Kaplan Financial Markets In-Company Training Curriculum

Transcription

1 Kaplan Financial Markets In-Company Training Curriculum 1

2 Welcome 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. 2

3 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 1 2 Building collaborative and customised programme design Continuous feedback to ensure we meet your aims 3 4 Tools and assessments to diagnose skills gaps Refinement of the programme through a partnered approach 5 6 Implementation through a range of delivery tools Post programme measurement 7 8 Continuous engagement Find out more:

4 s 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

5 Definitions : 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 of Level 1: Introductory Level 2: Intermediate Level 3: Advanced/Specialist

6 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 Advanced Asset and Liability Management Level 3 Value at Risk for Non-Quant Treasury & Financial Professionals Advanced Operational Risk Management 6

7 Foundations in Banking Risk 2 days Three, 3-hour Modules From 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. Functions 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 7

8 An Introduction to Asset Liability Management 1 day Two, 3-hour Modules This 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. Bank 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) 8

9 Operational Risk Management 2 days Three, 3-hour Modules Operational 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. Risk 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 9

10 Enterprise Risk Management (ERM) for Corporates 2 days Three, 3-hour Modules Traditionally, 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. Defining 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 10

11 Risk Management for Managers 2 days Three, 3-hour Modules The 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. Getting 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 of the three-pillar approach to assessing credit, market and operational regulatory capital charges 11

12 Market Risk Management 2 days Three, 3-hour Modules Market 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. 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 12

13 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 13

14 Credit and Counterparty Risk Management 2 days Three, 3-hour Modules The 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. Introduction 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 14

15 15

16 Market, Liquidity and Asset Liability Risk Management 2 days Three, 3-hour Modules The 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. Introduction Typology of market risk exposures Asset liability management Funds transfer pricing Industry best practices 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 16

17 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 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 17

18 Advanced Asset and Liability Management 2 days Three, 3-hour Modules This 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. Commercial 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 18

19 Value at Risk for Non-Quant Treasury and Financial Professionals 2 days Three, 3-hour Modules The 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. 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 19

20 Advanced Operational Risk Management 2 days Three, 3-hour Modules Operational 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 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 20

21 Financial Product and Trading Knowledge Learning Pathway Level 1 Insiders Guide to the Global Financial Markets Life Cycle of a Trade Introduction to Foreign Exchange and Money Markets Derivatives in Action Introduction to Bonds and Fixed Income 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

22 Insider s Guide to the Global Financial Markets 1 day Two, 3-hour Modules This 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. 22 Equity 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

23 Life Cycle of a Trade 1 day Two, 3-hour Modules This 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. The 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 23

24 Introduction to Foreign Exchange and Money Markets 1 day Two, 3-hour Modules This 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. How 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 24

25 Derivatives in Action 1 day Two, 3-hour Modules A 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. Forwards 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? 25

26 Introduction to Bonds and Fixed Income 1 day Two, 3-hour Modules This 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. 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 26

27 27

28 Using Technical Indicators to Identify and Analyse Trading Opportunities 3 days Six, 3-hour Modules This 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. Assumptions 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 28

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 29

30 Practical Pricing & Applications of FX Derivatives 2 days Three, 3-hour Modules This 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. Quick 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 combinations Participants 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 30

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 31

32 Derivatives Pricing and Applications 1 day Two, 3-hour Modules Staff 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. Discounted 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) 32

33 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 33

34 Further Bonds 2 days Three, 3-hour Modules This 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. Instruments 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 34 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 Modified 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

35 35

36 Distressed Securities Valuation and Trading 3 days Six, 3-hour Modules The 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. An 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 36

37 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. 37

38 Advanced Interest Rate and Currency Derivatives 3 days Six, 3-hour Modules Management 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 38 Derivatives 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

39 Foreign exchange options FX options Modelling Exercise: Managing currency risk using options Trading FX options: OTC Vs ETO 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 39

40 Exotic Options Strategies and Applications 3 days Six, 3-hour Modules This 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. Exotics 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 40

41 Securitisation 2 days Three, 3-hour Modules This 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. 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 UK The 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 41

