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Provided by: FitchTraining Bank Failures Applying Lessons Learned Early Warning SignalsAccounting and Finance |
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Training
Provided by FitchTraining
A two-day masterclass for experienced analysts offering an insight into the causes and early warning signals of credit deterioration and failure in financial institutions. The workshop contains both local and international cases of distress in banks, broker dealers and finance companies to identify common themes and financial, non-financial and market indicators of deterioration. This workshop can be combined with the one-day Early Warning Signals in Insurance Companies.
Related Awards, Degrees or Certifications: Earn CPD credits
We are an accredited training provider with a number of institutions including:
ACCA
NASBA
Securi
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Bank Failures Applying Lessons Learned Early Warning Signals
Course Objectives
This two-day intensive workshop will provide a structured approach for identifying early warning signals in financial institutions. The aim is to equip participants with the knowledge and skills to proactively:
Understand the causes and symptoms of both systemic and individual bank failure in the current crisis
Anticipate and quantify the vulnerability of institutions to liquidity and refinancing risk
Stress test solvency for write downs from credit, trading, investment and derivative positions
Differentiate qualitative, quantitative and market indicators of credit deterioration
Identify the likely triggers or events which would change the credit standing of a company in the future.
Target Audience
Experienced credit risk and fixed income professionals with a good understanding of the analysis of financial institutions. This workshop is a follow-on from our intermediary level workshops: Intensive Bank Analysis, Intensive Bank Analysis: Community & Regional Banks and Non-Bank Financial Institutions.
The majority of Fitch Training programmes are offered at an intermediate and advanced level. There are no specific prerequisite courses to attend our programmes, however some topic knowledge maybe required. Please refer to the target audience to see what level of prior knowledge is required for a specific course.
Content
ANALYTIC OVERVIEW
Signs of distress
Common themes in troubled financial institutions: excessive growth, over-concentration, volatile earnings sources, asset and liability mismatches, dependence on unstable funding
Symptoms of a company s deteriorating credit standing: financial, non-financial and market indicators.
Structured analytic approach
Four-step approach to focus on key issues: purpose, payback, risks and structure
Purpose of the exposure and sources of payback: importance of refinancing in financial institutions, challenges to downsizing assets and availability of external support
Risks to repayment: Identify the key macro, sector and company specific business and financial risks which might jeopardise repayment
Structure: conclude on appropriateness of the facilities, assess the level of protection and critique the pricing to assess the risk: return
Case study: a sub-prime lender. Lessons learned from the origins of the crisis.
OPERATING ENVIRONMENT
Key macro economic and sector trends, which are likely to erode creditworthiness
Systemic risks within a financial system: macro variables, competitive pressures, shadow banking system, quality of regulation and supervision
Support for the banking system: too big to fail or too big to rescue?
Case study: stressed countries and banking systems
Origins of the credit crunch: sub-prime, structured finance (MBS, CDO, SIVs and ABCP), leveraged loans, dependence on interbank and etcetera
Market risk exposures: interest rate (structural and specific), credit, equity, currency, commodity etcetera differences by type of bank and key indicators.
MANAGEMENT AND SHAREHOLDERS
This section will focus on comparing management responses to a challenged sector
Companies in crisis: recognising weak management and lack of integrity
Risk management challenges: liquidity, reputation, operational risk
Disclosure and corporate governance concerns
Inter-group support: ability of a stressed parent company to support subsidiaries
Case study: a failed investment bank.
BUSINESS RISK
This section will focus on companies with challenged business models and companies in crisis
Credit risk: asset quality in the loan book; excessive growth and concentrations, hidden impaired loans; using surveillance reports to anticipate credit risk problems
Market risk: stress and back testing VaR indicators, acceptable levels of exposure to structural interest rate and FX risk
Derivatives: hidden credit and market risks; appropriate exposure levels
Performance risk: assessing earnings volatility
Case studies: bank failures due to exposures to credit risk, trading and investment losses, derivatives and structural interest rate risk.
FINANCIAL RISK
This section will focus on the stability of a company s funding structure and the ability to withstand solvency and liquidity crises
Assessing the diversity and stability of funding sources: refinancing risk: quantifying liquidity and financial flexibility
Asset and liability management concerns: FX, interest rate and maturity mismatches
Liquidity risk management: managing and stress testing transaction and funding stability
Securitization vehicles: liquidity exposure to conduits, servicing rights and other residual interests, sub-prime risks
Double leverage: challenges of a leveraged holding company
Solvency: stress testing quality and adequacy of capital to withstand write-downs
Case studies: institutions without a stable deposit base; off-balance sheet exposures and inadequate capitalisation.
