Module One: Introduction to Banking
1.1 What is a Bank
1.1.1 In General · 1.1.2 Historical Perspective · 1.1.3 Intermediation · 1.1.4 Assets · 1.1.5 Liabilities
1.1.6 Banking Services
- Remittance
- Collections
- Letters of Credit
- Foreign Exchange
- Travellers Checks
- Credit Cards
- Funds Transfer (EFT)
- EDI
1.1.7 Trust Services · 1.1.8 Other Services
- Corporate Agency · Investment Securities · Custodial · Payment Services · Safe Deposit · Lock Box
1.1.9 Macro Economic Impact of Banks · 1.1.10 The Role of Government
- Increasing and Decreasing Money Supply
- Licensing and Regulating
- Lender of Last Resort
1.1.11 The Role of Non-Bank Financial Institutions · 1.1.12 Disintermediation
1.2 What is Money
1.2.1 Historic Perspective (Barter · Mediums of Exchange · Specie · Paper Money · Bank Notes · The Role of Government)
1.2.2 Non-Cash Money (Credit · Credit Cards · Cashless Society)
1.2.3 Measurements of Money Supply (M1 · M2 · M3 · Other Measures)
1.2.4 Government Control · 1.2.5 The Creation of Money · 1.2.6 Non-bank Creators of Money · 1.2.7 Trends and Future Developments
1.3 Capital Structures of Banks
1.3.1 Assets (Due From Banks · Securities · Loans · Leases · Non-earning Assets)
1.3.2 Liabilities (Due To Banks · Deposits · Direct Liabilities · Contingent Liabilities)
1.3.3 Capital Accounts (Paid in Capital · Retained Earnings · Capital Notes · Debentures)
1.4 Bank Earnings — Interest on Loans · Income from Leases · Fees · Other
1.5 Interest Rates — Term Structure · Liquidity Preferences · Inflation and Expectations
1.6 Present Value and Rates of Return
Time Value of Money · Compounding · Discounting · Present Value · Future Value · Internal Rates of Return · The Concept of Duration
1.7 & 1.8 Risk and Reward · Capital Adequacy
Liquidity · Leverage · The BIS Guidelines
1.9 Organization of a Typical Bank
Module Two: Credit
2.1 Introduction to Credit and Lending (Credit Analysis I)
2.1.1 Overview of the Credit Process
- Key Elements of the Credit Process
- Credit Procedures / Credit Analysis and Initiation
- Credit Approval Process / Credit Review
- Non-performing Loans / Collection and Salvage
- Loan Administration / Organization and Staffing
2.1.2 Qualitative Analysis (External & Internal Analysis · Sources of Information · The Five Cs of Credit) 2.1.3 Financial Analysis (Comparative Techniques · Financial Ratios · Liquidity · Leverage · Operating · Profitability · Cash Flow) 2.1.4 Credit Initiation (Structuring · Cash Flow Projections · Terms · Pricing) 2.1.5 Credit Memorandum (Background · Management · Use of Funds · Security · Financial Analysis · Sensitivity Analysis · Recommendations) 2.1.6 Credit Approval (Policies · Procedures · Approval Authority) 2.1.7 Documentation · 2.1.8 Term Loans · 2.1.9 Credit Review 2.1.10 Loan Administration · 2.1.11 Portfolio Administration · 2.1.12 Risk Management · 2.1.13 Organization and Staffing
2.2 Corporate Capital Structures (Credit Analysis II)
Principal Components (Equity · Quasi-Equity · Debt · Linked Options) · Cost of Capital (Cost of Debt · Cost of Equity · WACC) · Effects of Capital Structure · Implications of Leverage · Cash Flow · Liquidity
2.3 Using Spreadsheets in Credit Analysis (Credit Analysis III)
Introduction to Desktop PCs & Spreadsheets · Analyzing Financial Statements · Spreading Financial Statements · Projections · Sensitivity Analysis
2.4 Corporate Valuation (Credit Analysis IV)
Alternative Methods (Book Value · Market Value · DCF · Liquidation · Replacement) · Discounted Cash Flow Valuation · IRR vs. DCF · Capital Asset Pricing Model
2.5 Non-Performing Loans (Credit Analysis V)