42 42

43 Investment Management and Private Banking Learning Pathway Level 1 Introduction to Investment Management Effective Asset Allocation for Private Banking Clients Introduction to Alternative Investments Level 2 Technical Competence for Wealth Managers Level 3 The Essential Guide to Hedge Funds Wealth Management Hedge Funds and Private Equity Fund Management Techniques Structured Investments Suitability Based Selling

44 Introduction to Investment Management 1 day Two, 3-hour Modules Fund (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). The 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 44

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? 45

46 Introduction to Alternative Investments 2 days Three, 3-hour Modules There 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. Exchange 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 46 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

47 47

48 The Essential Guide to Hedge Funds 2 days Three, 3-hour Modules The 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. Defining 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 48

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 (nonprobability dependent) Fixed-Income management, 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 49

50 Effective Asset Allocation for Private Banking Clients 2 days Three, 3-hour Modules This 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 macroeconomics 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. 50 Presentation 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

51 Technical Competence for Wealth Managers 2 days Three, 3-hour Modules This 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. 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 51

52 Wealth Management Hedge Funds and Private Equity 2 days Three, 3-hour Modules This 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. Introduction 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 52

53 Fund Management Techniques 2 days Three, 3-hour Modules This 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,, and CAPM will not be shirked, but will be covered in a way which stresses 'how they work' rather than number-crunching. The 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 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. 53

54 Structured Investments Suitability Based Selling 2 days Three, 3-hour Modules The 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 valueproposition, 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. 54 Principals 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.

55 Project Finance Learning Pathway Level 1 Principals of Project Finance Level 2 Power Industry Project Finance Project Finance for Infrastructure Level 3 Advanced Project Finance Project Finance in the Oil & Gas Industry

56 Principals of Project Finance 3 days Six, 3-hour Modules The 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. What 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 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 56

57 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 57

58 Power Industry Project Finance 1 day Two, 3-hour Modules This 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. 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 58

59 Project Finance for Infrastructure 1 day Two, 3-hour Modules This 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: 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. Infrastructure 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 59

60 Project Finance in the Oil and Gas Industry 1 day Two, 3-hour Modules This 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: 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 Upstream 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 60

61 Advance Project Finance 2 days x Two, 3-hour Modules This 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. Project 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 61

62

63 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

64 Essentials of Trade Finance 3 days Six, 3-hour Modules This 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. Letters 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 64

65 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 65

66 Identifying and Mitigating Risks in Trade Finance 3 days Six, 3-hour Modules This 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. 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 66

67 67

68 Structured Trade Finance Principles, Practices and Cases 3 days Six, 3-hour Modules This 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. Unlocking the secret of structured trade finance in back-to-back trade financing 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-toback financing The structure Flow Term sheet Short case study: A trading company needs structured trade finance facilities based on back-toback 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 68

69 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 69

70 Financial Modelling and Valuation Learning Pathway 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 Level 3 Advanced Analysis of Financial Statements Excel Modelling for Financial Analysis: Options and Regression Advanced Equity Analysis and Valuation

71 Analysis of Financial Statements 2 days Three, 3-hour Modules From 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. Accounting 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 71

72 Excel Features for Financial Management 1 day Two, 3-hour Modules Anyone 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 Conditional 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" 72

73 Introduction to Financial Maths 1 day Two, 3-hour Modules People 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 Simple 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 of equity valuation via DCF Discounting of dividends with and without growth P/E ratios as concealed discount factors Discounting free cash flow of property valuation via DCF Capitalization rates NPV valuation Applications of DCF in financial statements analysis Accounting for bonds Leasing 73

74 Valuation Toolkit 2 days Three, 3-hour Modules The 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. What 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 74

75 Financial Statement Modelling and Valuation 1 day Two, 3-hour Modules The 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 Introduction to modelling and income statement modelling Worked example: Income statement modelling : 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: 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) 75

76 Introduction to VBA Programming for Excel 1 day Two, 3-hour Modules Visual 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. Getting 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 76

77 Financial Modelling with Excel 1 day Two, 3-hour Modules The 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 Foundations 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) 77

78 Building a Valuation Model 2 days Three, 3-hour Modules A 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. Valuation 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 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 78

