Fundamentals of Loan & Transaction Structuring

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1 Fundamentals of Loan & Transaction Structuring A 2 day Training Workshop This course can also be presented in-house for your company or via live on-line webinar The Banking and Corporate Finance Training Specialist

2 Course Overview A two day interactive workshop style course, aimed at mid-level corporate bankers, analysts, product and client servicing and support teams wanting to gain an understanding of how credit assessment, loan structuring, cash flow analysis and loan covenants can be used effectively to ensure corporate client borrowing needs are matched and serviced by the appropriate bank loan facility. Participants are not expected to be lending experts but a basic understanding of bank lending products and some Course lending Overview exposures would be helpful Learning Objectives Participants will gain an understanding of how to: Identify the key elements of credit risk Understand the working capital cycle of a business Measure, quantify and evaluate the actual borrowing needs of the client (lend them what they need as opposed to what they want). Assess the risk of lending the client what they need Understand the difference between short, medium and long term loans and the risk profiles Analyse the cash flows the source of our repayment over the length of our loans Select the most appropriate lending structure Decide whether security is required Select appropriate documentation and loan covenants to manage the loan Learn how ongoing management of the loan is vital (following the bank s money) Methodology Highly interactive workshop style delivery with numerous Nigerian examples to illustrate the learning points. Delegate participation is expected and will be encouraged About the Course Director Your course director has spent more than 40 years in banking. He is a former Institute of Banking Lecturer, having gained distinctions in the exams and finishing as the top candidate for his year. He has lectured extensively to all the leading global banks including the world s largest institutions. He has delivered extensive programmes to banks in all parts of the world including the USA, Europe, MENA, Africa and Hong Kong. He is currently an accredited Master Trainer for the world s biggest trade finance bank Course Content Session 1: Defining credit risk The Basel Accords - briefly What is credit risk? The different types of credit risk Sovereign Corporate Retail Systemic Counterparty How do we measure credit risk The SSA environment Expected and unexpected losses Session 2: Lending Refresher - overview Definitions & basic lending principles Lending policies, lending strategies, lending systems

3 Data/information collection Approvals, security, draw downs Management & monitoring systems Case Study/Exercise: Several of each throughout the session Session 3: The Credit Risk of Specific Financial products Loans and overdrafts Term loans Project finance Construction finance Private public partnerships Government and corporate bonds Equity and mezzanine debt Credit derivatives Counterparty exposure Trade finance Mortgages Credit cards Session 4: The Working Capital Cycle Definition Understanding the mechanics Seasonal or non recurring cycles The role of bank finance The role of the overdraft Understanding break even analysis Understanding bankers cash flows How to lend in support of the cycle When an overdraft becomes a medium term loan Managing multiple cycles Session 5: The Basic Principles of Lending Appraisal techniques Credit assessment Business clients Corporate Clients Private Wealth Clients Group credit appraisal Development finance Project finance Session 6: Establishing the borrowers actual needs What do budgets and cash flows actually measure Short, medium and long term funding needs Short medium and long term lending products SWOT analysis Basic principles Data collection, refining and perfection Evaluation back testing Selecting the appropriate lending mix in practice Case Study/Exercise: Several of each throughout the session

4 Session 7: Introduction to Credit Risk Strategy Measuring credit risk in structured loans Portfolio theory and correlation concepts Contagion risks Liquidity assumptions The importance of time Session 8: The different lending maturities Short term finance Medium term finance Long term finance Working capital finance Trade finance Project finance The risks Session 9: Understanding cash flows Definitions Bankers cash flow What do we use them for Discounted cash flow, NPV & PDV Are medium term cash flows useful tools What are the pitfalls Where does it go wrong Stress testing and scenario analysis Session 10: Introduction to Lending structures What facilities does the client need What are we prepared to lend Is this enough Matching lending to cash flow Matching lending to use of funds Lending cycles Economic cycles Management and monitoring systems Cash flow monitoring Recovery management Session 11: Do we need/want security Why do banks take security Does it achieve recovery by itself We do lend unsecured Security does not improve the underlying deal Why take it then Safety net Risk transfer The importance of guarantees Type of security Completion and perfection of security

5 Independent and direct bank control Monitoring security post lending draw down Session 12: Documentation What do we need The minimum The ideal Covenants Undertakings Key clauses Managing the loan Regular scrutiny Report processes Session 13: Following Our Money Why is this necessary How do we do it The role of the CRM The role of Credit & Risk Management Systems, Processes Session 14: Course conclusion Summary Course win up Open forum END (0)

6 Tailored Learning All of our training courses can be tailored to suit your company s exact training needs. We will work closely with you to help develop a training programme with content that is unique for your organisation. Please us on enquiries@redcliffetraining.co.uk for more information E-Learning This course can also be presented as a bespoke e-learning programme created by you to fit your exact requirements. enquiries@redcliffetraining.co.uk +44 (0)