Euromoney Audit Training

A 4 day financial training course addressing the principles and practice of evaluating bank and country risk featuring:

Evaluate Country Risk

• Study local economies using readily available economic and political data.
• Why are some countries investment grade and others not?
• The difference between medium term and trade finance risks.
• Why is investment grade important?
• Why did analysts go wrong on country risk?

Look Behind the Numbers - Understand Bank Risk

• Learn how to find the weaknesses in the balance sheet.
• Ask the questions which reveal the real facts.
• Look behind the numbers and ratios to work out what is really happening.
• Bank reports can run to 200 pages - find the pages which matter.
• Why do banks fail? Spot the danger signs

Bank Rescues

• Not all banks are rescued when trouble hits.
• Which banks are likely to be supported. Why?

COURSE OBJECTIVES

This course is designed to give participants a thorough grounding in the principles and practice of evaluating bank and country risk. It is based on the need to understand the environment in which a bank operates and the importance of a thorough understanding of the off-balance-sheet features which influence bank risk. Country risk appraisal methods are explained and demonstrated because this is one of the largest components of bank risk. Credit rating agency services are examined and some key concepts demonstrated using computer techniques

At the end of the course students should have an understanding of the methods used to evaluate country risk and will have been taken step by step through a bank evaluation, considering the economy, quality of supervision and the detail of the bank management and balance sheet.

WHO SHOULD ATTEND

• Correspondent and international bankers
• Multinational corporate investors
• Credit managers
• Bank treasury analysts
• Bank & country risk managers
• Central bank and export credit agency officer
• Financial institutions bankers & relationship managers
• Institutional depositors
• Emerging market analysts
• Corporate treasurers
• Import and export trade managers

DAY ONE

Introduction

• Thinking about Country Risk
• Why do we accept some risks and not others?

Workshop & Discussion

The Banking Environment

• Why do banks fail?
• How does operating environment affect risk?
• Economic crises – the warning signs
• Approaches to country risk
• What are the methods used to evaluate country risk? What the agencies don’t cover.

Measure Country Risk

• Sources of information IMF, World Bank, CIA, Economist, FT, WSJ,
• Transparency International

How to use these sources

• Use and misuse of statistics. GDP, GNP, the Trade Accounts

Economic Indicators I

• Find and calculate Debt, Exports,
• Debt Service ratio

Economic Indicators II

• Short term liquidity
• Current Account Deficit
• Reserves

Current Account Workshop

Structural and political risk

• Commodity reliance – why is oil a risk indicator?
• What are the signs of a weak economy and banking system?
• Importance of the external debt structure

Political Risk

• Why is this important?
• Measure political risk.
• World Bank Governance Index
• TI Corruption Index
• Does democracy matter?
• Influence of political risk on financial policy and ability to service debt.

DAY TWO

Classical Mistakes in Country Risk Assessment

• A review of the errors made by the rating agencies in 1997 Asian crisis
• Why Investors in Russian bonds lost money

Medium Term Risk Workshop –Country 1

• Use real documents to calculate country risk.

Workshop Review

Short Term Risk

• How does short term risk differ from medium term risk?
• Why is there less risk?
• How to calculate the risk.

Short Term Risk Workshop – Country 1

How to interpret the Risk Score

• How do risk scores relate to bond ratings?
• Bond ratings rate bonds, but banks take different risks.
• Learn how to tailor bank credit policies to risk appraisals.
• What transactions are appropriate at differing risk levels?
• What is the exit strategy if risk deteriorates?

Medium and Short Term Risk Workshop – Country 2

• Calculate country risk on a second and very different country

DAY THREE

Origins of Bank Failures

• Why do banks fail?
• Signs of bad management, indicators of financial crisis

Elements of bank risk appraisal

• An introduction to the concepts

Bank Risk Workshop 1

• We study summary data from two banks to prepare risk appraisals.
• Credit de France
• Bank of Global Trade

Workshop Review

CAMEL – a structure for analysing banks – as used by the IMF

A method for analysing banks using quantitative and qualitative analysis.

Liquidity workshop

• Review an offshore bank to consider liquidity policies and support rating

Spreading the balance sheet

• Quantitative and qualitative analysis.
• Ratios – their use and misuse
• Ratios on 230 banks

Introduction to BankScope

• This is a very powerful computer based analysis tool which all bankers should understand.
• Examine the facilities available.

Trade Finance Bank Workshop 2

• A workshop to review the loan book and support rating of a leading international bank

DAY FOUR

Bank Risk Workshop 3

• Using spreadsheets and extracts from the Annual Report prepare a risk analysis.
• Review the bank using CAMEL & BankScope.

Workshop Review Discussion

Our Egyptian Auditors will certify………. Window Dressing of Accounts

• Things are not always what they seem to be. How banks and companies manipulate their accounts.

Bank Risk Workshop 4

• Using a full set of spreadsheets and extracts for the Annual Report and Accounts, prepare a risk analysis and peer group analysis.
• Review the bank using CAMEL and BankScope.

Workshop Review Discussion

Bank Failures – the Aftermath

• Some banks should fail.
• Which will be supported or rescued
• Which will be left to the vultures?
• Why?

Interested in holding this course in-house? Please fill out your details and a member of our team will be in touch with more information.

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