challenge for the industry and preparing to meet the challenge cannot begin too soon.

This two-day course will look at the practical implementation issues along with proposed changes.

ContentMiFID 2• Extension of MiFID rules• Exemptions and Upgrades• Upgrades to the market structure framework;• Corporate Governance and Investor Protection• Enhancement of the investor protection framework;• Amended sanctions powers; and• Trading in Emission allowances.

Objective of MiFID• Single Passports - Barriers to Entry Removed.• Reduced Regulatory Bureaucracy - Generally firms

must only answer to home regulator• Principle v Rule Based – Can cope with complexity• Information Sharing – Regulation more Effective

Investor protection changes• Article 7(4) of MIFID andf relevant Regulator

Technical Standard• Passport notification• Regulatory Technical Standard on the

Protection of Investors• General Information to be provided for authorisation

Transparency Requirements• Information to be made public• Shares Depository Receipts and Exchange Traded

Fund requirements• Publications, deferred publications,

thresholds and delays• Details of transactions to be made available

Organisational Structures• Investment firms engaged in algorithmic trading• Organisational requirements• Market making schemes

Market Structure• Non Equity Organised Trading Facilities• High-frequency trading• Commodity Derivatives and MIFID requirements• Derivative traders and central counterparties

Conduct of Business• Inducements to sell products• Appropriateness of investments• Best execution strategies• Impact of rule changes

EMIR• European Market Infrastructure

Regulation - overview• Impact on pension funds, investment funds,

corporates and insurance companies• Definition of a derivative under EMIR• The Clearing Obligation• Risk management techniques• NFC's and rolling average positions• Clearing Thresholds


Classroom 2 days


Markets in Financial Instruments Directive II

99

MIFID and Basel 3• Introduction to new Basel requirements• Capital conservative buffer• Liquidity coverage ratios• New stable funding ratios• Liquidity Coverage Ratio• Definition of the LCR• Application issues for the LCR

100

Case Studies in IFRS: Accounting for Financial Instruments Under IAS 39

OverviewThis course is designed for those with some familiarity with IFRS and who would like to deepen their knowledge of how IFRS identifies, accounts for and reports financial instruments. The focus will be on financial instruments relevant to the client.

Although IFRS 9 replaces it with effect from accounting periods commencing on or after 1-1-2018, IAS 39 is still currently in force and of major importance.

The course will feature several case studies examining the detail of the current rules on accounting for financial instruments employed by banks and the messages the disclosures contain for investors. There will be a big focus on the issues of:

Content• Debt vs. equity• Revenue and cost recognition• Effective interest and impairment; and• Fair value and risk disclosure• The current IFRS rulebook• Key definitions and scope• Presentation• Classification and measurement (including effective

interest and impairment)• Hedge accounting• De-recognition• Disclosure• Future developments


Classroom 1 day


101


Classroom 1 day


OverviewThis course is designed for those with some familiarity with IFRS and who would like to deepen their knowledge of how the client identifies, accounts for and reports its interests in other entities.

There will be a greater focus on case studies and group exercises aimed at how to identify the status of interests in entities and at how to do the numbers following the latest rules which came into force in 2013.

Content• The IFRS rulebook• The IFRS 10,11,12 and IAS 28 framework• Consolidation• Identifying and accounting for business

combinations (including goodwill)• Non-controlling interests• Equity accounting for associates and joint venture• IFRS 12 disclosure

Case Studies in IFRS: Consolidation and Group Reporting under IFRS

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IFRS Forensics – Impact on Valuation Metrics

OverviewThis course is targeted at those who are interested in business valuations and how IFRS attempts to prevent the manipulation of the reported numbers which are used to calculate the key valuation metrics.

The course will start with an outline of our approach followed by an examination of a valuation check list which will used by us to identify the key numbers commonly input into the calculation of valuation metrics such as “how much should we pay to acquire/ receive to sell?”

Consider the impact that the inappropriate selection and application of accounting policies and judgement based estimates can have on the key numbers identified in our check list.

