The outline below is the standard format. It can be adapted to the client’s specific requirements to include for example:
• Case studies based on the local banking industry
• An introduction to Rating Agencies Methodologies
Duration: 2 to 3 days.
Level: Foundation to Intermediate
Suitable for: Credit risk management, bank or investment analysts and originators.
Learning Outcomes
By the end of the course, participants will be able to:
• Use a structured approach to assess a bank’s credit quality
• How to assign internal and external ratings
• Recognise early warning signals of credit deterioration
Course description
The course provides a structured approach to bank analysis, focusing on the assignment of internal credit ratings as required by the new Basel II IRB Approaches as well as the rating methodologies of the major rating agencies. The concepts are applied to case studies where delegates are asked to make credit decisions, assign ratings and price transactions.
Day 1
Economic fundamentals of banking
• Definition and role of banks
• Dynamics of different business lines- Predictability of income
• Recapitalisation, disintermediation, diversification and consolidation
• Status and credit quality of the industry in different markets
Financial fundamentals of banking
• Balancing contradictions: Risks, leverage, liquidity, capital and returns
• Basel I and II-impact on business lines and returns- treatment of provisions
Day 2
Bank analysis
• Critical success factors: External and bank specific.
• CAMEL as an approach.
• Agency ratings-methodology
• Economic capital and ratings
• Warning signals
Case studies
• All the above concepts are dealt with in case studies prepared in group and discussed in class.