|
Provided by: FitchTraining Advanced Bank Analysis Evaluating Complex Financial StatementsAccounting and Finance |
 |
Training
Provided by FitchTraining
A two-day advanced case study based workshop which drills down into the financial statements of banks and securities companies in order to identify and quantify the risks of more complex business lines.
Related Awards, Degrees or Certifications: Earn CPD credits
We are an accredited training provider with a number of institutions including:
ACCA
NASBA
Securi
|
|
||||||||||
Advanced Bank Analysis Evaluating Complex Financial Statements
Course Objectives
Participants will be equipped to:
Recognise how and the extent to which more complex banking businesses are reflected in the balance sheet and how the risk profile is evidenced in the income statement
Identify and quantify exposures where all or part of the exposure is off-balance sheet, including derivatives and structured finance vehicles
Understand how the new accounting and reporting conventions under both US GAAP and IFRS impact differently the financial statements of banks and investment banks
Use the information provided to evaluate the bank's risk profile and appetite.
Target Audience
Experienced analysts, regulators, 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, Emerging Market Banks and Sovereigns and Non-Bank Financial Institutions. Other complementary workshops include Risk Management in Banks & the Capital Implications and Early Warning Signals in Financial Institutions.
Content
OVERVIEW
Products
Complex banking products: risk profiles and analytic challenges - cash, derivative and structured products
Transaction flows: securities and derivatives trading products, other investment banking activities.
Accounting
Accounting for securities and derivatives transactions
Overview of new accounting principles
Impact of FAS 133 and IAS 39 on financial instrument and derivatives accounting
Key differences between US GAAP and IFRS
Impact of Basel II on the financial statements and disclosure.
STATEMENT LOGIC
Cash market transactions
Long and short positions in equities, bonds and commodities
Loan and loan commitments: fair valuation and cost plus impairment techniques; banks who use a mix of fair value and cost accounting; contingent liabilities
Brokerage: agency Versus principal, OTC vs. on-exchange, cash Versus derivatives
Financing transactions: stock borrowing and lending, repos and reverse repos
Re-hypothecation of client balances liquidity challenges
Where these items will be reflected in the financial statements.
Derivative transactions
Treatments of trading and hedging transactions under FAS 133 and IAS 39
Methodologies for quantifying credit risk: factors affecting potential future exposure (PFE) calculations
Expected disclosures and key additional questions to ask.
Structured finance transactions
Types of transaction: securitization, other structured credit products, other off-balance sheet vehicles e. g. SIVs, ABCP
Different risk profiles: what went wrong?
When and where these will come on balance sheet
Role of investment banks in the originating, securitizing, trading and investing in RMBS liquid and non-liquid (equity) tranches
Quantifying exposure to CDO s, MBS, and SIV s: valuing securities marked to model when market values can not be established.
FINANCIAL STATEMENT ANALYSIS
Securities and derivatives activities
Using the financial statements to assess trading and market risk
Relating market risks to the success of the business model: key sensitivities to different markets
Reliance on, and volatility of, trading profits
Measuring VaR levels: benchmarking performance against peers
Other disclosures about market risk: back testing, stress testing, other risk measures
Due diligence: further questions to ask.
Lending and underwriting activities
Using the financial statements to assess credit risk: insights and limitations of traditional impaired loans and provisioning ratios
Impact of derivatives on credit risk: credit derivatives used for hedging and potential future exposure on all derivative positions
Best practice: need for global systems (limits and outstandings), models that accommodate correlated variables; Credit VaR
Due diligence: limitations to disclosure and further questions to ask
Case: credit risk on- and off-balance sheet activities and derivatives.
Financing activities
Using the balance sheet to assess liquidity risk and capital adequacy
Relating transaction flows to liquidity
Impact of different business lines on liquidity: trading, broking, prime brokerage, etc.
Liquidity regulations
Legal structure: implications of double leverage
Off-balance sheet exposures and their implications; window dressing
Capital adequacy: differences between core and hybrid capital
Distinction between a liquidity and solvency crisis
Ratios: what they mean and how they should be used
Case: liquidity risks, stress testing capital and early warning signals.
Participants will be equipped to:
Recognise how and the extent to which more complex banking businesses are reflected in the balance sheet and how the risk profile is evidenced in the income statement
Identify and quantify exposures where all or part of the exposure is off-balance sheet, including derivatives and structured finance vehicles
Understand how the new accounting and reporting conventions under both US GAAP and IFRS impact differently the financial statements of banks and investment banks
Use the information provided to evaluate the bank's risk profile and appetite.
Target Audience
Experienced analysts, regulators, 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, Emerging Market Banks and Sovereigns and Non-Bank Financial Institutions. Other complementary workshops include Risk Management in Banks & the Capital Implications and Early Warning Signals in Financial Institutions.
Content
OVERVIEW
Products
Complex banking products: risk profiles and analytic challenges - cash, derivative and structured products
Transaction flows: securities and derivatives trading products, other investment banking activities.
Accounting
Accounting for securities and derivatives transactions
Overview of new accounting principles
Impact of FAS 133 and IAS 39 on financial instrument and derivatives accounting
Key differences between US GAAP and IFRS
Impact of Basel II on the financial statements and disclosure.
STATEMENT LOGIC
Cash market transactions
Long and short positions in equities, bonds and commodities
Loan and loan commitments: fair valuation and cost plus impairment techniques; banks who use a mix of fair value and cost accounting; contingent liabilities
Brokerage: agency Versus principal, OTC vs. on-exchange, cash Versus derivatives
Financing transactions: stock borrowing and lending, repos and reverse repos
Re-hypothecation of client balances liquidity challenges
Where these items will be reflected in the financial statements.
Derivative transactions
Treatments of trading and hedging transactions under FAS 133 and IAS 39
Methodologies for quantifying credit risk: factors affecting potential future exposure (PFE) calculations
Expected disclosures and key additional questions to ask.
Structured finance transactions
Types of transaction: securitization, other structured credit products, other off-balance sheet vehicles e. g. SIVs, ABCP
Different risk profiles: what went wrong?
When and where these will come on balance sheet
Role of investment banks in the originating, securitizing, trading and investing in RMBS liquid and non-liquid (equity) tranches
Quantifying exposure to CDO s, MBS, and SIV s: valuing securities marked to model when market values can not be established.
FINANCIAL STATEMENT ANALYSIS
Securities and derivatives activities
Using the financial statements to assess trading and market risk
Relating market risks to the success of the business model: key sensitivities to different markets
Reliance on, and volatility of, trading profits
Measuring VaR levels: benchmarking performance against peers
Other disclosures about market risk: back testing, stress testing, other risk measures
Due diligence: further questions to ask.
Lending and underwriting activities
Using the financial statements to assess credit risk: insights and limitations of traditional impaired loans and provisioning ratios
Impact of derivatives on credit risk: credit derivatives used for hedging and potential future exposure on all derivative positions
Best practice: need for global systems (limits and outstandings), models that accommodate correlated variables; Credit VaR
Due diligence: limitations to disclosure and further questions to ask
Case: credit risk on- and off-balance sheet activities and derivatives.
Financing activities
Using the balance sheet to assess liquidity risk and capital adequacy
Relating transaction flows to liquidity
Impact of different business lines on liquidity: trading, broking, prime brokerage, etc.
Liquidity regulations
Legal structure: implications of double leverage
Off-balance sheet exposures and their implications; window dressing
Capital adequacy: differences between core and hybrid capital
Distinction between a liquidity and solvency crisis
Ratios: what they mean and how they should be used
Case: liquidity risks, stress testing capital and early warning signals.
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...
