Course background
The marketing process is seen to comprise several fundamental strategies and techniques that used singularly, or in combinations, can achieve success. First, the use of advanced global frameworks necessary to analyse thoroughly various types of clients in order to identify and manage financial exposures, risks, and opportunities in their financial performance.
Second, solutions can be marketed based upon clients’ own views on markets and risk-perspectives. Third, solutions can be marketed based upon a bank’s analysis and views on markets and client industry best practices. Fourth, the workshop delegates will learn how to market and close structured value-added solutions to market exposure and profit-opportunity solutions.
These frameworks enable delegates to expand value-added business with existing clients as well as to generate profitable crossproduct sales and develop relationships with new clients.
Course Objective
- Develop a robust set of comprehensive frameworks for exposure analyses across different types of clients and situations
- Implement a process of identifying and measuring exposures
- Learn how to use market movements, research views, and special situations within a marketing context
- Review range of strategic and derivative solutions to exposures in areas including interest rates, foreign exchange, liquidity, commodities, equity, credit, and taxes
- Understand common linkages of exposure management solutions to frequently-encountered client situations, such as raising/re-structuring debt
- Improve capability to discuss product solutions and anticipate/answer commonly asked client questions
- Understand how exposure management solutions and derivatives are risk managed by banks and how this process impacts pricing-attractiveness to clients
- Identify opportunities for cross-selling and the management of follow-up marketing of additional products or restructuring existing solutions
- Review how to integrate the marketing of structured solutions to clients
Who should attend
Finance professionals from banks, financial institutions, governments and other organisations that provide product solutions – particularly those with some degree of structuring – to various types of client should find this course enormously informative and useful.
These professionals include:
- Bank relationship managers
- Investment bankers
- Product specialists and structurers
- Treasury sales and traders
- Equity analysts
- Asset managers
- Various support groups related to clients coverage units
- Corporate treasury professionals
Day 1
Introduction to Marketing of Structured Exposure Management
- Exposures, risks, and opportunities driving financial performance
- Identifying and measuring exposures
- Types of exposures: cash flow, income statement, balance sheet, economic, competitive
- Objectives and policies for corporate exposure management
- Sizing relative risks in exposure profiles
- Developing comprehensive exposure management and risk management policies
- Strategic versus derivatives solutions for exposure management
- Overview of marketing techniques for relationship and structured product sales
- Building sales on exposure analyses, on market views / special situations, research-driven ideas, and cross-selling opportunities
- Challenges in offering structured and derivatives solutions to clients today
- Suitability and appropriateness of solutions
- Marshaling a bank’s resources for a client marketing process
- Accounting, regulatory, and reputational concerns with exposure management solutions
- Responsibility for client follow-up and monitoring
- Spotting and managing opportunities for cross-sales of other financial products
Marketing Solutions for Corporate Foreign Exchange
Exposure Solutions
- Modeling cash flow foreign exchange exposures
- FX exposures in sales, purchases, and capital expenditures
- Probabilistic assessment of FX risks
- Review of important statistical concepts
- Measuring Cash Flow at Risk (CFaR) or earnings at Risk (EaR) from FX rate movements
- Developing Monte Carlo analysis of FX exposures
- Assessing FX exposures as portfolios of cash flows
- Assessing and comparing exposure profiles using statistical moments and quantiles
- Strategic, contractual, and commercial FX exposure management through non-derivatives solutions
- Derivative and structured solutions to FX exposures
Case study: Marketing FX exposure solutions involving forwards, par forwards or currency swaps, and options
- FX translational exposures and possible solutions
- FX hedge optimisation analysis and strategies
- Liquidity concerns and FX hedges
- Suitability and appropriateness of FX solutions
- Accounting for FX derivatives hedges
- Counterparty risks for bank and clients in FX exposure management solutions
- Client follow-up and cross-selling opportunities
- Current and future trends in marketing FX exposure management
Day 2
Marketing FX Options and Similar Products: A Product Review
- Explaining options definitions and payoffs
- Comparative frameworks for FX, interest rate, commodities, and equity options
- Basic option pricing review and de-mystification
- Analytical formulas and numerical procedures
- Relationships between options and forwards
- Option risk management and pricing
- Importance of expected volatility in options pricing
- Marketing option solutions: comparing advantages and disadvantages
- Marketing options combinations commonly used by clients
- Marketing option solutions to research-driven or own market views and special situations
- Marketing structured notes embedding FX options
Marketing Corporate Commodity Exposure Solutions
- Modeling cash flows from commodity exposures
- Commodity exposures in sales, purchases, inventories, and capital expenditures
- Probabilistic assessment of commodity exposures driven by volatility
- Supply and demand challenges from spot commodity markets
