Euromoney Audit Training

This course will cover:

• How debt market participants measure and price country risk
• Understand the circumstances and factors that drive country defaults
• Identify the key factors behind geo-political risk
• Compare the risk analysis of emerging countries with that of developed markets
• Why banking and financial systems are an essential ingredient in the analysis
• Assessing the risks of banks and the financial system, and its impact on country risk
• Analysing the risks in sub-sovereign counterparties and borrowers
• The relative risk of sovereign and corporate/bank debt in a country – the ‘country ceiling’ concept.

Who should attend?

• International and Investment Bankers
• Country and Bank Risk Managers
• Corporate TreasurersRisk Analysts
• InvestorsOriginatorsEconomists
• Export Credit Managers
• Banking Strategists
• Emerging Market Traders
• Financial Institution Bankers and Relationship Managers
• Credit Rating PersonnelBanking System Regulators and Supervisory Staff.

Methodology

• The learning techniques will be a mixture of formal presentations, written materials, case studies, and frequent group break out assignments.
• The analysis is structured to include not only a classic approach to understanding key balance sheet and income statements ratios and trends but also a methodology for analysing franchise value, management expertise and strategic vision.

Course overview

The focus of the course is to provide both quantitative and qualitative methods of bank credit risk analysis and early warning signals that are especially relevant to institutions in both developed and emerging markets. Recent developments in bank globalisation and capital markets securitisation will be covered, together with the on-going impact of the current crisis in global financial markets and financial institutions, including government intervention and government support for creditors. Case studies will be taken from a variety of markets, both developed and emerging, those currently undergoing severe stress and those at present showing more resilience to the crisis.

Day 1

 

Part 1: Sovereign debt, issuance patterns, investors and the market

 

·         Sovereign debt issuance, historic patterns

·         Local currency vs. foreign currency debt issuance characteristics

·         The investors in sovereign paper and their requirements

 

Case studies: Government of Canada; investors in Latin American debt

 

·         The country risk spectrum – beyond bonds

·         Interbank deposits; trade finance; profit and dividend repatriation

 

Case study: Russian trade finance debts

 

Part 2: Economics, econometrics and risk – the analysis

 

·         The economic model: central planning vs. economic liberalisation

 

Case studies: New Zealand; Czech Republic; Brazil

 

The credit analysis: analytical inputs

 

·         Comments on the importance and limitations of the statistical approach

·         Qualitative inputs

o    Social structures and the political system; the power base

o    Stability and predictability of responses

·         Sources of analytical data and information

 

Case study: Turkey; Gulf countries – Dubai and the UAE

 

Quantitative inputs

 

·         Fiscal position and monetary policy

·         Indebtedness, domestic and external; foreign currency reserves

 

Case study: China

 

Metrics compared

 

Case studies: Italy, Poland, China, India, Mexico, Argentina

 

Other inputs

 

·         The exchange rate system; currency boards

·         Public sector vs. private sector institutions

·         Domestic regional factors; sub-sovereign financial structures

·         Supranational relationships – the IMF, EU, other supporting bodies

 

Case studies: Greece, Ireland, Iceland: the realities of EU ‘support’

 

Day 2

 

Part 3: Other drivers of credit risk

 

·         The importance of the financial system

·         The costs of bank support structures in the current financial crisis and the long-term effect on country risk in developed and emerging countries

·         Off balance sheet items for sovereigns

·         Public vs. private sector institutions

·         Private capital flows – the hazards and the benefits; controls and regulation

·         The dangers of ‘moral hazard’

·         Econometric modelling techniques for risk assessment

 

Case studies: Kazakhstan; the United States, the Asian financial crisis

 

Part 4: Credit ratings; what they mean and how they are determined

 

·         What are ratings?

·         How rating agencies assess sovereign risk

·         The relationship between bond yields and country ratings

·         How successful are ratings agencies in predicting default?

·         How accurate are ratings?

·         Disagreements between agencies; controversial rating decisions

·         Does the rating business have a viable future? – The regulatory imperative

·         Banks’ internal risk ratings systems; Basel II

 

Case study: Country ratings vs. corporate ratings – different scales?

 

Part 5: Country defaults – the special nature of sovereign defaults, and remedies for creditors

 

·         Historical patterns of default: the ‘serial defaulter’

·         Legal issues: court judgements, sovereign immunity

·         The rescheduling of sovereign debt

·         Restructuring specialties; Brady and other secured structures

·         Forced debt exchanges

·         Local currency vs. foreign currency treatments

·         Recovery rates on defaults

·         The market for defaulted debt securities – trading opportunities

 

Case studies: Ecuador, Argentina

 

Day 3

 

Part 6: Financial institutions analysis: banks and the financial system

 

The role of the institution in the system

 

·         Emerging market vs. developed markets issues

·         Franchise value

·         The payments system

·         The “too big to fail” concept

 

Case study: Korea and its banks

 

Management and financial fundamentals

 

·         CAMELS topics, stressing:

o    Analysing the quality of capital

o    Loan diversification vs. concentration

o    NPL resolution techniques and hazards

o    Market risk and how to assess it

o    The importance of core earnings

o    Liquidity – funding structures, and the role of the market / central bank

 

Case study: analysis of an emerging market banking system

 

Other analytical issues

 

·         Capital and regulation: domestic and international; Basel I and II

·         Anti-money laundering compliance

·         Non-credit business lines: capital markets, investment banking, trust and fiduciary businesses

 

The importance of ownership

 

·         Government involvement and ownership in financial systems; directed lending

·         The globalisation of banking – hazards

·         Analysing diversified and multinational banking groups: a support for country risk, or a source of instability?