Content• Introduction, outline of our approach• A valuation check list and identification

of key numbers• Present a high level sketch of the relevant

accounting rules• IFRS background – latest state of play

• Recall some “war stories” (real life examples of how these numbers have been “messed” with)

• IFRS principles and presentation• Primary financial statements• Significant foot notes

• Broad transactions• Group accounting issues• Financial instruments• Leasing

• Revenue and costs• Revenue recognition• Tax accounting

• Mainstream asset and liability issues• Non-current assets• Inventory• Provisions


Classroom 1 day


Financial and Business Analysis

Learning Pathway

Level 1

Kaplan Business Challenge

Finance for the Non-financial Manager

Fundamentals of Business Analysis

Introduction to Economics

Level 2

Planning, Forecasting and Budgeting Behavioural Finance

Level 3

Business Analysis – Non-banking Entity

Business Analysis – Banking Entities

Advanced Economics

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Kaplan Business Challenge


Classroom 2 days

WebEx Group x N/A

OverviewAre your employees up for the challenge? If you want them to walk in the shoes of management, and experience the day-to-day challenges and decision-making powers at all levels, then the Kaplan Business Challenge is the ideal solution.

With this well-crafted and detailed simulation exercise, employees will gain a hands-on understanding of how a business runs, and come to appreciate the direct financial consequences of their decisions. The best way to learn is by doing.

Competing teams will develop their strategies, create innovative solutions, and implement them with the goal of attaining commercial success. They will learn and practice crucial financial skills and decision-making abilities in a volatile climate. In addition, they will examine core leadership subjects such as self-awareness, team building, negotiation, and risk assessment.

ContentThis workshop will provide your employees the ability to:

• Practice the key components of effective decision making and recognise the commercial impact of these decisions

• Understand and manage team dynamics in a competitive environment

• Gain insight into the financial process, corporate reporting, and cash-flow velocity

• Establish heightened commercial awareness and strategic thinking

• Develop effective skills in the art of negotiating and influencing

• Communicate a coherent plan to stakeholders and manage expectations

ValuesOpen to different ideas and cultures Successful teams in the KBC are built on an open, interactive culture where all members contribute strategies and ideas. The pressurised environment of the simulation renders any hidden agendas or individual prejudices both counter-productive and redundant.

Connected to customer, communities, regulators and each other.The KBC demonstrates powerfully the inter-connected nature of both organisations and the wider business environment. Success in the simulation requires the ability both to coordinate all of an organisation’s operational functions and to address the interests of all of its stakeholders.

Dependable and do the right thingThe Kaplan presentation team will emphasize the importance of an ethical, dependable approach to business practice throughout the KBC. These considerations will be built in to the criteria which will be used to judge the winning team.

Business principlesThe KBC is also used in Kaplan’s leadership training solutions and therefore we believe it is the ideal product to align the principles of your organisation.

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Financial strength & efficiencyThe KBC develops leadership and interpersonal skills in a commercial and financial context. Working together in teams with their colleagues, delegates will understand the financial consequences of every business decision they make and how this is in turn reflected in an organisation’s financial statements.

Customer focus & risk managementThe programme is highly competitive and a clear ‘winner’ will be identified by the end of the simulation. Success in the KBC can only be achieved by fulfilling customer expectations, continuously improving all aspects of the business’ operations and outperforming all of the competition.

Throughout the KBC our presentation team will emphasize the importance of an ethical and dependable approach to business practice. These considerations will be built in to the criteria which will be used to judge the winning team.

During the programme, each team is required to:

• Devise a business plan• Set out their strategy• Manage finances (both in reporting requirements

and cash management)• Build a winning team• Work co-operatively as a group• Present results and explain business performance to

key stakeholders.

Performance focus and speedThe context of the KBC requires delegates to turn around a struggling company in a fast-moving business environment. The targets and goals against which teams are required to deliver can be further defined by ‘wild card’ interventions. These training interventions can be designed to stretch delegates’ capabilities and if required, and can be tailored to reflect business issues specific to your organisation.

Sustainability

The KBC is designed to create commercially astute business leaders who are able to add significant and sustainable value to the business. The criteria by which success is judged in the simulation will be based on the creation of long-term shareholder value.

