Course overview
Facing the twin pressures of weakened balance sheets, caused by loan impairments, and demands from regulators for increased Core Capital ratios, now more than ever banks need to focus on how to maximize the returns from their corporate banking businesses. Corporate Banking leadership teams need to develop strategies to minimize the capital consumed by their business and, increasingly, avoid locking themselves into unsustainable funding commitments in the face of a wholesale funding market that has changed beyond recognition. Developing a sustainable competitive advantage, whether this is through a niche market entry strategy or a full-service approach depends upon the bank's resources and ambitions. Our course 'Corporate Banking Academy' has been designed to guide the Corporate Banking leader through this maze of conflicting objectives and resource constraints….
Summary of course content
- Design the corporate banking team’s strategy in order to maximise risk adjusted returns from scarce capital resources
- Develop a customer-focused product range as the foundation of sustainable success
- Design sectoral and customer planning systems to ensure that the best prospects are targeted and to maximise share of wallet from these relationships
- Manage and reward the corporate banking team
- Improve the credit risk assessment and approval process, minimising credit losses
Methodology
The programme is highly interactive, making extensive use of case studies, exercises and group discussions as well as presentations by the Course Director. Approximately 30% of the course is lecture-based. The remaining 70% is hands-on modelling.
Learning level
Intermediate/advanced
Computer-based exercises
All delegates should bring their laptops to facilitate in-class studies and exercises.
Who should attend this training course?
- Heads of corporate banking
- Corporate banking relationship managers and directors
- Credit managers and directors
- Corporate debt advisers
- Other banking professionals who need to understand corporate banking operations
- Treasury operations
Supporting publications:
DAY ONE
Strategic issues in corporate banking
- Profitability in corporate banking
- Lessons on the influence of strategy, market position, broad vs. niche product range
- The risks and rewards of pursuing a credit-led approach vs. deposit-taking and fee earning/advisory services
- Comparison between "winners" and "losers"
- Overview of international capital standards and their implications for corporate banking
- From Basel I to Basel III
- Concepts of risk adjusted pricing and the use of models
- Customer profitability statements
DAY TWO
Developing a customer-focused product range
- Achieving competitive advantage in corporate banking
- Which products do we want to offer?
- Which products do customers want to buy?
- What do customers value? The view of treasurers and finance directors
- Analysis of vanilla and structured products within:
- Deposit taking
- Lending
- Structured and project finance
- Asset based finance
- Treasury/market lines
- Seeking ancillary business to enhance returns from credit
DAY THREE
Understanding and profiting from opportunities within the corporate banking market
- The arguments for and against customer/sectoral segmentation
- Sector planning
- What should be contained within an industry strategy report?
- Which companies should we seek to do business with?
- Relationship planning
- Targeting and achieving desired "shares of wallet"
- Diversifying income away from credit revenue
- Overview of the customer needs/market opportunity within
- Manufacturers
- Other industrials
- Agribusiness
- Telecommunications/media and technology
- Utilities
- Airlines and transportation
- Consumer goods and retail
- Leisure and hotels
- Property
- Financial institutions
- Understanding customer needs and preparing winning pitches to sell to them
- Relationship management
- Building relationships
- Call reports
- Customer entertainment
- Managing the corporate banking team
- Performance management
- Unit and individual targets
- Performance-related rewards
DAY FOUR
Mastering credit risk in corporate banking (part I)
- Macroeconomic environment
- Risks arising from the local economy (GDP growth, demographics, inflation, FX, unemployment, political factors)
- Risks arising from cyclicality
- Risks arising from changes in technology and their impact upon the firm's EBITDA, liquidity and other key measures
- Credit rating methodology
- The approach and perspective
- Qualitative vs. quantitative analysis
- Interaction between business risk profile and financial risk profiles
- Key ratings ratios: comparable companies' analysis
- Median ratios per rating category
- Activity analysis
- Business model
- Deriving the revenue drivers and cost drivers
- Main business lines
- Critical success factors
- How does the business generate cash?