This two-day intensive workshop will provide a structured approach for identifying early warning signals in financial institutions. The aim is to equip participants with the knowledge and skills to proactively:
Understand the causes and symptoms of both systemic and individual bank failure in the current crisis
Anticipate and quantify the vulnerability of institutions to liquidity and refinancing risk
Stress test solvency for write downs from credit, trading, investment and derivative positions
Differentiate qualitative, quantitative and market indicators of credit deterioration
Identify the likely triggers or events which would change the credit standing of a company in the future.
Target Audience
Experienced credit risk and fixed income professionals with a good understanding of the analysis of financial institutions. This workshop is a follow-on from our intermediary level workshops: Intensive Bank Analysis, Intensive Bank Analysis: Community & Regional Banks and Non-Bank Financial Institutions.
The majority of Fitch Training programmes are offered at an intermediate and advanced level. There are no specific prerequisite courses to attend our programmes, however some topic knowledge maybe required. Please refer to the target audience to see what level of prior knowledge is required for a specific course.
Content
ANALYTIC OVERVIEW
Signs of distress
Common themes in troubled financial institutions: excessive growth, over-concentration, volatile earnings sources, asset and liability mismatches, dependence on unstable funding
Symptoms of a company s deteriorating credit standing: financial, non-financial and market indicators.
Structured analytic approach
Four-step approach to focus on key issues: purpose, payback, risks and structure
Purpose of the exposure and sources of payback: importance of refinancing in financial institutions, challenges to downsizing assets and availability of external support
Risks to repayment: Identify the key macro, sector and company specific business and financial risks which might jeopardise repayment
Structure: conclude on appropriateness of the facilities, assess the level of protection and critique the pricing to assess the risk: return
Case study: a sub-prime lender. Lessons learned from the origins of the crisis.
OPERATING ENVIRONMENT
Key macro economic and sector trends, which are likely to erode creditworthiness
Systemic risks within a financial system: macro variables, competitive pressures, shadow banking system, quality of regulation and supervision
Support for the banking system: too big to fail or too big to rescue?
Case study: stressed countries and banking systems
Origins of the credit crunch: sub-prime, structured finance (MBS, CDO, SIVs and ABCP), leveraged loans, dependence on interbank and etcetera
Market risk exposures: interest rate (structural and specific), credit, equity, currency, commodity etcetera differences by type of bank and key indicators.
MANAGEMENT AND SHAREHOLDERS
This section will focus on comparing management responses to a challenged sector
Companies in crisis: recognising weak management and lack of integrity
Risk management challenges: liquidity, reputation, operational risk
Disclosure and corporate governance concerns
Inter-group support: ability of a stressed parent company to support subsidiaries
Case study: a failed investment bank.
BUSINESS RISK
This section will focus on companies with challenged business models and companies in crisis
Credit risk: asset quality in the loan book; excessive growth and concentrations, hidden impaired loans; using surveillance reports to anticipate credit risk problems
Market risk: stress and back testing VaR indicators, acceptable levels of exposure to structural interest rate and FX risk
Derivatives: hidden credit and market risks; appropriate exposure levels
Performance risk: assessing earnings volatility
Case studies: bank failures due to exposures to credit risk, trading and investment losses, derivatives and structural interest rate risk.
FINANCIAL RISK
This section will focus on the stability of a company s funding structure and the ability to withstand solvency and liquidity crises
Assessing the diversity and stability of funding sources: refinancing risk: quantifying liquidity and financial flexibility
Asset and liability management concerns: FX, interest rate and maturity mismatches
Liquidity risk management: managing and stress testing transaction and funding stability
Securitization vehicles: liquidity exposure to conduits, servicing rights and other residual interests, sub-prime risks
Double leverage: challenges of a leveraged holding company
Solvency: stress testing quality and adequacy of capital to withstand write-downs
Case studies: institutions without a stable deposit base; off-balance sheet exposures and inadequate capitalisation.
About The Training Provider: FitchTraining
FitchTraining - Fitch Training is a specialist training firm focused on the provision of credit and corporate finance training. Courses are offered in three areas: financial institutions, corporate credit and securitization. Fitch Training is part of Fitch Solutions, a division of the Fitch Group. We also work in partnership with Fitch Solutions to provide quantitative training.
Fitch Training operates...