In the closing presentation teams will be required to set out the future prospects and sustainability of their businesses. They will also be judged on the way they have conducted themselves during the programme and the professionalism of their business practices.

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Finance for the Non-financial Manager


Classroom 2 days


OverviewYou are an effective manager, skilled in your own area of expertise. Only two things stop you from becoming an all-round high performer – a sure grasp of how finance works and the confidence to use that knowledge to make better business decisions.

The programme is designed specifically for you. It demystifies finance. It explains simply and clearly what the key financial statements mean, how they work and relate to each other and how your actions as a manager affect them and your business.

The course is relevant to all managers. Previous delegates have included: project managers, marketing managers, technical managers, solicitors, general managers, office services managers, manufacturing managers, contracts managers, engineers, sales managers, business development managers, research managers and many, many others – even managing directors and finance directors.

ContentAccounting and accountants• What types of accountant are there? • What do they do? • Financial accounting • Management accounting • Treasury function • Activities and terms

Understanding the basis of accounting records• Basic balance sheet and profit and loss accounts • Accounting records • Assets/liabilities • Income/expenditure • General/nominal ledgers

Getting to grips with financial statements• Balance sheet and profit and loss accounts

– terminology • Fundamental accounting concepts – going concerns

and accruals • Other concerns • Depreciation • EU legislation – format of accounts

Cash flow and cash management• Working capital – cash cycle • Just in time • Flow of funds/cash flow statements • Current and liquidity ratios • Gearing• Treasury management • Foreign currency and cash management

Tips and techniques for planning and budgets• Corporate plan – financial • Planning the budget • The budget cycle • Links with company culture • Budgeting methods • Zero/priority based budgets • Reviewing budgets • Responding to the figures • The need for an appropriate accounting system

Management accounting – costing methods and their uses• Cost definitions • Full/absorption costing • Overheads • Overhead allocation or absorption

• Activity based costing • Marginal costing/break-even – use in planning • Costing for control

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A comprehensive case study

What the figures reveal: Understanding and interpreting accounts• Analytical review (ratio analysis) • Return on capital employed • Net profit % • Asset turnover • Fixed asset, debtor and stock turnover • Responding to figures

An introduction to other key issues• Creative accounting • Accounting policies/group situations • Intangible assets – brand names • Company valuations • Fixed assets – leased assets

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Fundamentals of Business Analysis


Classroom 2 days


OverviewThe content and complexity of financial statements has expanded greatly in recent years, making interpreting and drawing conclusions from financial statements more difficult. The course sets out techniques that can be used to draw understandable and useful conclusions when researching financial information.

This case study based course is essential for those involved analysing financial statements with a view to valuing a business but will benefit anyone who wishes to gain more value from the information contained within corporate reports. At each stage the course will be illustrated by case studies and delegate discussions. This is a highly interactive course, not a mere transfer of knowledge.

Content

Overview of business analysis • Aims• Types of business analysis• Components of business analysis (industry, strategy,

accounting, financial, prospective)

Gathering relevant information• General research sources• Components of the annual report• Filtering the narrative disclosures• The aims of the financial statements

Variabilities in financial statements• The impact of judgement, choice and estimation on

financial statements• Illustrative case studies• Appraising the impacts

Earnings manipulation• Revenue recognition tricks• Other techniques for earnings manipulation

Financial analysis tools (1) basic comparisons• Comparative analysis• Common sizing

Financial analysis tools (2) ratio analysis• Aims and limitations• Standard analysis vs KPIs• Headline metrics• Profitability ratios• Liquidity ratios• Working capital analysis• Solvency ratios• Integrated approaches: top down and bottom up• DuPont analysis

Financial analysis tools (3) investor ratios• Investor’s information needs• Common ratios (e.g. PE, dividend yield etc)• Dividend policy

Financial analysis tools (4) cash flow analysis• Cash flow vs profits• Analysing the cash flow statement• Deducing financial strategy• Analysing free cash flow• Summary of approach to financial

statements analysis

Business valuations• Overview of metrics• Net asset value• PE based valuations• Market capitalisation• Free cash flow valuations• Enterprise value

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Introduction to Economics


Classroom 1 day


OverviewThis course is designed to be a general introduction to macroeconomics. The aim of the course is to ensure that the delegates understand the key strands of macro-economics in a practical and usable way. The course will relate the theory to the likely impact on the economy and financial markets. It will give an overview of the key terminology and techniques used by the market and help individuals to better understand economic indicators. We will highlight the importance of monetary policy and explain the main economic factors that impact on financial markets.

