School of Corporate Banking

Course Background The financial crisis and subsequent meltdown of the banks of 2008 and 2011 has fundamentally altered corporate banking business models. Regulations including the Basel III have forced change, and bankers themselves are learning important lessons from the crisis. To adapt to the resulting challenges, banks are required to build flexible structures that are able to adapt and respond to client requirements and regulatory constraints. This training will review the recent changes and challenges as well as their their strategic impacts, discussing good management principles that allow bankers not only to implement the new business models, but also to thrive in the new banking environment. By attending this comprehensive and interactive five day course you will learn the best practice techniques to: Develop a sound corporate banking strategy in the post crisis environment Create an efficient corporate banking organisation Produce a competitive corporate banking product range Build effective relationship management skills Implement a risk-focused banking organisation This course has been specifically designed for the benefit of: Corporate banking managers Business managers Risk managers Financial and management accounting managers Strategy managers
Day 1 Corporate Banking Strategy in the Post Crisis Environment Concepts How is the financial crisis (sub-prime, sovereign crisis) influencing banking and more specifically corporate banking? - Impact of the crisis and the Regulatory response (Volker rule, Sir John Vickers recommendations, B III, stress tests...) - Bank management response - Redefinition of the scope and organization of corporate banking, investment banking, retail and SME Bankin Bank management impacts - Changes in customer requirements (the demand side) and the bank product and services (the offer side) - Changes in the bank business models - Changes in management information (the analytical tools and data requirements) A systematic analytical framework (POLDAT) for business impacts and technical impacts. Workshop: Analysis by small groups and class room discussion on corporate customer requirements: Their needs, the bank’s response, key factors of success for the corporate banker, impact on the financial results and KPIs of the bank! Day 2 Building a Competitive Product Range Group Discussion List and describe corporate banking product offering How does this meet the customer requirements? How do you create a competitive advantage to sell your products to the market? How are your products priced and what is the pricing process -- who, when, how? How do you assess product, client, portfolio and department ... profitability? Concepts Banking product pricing and valuation Pricing exercise: Which loan would you approve? - Pricing and valuation principles as per corporate finance theory - Remuneration of all risk classes and of equity allocations (risk based pricing) - Remuneration of operating (fixed, variable, direct, indirect) expenses (cost based pricing) - Commercial margin (relationship based pricing) Financial KPIs - Profitability measures (Volume, NP, RoA, RoE, RORAC...) - Value measures (SVA, EVA, VAR, EAR...) - A balanced scorecard approach - Other issues including product groupings, cross subsidization, loss leaders A systematic analytical framework (POLDAT) for business impacts and technical impacts. Exercise: Define a marketing budget on the basis of profitability and/or value KPIs and optimize the marketing budget (dollar value) A quick review of financial engineering (spot/ cash products, forwards and options and their decomposition in banking products and in financially engineered structured solutions. Financial Engineering Exercise: develop and price a solution to a specific customer requirement (the RfR loan) – group work Classroom discussion A: What are the risks associated with this product for the bank... and for the client? How should you manage these risks? How should you sell this product? Classroom discussion B: On the basis of the first discussion, what are your recommendations for the Bank’s organization for (1) product management (2) client management (3) risk and equity management (4) solvency management? Day 3 Effective Relationship Management Concepts Relationship management versus sales management From “share of the market” to “share of the wallet” and then to the “share of the mind”! What corporate customers buy and why Managing multidimensional relationships - Relationship dimensions and stages - Marketing yourself (the Relationship Manager -- RM -- and/or the Product Specialist – PS --), the products and services, the organization - Relationship quality assessment (with a self-assessment exercise) - Determination of high potential relationship prospects - The relationship management process, from idea generation to delivery and deal assessment - Relationship planning and review process Case Study: the B&B case. Analyse the business opportunity, define an appropriate product/service offering; develop a relationship plan and marketing plan. Day 4 Building an Efficient Corporate Banking Organisation Concepts Responding to the corporate market characteristics - Segmentation (industry, geography, service..., why – what and how?) - Tailor made offerings versus other strategies (operational efficiency, innovation - Organisational impacts, the POLDAT analysis (process; organisation; location; data; applications; technology) Challenges, risks and their mitigants Case Study: A POLDAT analysis Day 5 Dealing with Risk Concepts Risk Models - Borrower variance analysis (internal risk rating models) and optimisation strategies - Portfolio risk management analysis (variance/ covariance models) and optimisation strategies - Expected Loss calculations and value at risk analysis - Stress testing architecture - Systemic risk Risk management techniques (underwriting, managing and hedging strategies) Credit risk corporate borrowers Credit risk, institutional borrowers (banks, insurances, sovereign, parastatals...) Case Study: Managing loan portfolios (corporate, institutional, investment portfolios and trading portfolios) within targeted Solvency constraints (bank’s risk rating strategic target Course summary and close