 

Institutional and systemic failure

 

·         Financial institution failure: historical trends and recent developments

 

Case study: The current global financial system crisis and country risk

 

·         Banking crises and country risk, causes and costs: the historical experience and lessons for the future:

·         Emerging markets

 

Case studies: the United States 1989 and 2008/09; CEE countries; Thailand; Scandinavia

 

Day 4

 

Part 7: Major case studies

 

A group of major case studies, selected from both developed and emerging/transitional economies, utilising qualitative and quantitative risk factors and developing a complete risk assessment framework.

 

Part 8: Country risk diversification and correlation

 

·         Hedge funds: did they trigger the Asian crisis?

·         Russia and long-term capital management: the link

·         Hazards of correlation; assembling a diversified country risk portfolio

 

Part 9: Sovereign risk specialties

 

Analysing sub-sovereign borrowers: analytical principles; debt issuance trends

Off-shore banking centres, and assessing their transfer risk

 

Part 10: Country ceilings: country risk and transfer risk – the evolution of a concept

 

·         The relationship between the government’s credit quality and that of other major borrowers in the country

·         Historic evolution of the ‘country ceiling’

·         Structuring transactions that attempt to avoid country risk

·         Recent developments in transfer risk and sovereign moratoria

o    Increasing pragmatism of sovereigns

 

Course summary and review

 

Course ends at approx. 16:00 hrs

• Nicholas Krasno

  Nicholas Krasno has over thirty years experience in the financial and banking world. Prior to his career with Moody’s his specialisations in the corporate governance field included corporate governance advisory for companies, governance reviews and assessments and training for management and directors. He also advises on: strategic development; risk analysis and metrics; credit portfolio and capital management for banks and financial institutions including Basel II compliance; the development of securitisation and capital markets; prudential bank supervision and regulation, credit rating agency development and regulation.

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.

Modern Corporate Governance - Johannesburg

25-28 Jun 2012 (Johannesburg, South Africa)
26-29 Nov 2012 (Johannesburg, South Africa)

This 4-day financial training course deals with questions like – what is so special about corporate governance?, how are banks regulated? and includes insights from international experience.

Syndicated Lending Techniques - Johannesburg

29-31 May 2012 (Johannesburg, South Africa)

This practical and highly interactive 3-day financial training course, which incorporates numerous case studies, provides delegates with a thorough understanding of the syndicated loan market, its process and potential.

Advanced Corporate Credit - Johannesburg

2-5 Oct 2012 (Johannesburg, South Africa)

This 4 day financial training course has been designed to guide bankers through the corporate credit process and to give practical advice on what to do if problems occur.

Credit School, Including Financial Analysis, Modelling & NPLs/Debt Restructuring - Johannesburg

20-23 Aug 2012 (Johannesburg, South Africa)

A 4-day case study based training course designed to teach delegates how to model and analyse corporate credit risk, how to assess structural and documentation risk and to give an overview of dealing with NPLs.

Bank Risk Management & Basel III - Johannesburg

7-10 Aug 2012 (Johannesburg, South Africa)

An intensive 4-day training course for risk management professionals in banks, corporate treasury and financial institutions.

Corporate Loan Workouts & Financial Restructuring - Johannesburg

21-23 May 2012 (Johannesburg, South Africa)

A 3-day financial training course on corporate loan restructuring. With tough liquidity conditions finance professional are required to quickly identify what is causing borrowers problems and provide the most appropriate and costeffective finance solution.

Managing & Measuring Operational Risk - Johannesburg

25-28 Jun 2012 (Johannesburg, South Africa)

A unique training course designed specifically for Investment/Commercial Banks, Securities and Asset Management Firms, Corporate Treasurers, Auditors and Financial Regulators.

Bank Risk Management Including Basel II.5 & III - Accra

27-30 Mar 2012 (Accra, Ghana)

An intensive 4-day training course for risk management professionals in banks, corporate treasury and financial institutions.

Credit Risk: Analysis & Management - Lagos

7-10 May 2012 (Lagos, Nigeria)

This comprehensive 4-day introductory course on credit risk management is designed to give participants the basic skills to understand the credit approval process in a new credit environment.

Treasury Risk Management - Harare

19-22 Mar 2012 (Harare, Zimbabwe)

Euromoney’s highly acclaimed 4-day training course.

Credit Risk Management for Consumer Lending - Lagos

16-19 Apr 2012 (Lagos, Nigeria)

This interactive four day training course will help delegates to find the most efficient ways to control credit losses and to identify opportunities to generate new business.

Bank Risk Management Including Basel II.5 & III

27-30 Nov 2012 (Nairobi, Kenya)

An intensive 4-day training course for risk management professionals in banks, corporate treasury and financial institutions.

Enterprise Risk Management & Value Creation - Accra

2-5 Jul 2012 (Accra, Ghana)

This four day course will address the principles and practice of risk management. The results of the economic crisis will be used as a backdrop to explore risk management and the significant reshaping of the financial world.