Content

Introduction• A brief history of economic methods – Keynesian

and classical views• The multiplier effect • Aggregate demand (AD) and aggregate supply (AS)• UK growth and interest rates • Measuring Gross National Product (GNP) and Gross

Domestic Product (GDP)

The business cycle• Unemployment and inflation • Inflation and inflation measures – Consumer price

indices (CPI) • The nature of unemployment • Measuring unemployment – non-farm payrolls and

the unemployment rates • The Labour force

Managing the economy – Fiscal Policy • Budget deficits and budget surpluses • Fiscal policy in economic management• Crowding out • How do markets behave?

Managing the Economy – monetary policy • Supply and demand for money and interest rates• Equation of exchange• The Monetary Policy Committee (MPC) in the UK• Inflation targets • The US Federal Open Markets Committee (FOMC) • Money supply and inflation • Central banks and money • Transmitting monetary policy to the markets

Economics in an open economy • Components of the balance of payments – current

accounts and capital accounts • Balance of payments and the impact on currencies • Economic influences on exchange rates

The European Union • The history of the Euro • Britain's five economic tests • The cases for, and against joining the Euro

Current economic indicators in focus • An explanation of the economic figures and data

currently of significance in the financial markets

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Planning, Forecasting and Budgeting


Classroom 1 day


OverviewAre you entirely happy with your planning, forecasting and budgeting processes? Does the business plan do justice to the strategy? Is it an essential management tool or is it gathering dust? Is the revenue forecasting reliable? Is there a continuous process of rolling forecasts or is it a major effort to generate a new forecast?

Many organisations are dissatisfied with the budget as a mechanism of planning and control. This course explores several ways of improving the budget – from getting rid of it altogether to adopting a range of less radical modifications.

It starts with the assumption that you already have a business strategy and outlines techniques for creating business plans that are aligned with this strategy and for checking that the plans – and hence the strategy – are financially viable. Moving on to forecasting, the programme describes seven techniques that between them improve the accuracy of any forecast you have to make. This leads in to budgeting, which should convert the business plan and the sales forecasts in to a financial statement of expected revenues and costs.

ContentCreating business plans from the strategy• The meaning of strategy • Translating strategy into plans – positioning

and capability • The strategy tree – a technique for:

• Ensuring that plans are robust and complete • Link between strategic aims and budget• Resourcing monitoring

• Planning in an uncertain world – actions for contingency

Plans to improve business-as-usual• Building tangible improvement plans – the power of

activity-based techniques: • Core value adding vs diversionary tasks • Needs of customers – internal and external • Removing waste from business processes • Cost reduction and service improvement

Forecasting• Forecasting techniques – Key elements of a

successful forecasting process: • Key players to help reach a realistic but

challenging forecast • Identifying and providing relevant data • Recording assumptions and choices • Avoiding distortion caused by incentives

• The importance that timing plays in forecasting events

Risk• How to assess the risks associated with forecasts,

plans and the budget • Drawing up plans for avoiding, monitoring and

mitigating risks – the risk register • Integrating risk management into the standard

control processes of the organisation

The conventional annual budget• What do we mean by the conventional

annual budget? • What are its perceived weaknesses?

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One solution to the conventional budget: stop budgeting• Benefits claimed for this radical approach • What would go in the budget’s place? • What might the finance function do instead of

budgeting to add yet more value?