- Industry risk
- Introducing a framework for categorising industry risk across a range of key factors
- Methodologies for different industries and holding companies
- Macroeconomics and risk grid on macro, country, industry and counterparty risks
- Porter's 5 forces
DAY FIVE
Mastering credit risk in corporate banking (part II)
- Business risks
- Business risk evaluation framework, including assessment of quality of income and cash flow
- Assessing management, including judging asset quality and cash flow/networking capital/fixed assets efficiency
- Management strategy and performance, against the following measures:
- Return on assets
- Return on equity
- Return on capital employed
- Return on net operating assets
- Economic value added
- Cash flow return on investment
- Corporate governance
- Financial policy
- Accounting risk and creative accounting
- Use of special purpose vehicles
- Non-standard accounting policies/changes in policy
- Revenue recognition policy
- Non-recognition of impairment to key assets
- Inventory and other asset valuations
- Questionable revenue
- Hiding losses
- Capitalisation of ordinary expenses
- Liquidity risks
- Comparing the liquid resources of the firm with its near term need to invest in supporting growth and funding maintenance capex
- Placing firm's liquidity into context of its short term debt maturities/refinancing needs
- Assessing the strengths and weaknesses of commonly applied liquidity ratios
- Examining financial flexibility against the degree of operating leverage/cash breakeven point: the ability of the firm to withstand a prolonged downturn in the sector and/or a price war
- Borrower's debt capacity
- Traditional balance sheet measures of gearing
- Market-based measures of interest cover/debt service cover
- Cash flow based measures
- Discounted Cash Flow (DCF) analysis
- Asset cover measures
- Key levels of cash flow, cash flow ratios and their role in analysis
- EBIT vs. EBITDA
- Gross operating cash flow
- Working investment
- Cash after operations
- Net cash after operations
- Investing activities
- Financing activities
- Funds from operations
- Free operating cash flow
- Assessing "off balance sheet" items
- Operating leases
- Receivables securitisations
- Letters of credit/performance bonds etc.
- Warranties
- Litigation
- Debt structuring (amount, risks, cash flow projections)
- Quality of collateral
- Group structure and issues of subordination
- Tranching of debt and issues of subordination
- Inter-company guarantees/parental support
- Guide to setting financial covenants
- How much "headroom" is appropriate
- Pricing the loan
Course Case Studies
During this case, you will look at:
Case study: financing investment activities Delegates identify key risks of the existing business and
of the expansion opportunity. Delegates will be lead through the methodology behind the forecast financial statements (P&L, balance sheet and cash flow), and on the key tools within Excel facilitating sensitivity analysis
Sensitising forecasts: still working with the expansion case study, delegates use Excel tools to develop "Best Case", "Base Case" and "Worst Case" scenarios. Delegates will use these as the foundation of the decision whether to lend and, if so, the level of financial covenants to serve as monitoring, control and exit tools.
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Adrian Grant
Adrian has over 20 years' experience in lending to the business sector. Having worked in origination, credit and loan workout roles as a senior manager and consultant, he is uniquely qualified to deliver this programme. Adrian is a consultant and trainer to the banking sector. With range of services including mentoring bankers in their day-to-day work and the provision of research services to support his clients' business expansion plans.
Before becoming a consultant, Adrian was Regional Director, Ireland for National Australia Bank Group's Corporate and Institutional Banking division. In 2001, he started this operation and in five years grew the business to become a recognised force in the Irish market. He was responsible for all aspects of the business, including new business development, credit proposals, workout of difficult credits and growing the team. He built significant client relationships in a wide range of sectors, including Energy and Utilities, Food, Aerospace, Healthcare and Real Estate.
In 1996, Adrian became Senior Adviser and Team Leader at Bank Gospodarki Zywnosciowej SA ("BGZ"), an integrated corporate and financial restructuring project financed by the UK Know-How Fund. Leading a multi-cultural team of banking, systems and loan workout consultants, Adrian spearheaded the return to viability of significant customers of BGZ, leading financial restructurings under the auspices of the specialist legislation (including "compromise agreements" such as the Ugoda Bankowa).
From 1994 to 1995, Adrian was a Senior Manager for Lloyds TSB, responsible for credit sanctioning and resolution of problem loans for fifty branches in central London. In 1989, Adrian was appointed to Lloyds' New York operation, which had encountered severe problems in its leveraged and structured finance book. He was responsible for engineering financial solutions and workouts for a wide range of midmarket customers.
Adrian holds a Masters of Business Administration from Manchester Business School, and the Institute of Financial Services' Financial Studies and Banking Diplomas (both with Distinction).
Courses run by this instructor
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