2.6 Specialised Lending (Credit Analysis VI)
Agriculture · Real Estate · Project Finance · Energy · Transportation · Correspondent Banking · Trade Finance · Structured Financings
2.7 Other Credit and Risk Issues (Credit Analysis VII)
Sovereign Risk · Cross Border Risk · Daylight and Overnight Risk · Industry and Sector Risk · Interest Rate Risk · Counterparty Risk · Credit Rating Agencies
Module Three: Operations
3.1 Interchange and Settlement — Proofing · Clearing · Receiving/Paying Value · Posting · Exceptions
3.2 Reconciliation — Nostro/Vostro · Suspense Accounts · General Ledger Accounts
3.3 Internal Control — Deal Confirmations · Credit Overrides · Reconciliations · Systems Access · Value Dating Claims
3.4 Management Information Systems and Equipment
Mainframes, Minis, PCs and Terminals · Networks (LANs and WANs) · Access Security · Applications Software · Audit Trails · Marker/Checker Controls · Risk Analysis and Contingency Planning · Disaster Recovery · Reports
3.5 Communications — SWIFT · Telex (T.T.) · Test Key · Mail · Telecommunications · Courier · Satellite
3.6 Cash & Custodial — Domestic and Foreign Currency · Negotiable Instruments · Travellers Checks · Drafts · Acceptances · CDs · Securities · Safe Deposit Boxes · Lock Box · Agency Services
3.7 Position Keeping — Dealing Room Functions · Assets · Liabilities · Central Bank / Daylight / Overnight / Client Limits
3.8 & 3.9 Personnel and Human Resources · Premises and FF&E
Module Four: International Operations
4.1 Inward Clean Collections — Correspondent Bank Collections · Drafts · Mail Transfers · Telegraphic Transfers · SWIFT Payments · Foreign Travellers Checks · Foreign Cash
4.2 Inward Documentary Collections — Letters of Credit (Sight · Terms/Usance) · Import Collections
4.3 Outward Clean Collections — Correspondent Bank Collections · Export Collections · MT · TT · SWIFT · Foreign Cheques · Foreign Travellers Checks · Foreign Cash
4.4 Outward Documentary Collections — Letters of Credit · Acceptances · Export Negotiations · Export Collections · Trade Opinions
4.5 Correspondent Banks — Correspondent Bank Arrangements · Foreign Currency Accounts · Trade Enquiries
Module Five: Treasury Products
5.1 Introduction to Treasury Operations
5.2 Foreign Exchange
History of the Market · What Determines FX Rates · The Spot Market (Quoting Conventions · Bid-Offer Rates · Cross Rates) · The Forward Markets (Discounts and Premiums · Quoting · Arbitrage · Covered Interest Arbitrage) · Corporate FX Management (Transaction · Translation · Economic Exposure · Hedging) · Currency Swaps · Simulation Exercises
5.3 Money Markets — Instruments · Comparison of Markets · Quoting Conventions · Simulation Exercises
5.4 Futures and Forwards
Forward Contracts · Futures Contracts (Characteristics · Advantages/Disadvantages · Comparison) · Margin Requirements (Initial · Variation · Maintenance) · Interest Rate Futures · Implied Forward Rate · Cost of Carry · Convergence · Hedging Short-Term and Long-Term Instruments · Forward Rate Agreements · FX Forwards and Futures
5.5 Interest Rates and Duration
Dynamics of Interest Rates · Yield Curves · Forward Interest Rate Calculation · Fixed-Rate Securities · Duration-Based Hedging (Price Volatility · Modified Duration)
5.6 Interest Rate Swaps
What is an Interest Rate Swap? · Uses and Benefits · Types of Swaps · Coupon Swaps · Money Market Swaps · Performance Risk (Settlement · Market · Maximum Potential Exposure)
5.7 Financial Options Products