Ways to improve the budget• Rolling forecasts and budgets

• Accountability and cost drivers• Ensuring the budget reflects the strategy

• Timing: reviewing the strategy just before setting the budget

• How continuous budgeting helps the timing• Plans for change • Costs and their impact• Improving the budget-setting process

• Getting the high-level budget broadly right before plunging into detail

• Activity-based budgeting • Understanding how costs are driven in order to

model the finances of the organisation and create rapid revisions

Using the budget to manage effectively• Incorporating business plans accurately

in the budget • Incorporating business-as-usual in the budget

• Performance tracking to helps budget holders – breaking free from simplistic ledger line variances

Getting effective budget accountability• The nature of accountability • Identifying the underlying reasons for variances • Making budget reviews effective

• Key performance measures for tracking progress • Importance in measuring outputs as well as inputs

in reviewing performance • Performance reporting and having a

robust process for doing something about deviations from plan

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Behavioural Finance


Classroom 1 day


OverviewThe emphasis of this programme will be to introduce delegates to much of the terminology used in behavioural finance and outline some of the impacts that this could have on the investment decision making process. We will concentrate on explaining the practical application of this material.

This course will be of value for individuals involved in trading, research, capital markets, corporate finance or asset management.

Content• Psychological foundation• Over-optimism• Over-confidence• Cognitive dissonance• Confirmation bias• Conservatism bias• Anchoring• Representativeness• Heuristic – rules of thumb• Availability bias• Ambiguity aversion• Reference dependence• Errors of Preference

• Narrow framing• Prospect theory• Dynamic prospect theory• Agency friction

• Violations of LOOP• Limited arbitrage• Problems with arbitrage• The myth of perfect markets

• AMH – Adaptive Market Hypothesis• Behavioural finance and technical analysis

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Business Analysis – Non-Banking Entity


Classroom 1 day


OverviewThe course applies the knowledge and application skills gained on the Fundamentals of Business Analysis courses to the business and reports of a multi-national corporate entity. It analyses the policies used by both the client company and its clients and evaluates the extent to which the financial statements connect with the real underlying messages.

This course is specifically aimed at those seeking to gain a deeper understanding of how reliable or otherwise the financial statements are in providing a meaningful picture of the company’s performance but it will benefit anyone who wishes to gain more value from the information contained within corporate reports.

Content

The reliability of information Company background• The accounting rules and how applied

• IFRS reporting issues for banks• IFRS reporting issues for clients• Critical appraisal of accounting policies

• The potential for distortions• Filtering the narrative disclosures• The cash flow statement• The reliability of information• The use of judgements and estimates• The potential for distortions• Filtering the narrative disclosures• Benchmarking with the client• Prospective analysis – how much is the

business worth

Banking specifics• Opening case study: identifying individual banks from financial statistics• Analysis of the preceding tools to identify

which would be useful in the analysis of bank financial statements

• Analysis of the business model of banking entities• Derivation of relevant analytical ratios• What is actually controllable in a bank?• Costs and the Jaws ratio• Detailed bank comparison case study

Bank stability and Basel• Overview of Basel regime• Capital ratios• Leverage• Liquidity ratios• Total loss absorbing capacity• Use of these statistics to analyse a bank

Business valuations• Overview of available metrics• Why banks are different• Specific models to value bank equity

116

Business Analysis – Banking Entities


Classroom 1 day


OverviewThe course applies the knowledge and application skills gained on the Fundamentals of Business Analysis courses to the business and reports of a multi-national well known banking entity. The course analyses the policies used by both the client company and its clients and evaluates the extent to which the accounting rules generate information that reflects economic realty.

We see the course as essential for those involved analysing financial statements with a view to valuing a business or assessing its credit worthiness but it will benefit anyone who wishes to gain more value from the information contained within corporate reports.

Content• The reliability of information – Company background• The accounting rules and how applied

• IFRS reporting issues for banks• IFRS reporting issues for clients• Critical appraisal of accounting policies

• The potential for distortions• Filtering the narrative disclosures• The cash flow statement• The reliability of information• The use of judgements and estimates• The potential for distortions• Filtering the narrative disclosures• The cash flow statement

• Deducing financial strategy• Identifying risk factors

• Application of Dupont analysis• Financial performance and position• Assessing leverage/gearing• Shareholder value metrics

• Benchmarking with the client• Prospective analysis – how much is the

business worth

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Advanced Economics


Classroom 2 days


OverviewThe course will build upon the international aspect of economics. It emphasises the pivotal role played by external trade and looks at the determinants of the exchange rate along with analysis of the different schools of Economic thought (Keynesian, Monetarist Supply side and New Paradigm).

