Price category: C
Date: Check the Agenda section on this website
Location: Amsterdam
Duration: 2 Days
Time: 09:00 - 17:00
Language: NL / EN
Lecturer(s): Frans van Laar
PE points:  14

Introduction:

This interactive 2-day workshop consists of a combination of conceptual classroom discussions and a practical computer based banking simulation programme.

This workshop gives the participants the opportunity to manage their own bank in a simulated environment. In teams the participants develop a medium-term strategy, set financial targets including targeted credit rating and describe their approach in terms of pricing strategy, liquidity management and interest rate risk management.
The teams will be confronted with fierce competition and a dynamic economic environment.
Each bank must find the right balance between managing its risks and the need to create shareholder value. At the same time, they will pursue their pre-defined strategy and improve customer satisfaction.
Participants will experience and remember how the different types of banking risks are interrelated, and how costly it can be if they take decisions on the wrong assumptions or make the wrong assessment. The learning curve will be steep...and it will be fun.

Learning objectives:

After this 2-day workshop, all participants will be able to:
• Understand how the different activities and businesses of a bank interact
• Define and understand the 6 main banking risks ie liquidity-, capital-, market-, interest rate-, credit- and operational risk
• Explain the concept of Basel III: capital components (CET-1, AT1, Tier2), capital buffers, risk weightings, pillar 1-3, liquidity requirements (LCR and NSFR)
• Describe the benefits of risk adjusted performance measurement
• Compute capital and key performance indicators
• Discuss how the different risk categories interact and influence a bank’s growth opportunities
• Explain how ongoing tighter regulations in combination with a low interest rate environment force banks to reinvent a sustainable business model
• Tell everyone how challenging it is to manage your own bank and to create shareholder value while maintaining a solid risk management profile

Target group:

This workshop is of interest to risk managers, corporate account managers, controllers, general managers, planners, bank supervisors, ALM professionals, compliance officers, and accountants. Furthermore, everyone with a genuine interest in banking and a solid educational background can participate to this course. It will provide the participants the top-down insight in key decision making and risk management.

Content:

Structure of a simulation round;Each simulation is a quarter of a year.

The structure of each simulation round is as follows:
• Central bank’s view on the macroeconomic environment, discussion of key economic indicators and yield curve
• Feedback on financial results of the banking sector in the previous quarter
• Instructions for the next simulation round
• Teams analyze the macroeconomic environment and prepare a forecast for the next 3 months’ period
• Teams analyze the financial results of the previous quarter, check development of market shares, customer satisfaction and violations (capital and liquidity)
• Teams prepare budget for the coming quarter of a year:
o Determine type and quantity of new loans as well as funding needs and preferred types of funding.
o Check the impact on risk weighted capital ratios
o Analyze the liquidity profile of the bank and level of interest rate gap
o All these checks and balance may trigger the need to change the budget
• Teams to decide on the pricing of new loans, spreads offered on the different sources of funding. Set IT and marketing budgets, and determine fees charged on private banking business
• Teams can now simulate the next quarter results assuming that the actual macroeconomic indicators are equal to their forecasts and unchanged behavior of competitors relative to the previous quarter
At the start of the 1st simulation round teams develop a business strategy for the medium term. At the start of the 2nd simulation round they set financial objectives.

Day 1:
• Introduction and objectives
• Business models in banking
• Composition of bank financial statements
• Identification of major risk categories: credit risk, market risk, liquidity risk, operational risk, capital risk
• Regulations and supervision
• Explanation of the web-based bank simulation program
• 1st simulation round: commercial loans, retail loans and private banking

Day 2:
• Interest rate risk: banking book vs trading book
• 2nd simulation round:
o New: commitments, securitization and repo’s
• Basel III: capital and liquidity requirements, regulatory capital vis-à-vis economic capital, RaRoRac
• 3r simulation round
o New: interest rate swaps
• Wrap-up and closing remarks

Methodology:

• The participants will receive an (English) written handout
• The course will be supported by a Power Point presentation
• At the end of the course the participants will be given a certificate of completion.

Extra:

VAT is not applicable on Investment Academy training.