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 79

80 Advanced Analysis of Financial Statements 1 day Two, 3-hour Modules This 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. Group 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 80

81 Excel Modelling for Financial Analysis: Options and Regression 1 day Two, 3-hour Modules This 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. Options 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() 81

82 Advanced Equity Analysis and Valuation 3 days Six, 3-hour Modules This 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 Introduction 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 82

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 83

84 Credit Learning Pathway 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 3 days Six, 3-hour Modules This 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. Managing & 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 85

86 Effective Cash Flow Lending 3 days Six, 3-hour Modules This 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. Understanding 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 86

87 Loan Syndication A Practical Approach 3 day Six, 3-hour Modules This 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. & 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 87

88 Credit Risk Management Structuring Term Lending and Capital Expenditure Financing 2 days Three, 3-hour Modules In 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. What 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 88

89 Credit Risk Management Structuring Working Capital Financing 2 day Three, 3-hour Modules Working 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. Concept 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 89

90 Effective Credit Monitoring to Minimise Non Performing Loans 3 days Six, 3-hour Modules It 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. Review 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 90

91 Advanced Corporate Credit Analysis and Debt Restructuring 3 days Six, 3-hour Modules The 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. Fundamental 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. 91

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 of the debt restructuring process Problem loan and restructuring workshop 92

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 93

94 Reporting, Compliance and Regulatory Learning Pathway Level 1 Financial Reporting Basel III/CRD IV Background and Implementation Level 2 IFRS Update Markets in Financial Instruments Directive II Case Studies in IFRS: Accounting for Financial Instruments Under IAS 39 Level 3 Case Studies in IFRS: Consolidation and Group Reporting under IFRS IFRS Forensics Impact on Valuation Metrics

95 Financial Reporting 1 day Two, 3-hour Modules This 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. News 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 95

96 Basel III/CRD IV Background and Implementation 1 day Two, 3-hour Modules Basel 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. 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 of the financial stability board s new standards for globally systemically important banks (G-SIBs) Update on Basel IV changes 96

97 IFRS Update 1 day Two, 3-hour Modules IFRS 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 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. The current standard setting agenda 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 97

98 Markets in Financial Instruments Directive II 2 days Three, 3-hour Modules MiFID II the Markets in Financial Instruments Directive II will come into force in 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. MiFID 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 98

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 99

100 Case Studies in IFRS: Accounting for Financial Instruments Under IAS 39 1 day Two, 3-hour Modules This 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 , 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: 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 100

101 Case Studies in IFRS: Consolidation and Group Reporting under IFRS 1 day Two, 3-hour Modules This 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 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 101

102 IFRS Forensics Impact on Valuation Metrics 1 day Two, 3-hour Modules This 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. 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 102

103 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 Business Analysis Non-banking Entity Level 3 Business Analysis Banking Entities Advanced Economics

104 Kaplan Business Challenge 2 days x N/A Are 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. This 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 Values Open 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 thing The 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 principles The 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. 104

105 Financial strength & efficiency The 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 management The 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 speed The 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. 105

106 Finance for the Non-financial Manager 2 days Three, 3-hour Modules You 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. Accounting 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 106

107 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 107

108 Fundamentals of Business Analysis 2 days Three, 3-hour Modules The 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. 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 of metrics Net asset value PE based valuations Market capitalisation Free cash flow valuations Enterprise value 108

109 109

110 Introduction to Economics 1 day Two, 3-hour Modules This 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. 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 110

111 111

112 Planning, Forecasting and Budgeting 1 day Three, 3-hour Modules Are 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. Creating 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? 112

113 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 113

114 Behavioural Finance 1 day Three, 3-hour Modules The 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. 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 114

115 Business Analysis Non-Banking Entity 1 day Two, 3-hour Modules The 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. 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 of Basel regime Capital ratios Leverage Liquidity ratios Total loss absorbing capacity Use of these statistics to analyse a bank Business valuations of available metrics Why banks are different Specific models to value bank equity 115

116 Business Analysis Banking Entities 1 day Two, 3-hour Modules The 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. 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 116

117 117

118 Advanced Economics 2 days Three, 3-hour Modules The 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). With 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? 118

119 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 119