Option Terminology · Buying and Selling Calls/Puts · Option Pricing Concepts (Intrinsic Value · Time Value · Volatility) · Foreign Currency Options · Interest Rate Options · Hedging with Options · Equivalent Option Positions · Options Linked to Financial Instruments (Bonds with Warrants · Callable · Puttable · Swaptions · Convertibles)
5.8 Treasury Operations — Limit Control · Position Keeping · Confirmations · Reconciliation · Settlement · Accounting · Hardware and Software Issues
Module Six: Trade Finance
6.1 Introduction — The Role of the International Bank
6.2 Trade Payment Mechanisms — Open Accounts · Consignment · Collections · Commercial Letters of Credit · Cash against Documents · Cash in Advance
6.3 Letters of Credit — Mechanics · Applications · Principal Documents · Pricing · Governing Regulations · Confirmed and Advised LCs · Sight and Usance Drafts · Credit Risk
6.4 Bankers’ Acceptances — Mechanics · Applications · Pricing · Capital Adequacy Guidelines · Governing Regulations
6.5 Export Finance and Insurance — US/Japanese/Korean Ex-Im Banks · ECGD · Hermes · COFACE · MIGA · OPIC
6.6 Forfaiting
6.7 Standby Letters of Credit — Mechanics · Applications · Risks · Pricing · Capital Adequacy Guidelines
6.8 Other Trade Finance Issues — Commodities · Countertrade · Back Office Support
Module Seven: Capital Markets
7.1 Introduction
7.2 Equities
The Basics (Equity Securities · Types of Equities · Financial Implications) · Issuing Equities (IPOs · Private Placements · Primary and Secondary Issues · The Role of the Underwriter · International Equities) · Equity Valuation (EPS Multiples · Dividend Calculations · DCF · Asset-based Valuation · Valuing Risk and Volatility) · Equity Hybrids (Convertible Bonds · Equity Warrants · Warrant Hedging) · Equity from the Investor’s Point of View (Asset Allocation · Market Efficiency · Risk and Return · Mutual Funds) · Risk Management (Hedging · Options · Stock Index Futures) · Stock Markets: United States · Far East (Australia, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, NZ, Philippines, Singapore, Taiwan, Thailand) · Europe · Other Emerging Markets
7.3 Debt Securities
Bonds · Notes · Floating Rate Notes · Capital Risk · Coupon Stripping · Zero Coupon Bonds · Medium Term Notes · Option Linked Bonds (Bonds with Warrants · Callable · Puttable · Capped FRNs · Zero-coupon Convertibles) · Capital Markets for Debt (Public Markets · Private Placements)
7.4 Quasi Equity Securities — Convertible Bonds and Notes · Subordinated Debentures · Capital Notes
Module Eight: Management Issues
8.1 In General
8.2 Capital Structure — Leverage and Gearing · Senior and Junior Equity · Quasi Equity · Senior and Junior Debt · Dealing with Capital Markets
8.3 Asset and Liability Management — Capital Budgeting · Liquidity and Reserves · Asset and Liability Committee · Maturity Matching · Intermediation · Interest Rate Issues · Capital Market Issues
8.4 Credit Issues — Credit Policies and Procedures · The Credit Approval Process · Credit Review and Examination · Non-Performing Loans and Loan Loss Provisions · Risk Management · Portfolio Administration
8.5 Operations — Domestic and International Operations Issues
8.6 Treasury — Risk Management · Internal and External Limits and Control
8.7 Audit and Control — Cash and Custodial · Authorities and Approvals · Reporting · Limit Control · Settlement and Reconciliation · Clearing · Security Issues (Premises · Personnel · Telecommunications · Computers) · Internal Procedures · Outside Auditors
8.8 Role of the Board of Directors
8.9 Shareholder Relations
8.10 Government Regulations
8.11 Legislative and Regulatory Issues
8.12 Relations with Other Banks
8.13 Issues of Competition