The major influences on GDP, fiscal and monetary policy and their impact on GDP and hence inflation and unemployment are also analysed.

This course would benefit anyone who require a thorough understanding of the key economic relationships. The course assumes that delegates will already have attended the Introduction to Economics course (or that they have a comparable level of knowledge).

ContentWith what is economics concerned?• The economic decision and opportunity costs• The role of Economics• Incentives and their effect

Price theory • Demand: The principles of the purchase decision• The shift in the demand curve• Supply: The principles of the sale decision• The shift in the supply curve• Reactions to price and income changes • The combination of supply and demand

The market economy• How does the market economy function?

Macroeconomics

Determination of overall economic performance: The national accounts• The circular flow & calculation of national income• Analysis of the production, distribution and

expenditure sides• The limits of the national account• Appendix: From GDP to disposable income

The Determination of National Income• The role of aggregate demand• Components of aggregate demand• The Keynesian model: The role of aggregate demand

and the multiplier

Introducing aggregate demand and supply• Aggregate demand (AD) & factors affecting AD• Aggregate supply (AS) & factors affecting it• Equilibrium using AD & AS• Changes to equilibrium

Money, monetary policy and the problem of inflation• What does the money supply consist of?• How is the money supply controlled?• The monetary policy of the central bank

and its effects• The causes and consequences of inflation• Deflation and disinflation

Unemployment: Why does unemployment occur?• The classical explanation of unemployment• New labour market theories• What types of unemployment exist?• Why is core unemployment rising?• How can we conquer unemployment?

The role of Government• Fiscal policy tools and problems• Crowding out• The development of deficits and debt• Cyclical and structural deficits• Risks and limits of government debt• Do guidelines exist for acceptable government debt?

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Inflation and Unemployment• The Phillips curve• The New Paradigm

Foreign trade and balance of payments accounts

International division of labour • The development of world trade• The limits of international division of labour Free

trade versus protectionism • The balance of payments accounts

Exchange rates and exchange rate systems• Exchange rates determining factors, fluctuations and

their effects• Flexible exchange rates• Fixed exchange rates • European Monetary Union

Policies affecting economic fluctuations• The classical concept• The Keynesian concept• The monetarist concept• The supply-orientated concept• Who is right?

Economic growth: A long-term consideration of economic development• The determining factors in economic growth• Points of reference in relation to economic policy• The limits of growth• Sustainable development• Instruments for the promotion of

sustainable development

Balance of Payments: The use of the AD/AS model in the open economy• Internal balance/external balance• Policies in dealing with Balance of

Payment problems

Approaches to exchange rates• Assumptions in relation to the foreign

exchange markets• Simple arbitrage relationships• Important price relationships• Random Walk model• Quantity theory approach to exchange

rate explanation• Portfolio approach to exchange rate explanation• Empirical evidence

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Kaplan operates from nearly 400 locations in over 40 countries. We employ trainers, facilitators, lecturers, coaches, speakers, and instructional designers from around the world. Whether you are a multinational corporation with offices in every continent or a business based in a single location, we can deliver commercially relevant programmes close to home.

Localised ProgrammesDelivered

On A Global Scale

In-house Bespoke Training

Advanced Designations

Accountancy & Tax Qualification Apprenticeships

• Banking• Financial Markets• Financial Awareness• Assurance, Risk

and Regulatory• Tax• Accountancy &

Financial Reporting• Personal Effectiveness • Managing People • Talent Development• Managing Contracts

• CFA• CAIA• CISI Certificates• FRM• IMC• IOC

• ACA (ICAEW)• ACCA• AAT• ATT• CAT• CFAB• CIMA• CIPFA• CTA• ICB

• Financial Services (IOC, IMC, CFA)

• Accountancy (AAT)• Management

Accounting (CIMA)• Tax (ATT)• Audit (CFAB)

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Full course index

Level 1: Introductory

Level 2: Intermediate

Level 3: Advanced/Specialist

Level of Content

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Risk and Asset Liability ManagementL1 Foundations in Banking Risk 7

L1 An Introduction to Asset and Liability Management 8

L2 Operational Risk Management 9

L2 Enterprise Risk Management (ERM) for Corporates 10

L2 Risk Management for Managers 11

L2 Market Risk Management 12–13

L2 Credit and Counterparty Risk Management 14

L2 Market, Liquidity and Asset Liability Risk Management 16–17

L3 Advanced Asset and Liability Management 18

L3 Value at Risk for Non-Quant Treasury and Financial Professionals 19

L3 Advanced Operational Risk Management 20

Financial Product and Trading KnowledgeL1 Insider’s Guide to the Global Financial Markets 22

L1 Life Cycle of a Trade 23

L1 Introduction to Foreign Exchange and Money Markets 24

L1 Derivatives in Action 25

L1 Introduction to Bonds and Fixed Income 26

L2 Using Technical Indicators to Identify and Analyse Trading Opportunities 28–29

L2 Practical Pricing & Applications of FX Derivatives 30–31

L2 Derivatives – Pricing and Applications 32–33

L2 Further Bonds 34–35

L3 Distressed Securities – Valuation and Trading 36–37

L3 Advanced Interest Rate and Currency Derivatives 38–39

L3 Exotic Options – Strategies and Applications 40

L3 Securitisation 41

Investment Management and Private Banking L1 Introduction to Investment Management 44–45

L1 Introduction to Alternative Investments 46

L1 The Essential Guide to Hedge Funds 48–49

L2 Effective Asset Allocation for Private Banking Clients 50

L2 Technical Competence for Wealth Managers 51

L2 Wealth Management – Hedge Funds and Private Equity 52

L3 Fund Management Techniques 53

L3 Structured Investments – Suitability Based Selling 54

Project FinanceL1 Principals of Project Finance 56–57

L2 Power Industry Project Finance 58

L2 Project Finance for Infrastructure 59

L2 Project Finance in the Oil and Gas Industry 60

L3 Advance Project Finance 61

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Trade FinanceL1 Essentials of Trade Finance 64–65L2 Identifying and Mitigating Risks in Trade Finance 66L3 Structured Trade Finance – Principles, Practices and Cases 68–69

Financial Modelling and Valuation L1 Analysis of Financial Statements 71L1 Excel Features for Financial Management 72L1 Introduction to Financial Maths 73L1 Valuation Toolkit 74L2 Financial Statement Modelling and Valuation 75L2 Introduction to VBA Programming for Excel 76L2 Financial Modelling with Excel 77L2 Building a Valuation Model 78–79L3 Advanced Analysis of Financial Statements 80L3 Excel Modelling for Financial Analysis: Options and Regression 81L3 Advanced Equity Analysis and Valuation 82–83

CreditL1 Credit Risk Management – Credit Monitoring 85L2 Effective Cash Flow Lending 86L2 Loan Syndication – A Practical Approach 87L2 Credit Risk Management – Structuring Term Lending and Capital Expenditure Financing 88L2 Credit Risk Management – Structuring Working Capital Financing 89L3 Effective Credit Monitoring to Minimise Non Performing Loans 90L3 Advanced Corporate Credit Analysis and Debt Restructuring 91–93

Reporting, Compliance and RegulatoryL1 Financial Reporting 95L1 Basel III/CRD IV – Background and Implementation 96L2 IFRS Update 97L2 Markets in Financial Instruments Directive II 98–99L3 Case Studies in IFRS: Accounting for Financial Instruments Under IAS 39 100L3 Case Studies in IFRS: Consolidation and Group Reporting under IFRS 101 L3 IFRS Forensics – Impact on Valuation Metrics 102

Financial and Business AnalysisL1 Kaplan Business Challenge 104–105L1 Finance for the Non-financial Manager 106–107L1 Fundamentals of Business Analysis 108L1 Introduction to Economics 110L2 Planning, Forecasting and Budgeting 112–113L2 Behavioural Finance 114L3 Business Analysis – Non-Banking Entity 115L3 Business Analysis – Banking Entities 116L3 Advanced Economics 118–119

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