- Measuring Cash Flow at Risk (CFaR) or earnings at Risk (EaR) from commodity price movements
- Developing Monte Carlo analysis of commodity exposures
- Assessing correlated FX and commodity exposures to financial performance
- Strategic, contractual, and commercial commodity exposure management (non-derivatives)
- Marketing strategies and techniques for derivatives and structured solutions to commodity exposures
Case study: Marketing commodity exposure solutions involving forwards, futures, swaps, and options
- Commodity hedge optimisation analysis and strategies
- Liquidity concerns and commodity hedges
- Suitability and appropriateness of commodity solutions
- Accounting for commodity derivatives hedges
- Counterparty risks for bank and clients in commodity exposure management solutions
- Marketing commodity solutions to research-driven or own market views and special situations
- Marketing structured notes embedding commodities payoffs
- Client follow-up and cross-selling for opportunities in commodities solutions
- Current trends in marketing commodity exposure management
Marketing Interest Rate Exposure Analysis Solutions
- Various exposures to and analytical frameworks for fixed and floating interest rates
- Modeling cash flows from floating interest rates for debt instruments and investments portfolios
- Assessing interest rate gaps for corporate and financial institutions
- Net interest income exposure solutions for corporate and financial institutions
- Asset Liability Management (ALM) frameworks for financial institutions
- Probabilistic assessment of interest rate exposures
- Central bank policies, yield curves, and interest rate risks
- Measuring Cash Flow at Risk (CFaR) or earnings at Risk (EaR) from interest rate movements
- Developing Monte Carlo analysis of interest rate exposures
- Marketing derivative and structured solutions to floating interest rate exposures
Case study: Marketing interest rate exposure solutions
involving forwards, futures, swaps, and options
- Interest rate solution optimisation analysis and strategies
- Liquidity concerns and interest rate structured solutions
- Suitability and appropriateness of interest rate solutions
- Accounting for interest rate derivatives solutions
- Counterparty risks for bank and clients in interest rate exposure management solutions
- Marketing interest rate solutions to research-driven or own market views and special situations
- Marketing structured notes embedding interest rate payoffs
- Client follow-up and cross-selling for opportunities in interest rate solutions
- Current and future trends in marketing interest rate exposure management
Day 3
Marketing Interest Rate Exposure Analysis Solutions (continued)
Marketing Bond Value at Risk and Exposure Management Solutions
- Analytics for exposures of fixed rate bonds and contracts to interest rate changes
- Assessing fair value levels I, II, and III inputs
- Value at Risk (VaR) for bond investments and liabilities
Case study: Marketing bond exposure solutions involving forwards, futures, swaps, and options
Marketing solutions long-term ALM for corporate and financial institutions
- Bond and balance sheet liquidity solutions
- Special challenges of bond exposure optimisation for insurance companies, endowments, and pension funds
- Marketing exposure management solutions to new bond issuance
- Solutions for managing benchmark, swaps, and credit spread risks on planned debt issuance
- Marketing bond exposure solutions based on research-driven or own market views and special situations
- Client follow-up and cross-selling for opportunities in interest rate solutions
- Suitability and appropriateness of solutions
- Accounting for bond derivatives hedges
- Counterparty risks for bank and clients in bond exposure management solutions
Hegde Accounting under IFRS: Challenges in Marketing Solutions
- Purpose and scope of new accounting rules
- Standard fair value treatment of derivatives
- Types of hedges requiring special accounting
- Cash flow and fair value hedges
- Hedges of investments in subsidiaries
- Calculating hedge effectiveness
- Potential changes in accounting for the future
- Using knowledge of hedge accounting in marketing strategies
- Answer questions and overcoming objections
- Use of accounting experts in marketing
Special Issues in Marketing Structured Investment Solutions
- Analysis of investment frameworks and cash available for structured solutions
- Taxonomy of available structured investment products
- Identifying types of clients and opportunities for structured investment products
- Marketing structured solutions to reflect market views and research
- Marketing structured solutions as portfolio diversification and hedges
- Tailoring structured investment solutions to fit client objectives
- Trading off current versus capital returns versus principal guarantees
- Fair value and liquidity concerns on structured investment solutions
- Marketing and reputation risks in providing structured investment solutions
- Handling client questions and objections to structured investment solutions
Day 4
Counterparty and Credit Risks: Challenges in Marketing Solutions
- Measuring Exposure at Default (EAD) for loans, lines of credit facilities, and derivatives
- The linkage of market movements to EAD
- Right-way and wrong-way exposures
- Estimating credit losses using short form models
- Calibrating probability of default, survival, loss given default, and recovery
- Short-form models and counterparty valuation adjustments (CVAs)
- Developing credit loss distributions and Credit Value at Risk (CVaR) Valuing credit risky bond investments and liabilities using new credit factor technology
- Marketing solutions to credit and counterparty exposures
- The use of various credit derivative strategies for managing loan and counterparty credit exposures
- Standard conventions, modeling/pricing assumptions, and cash flows
Case study: Marketing loan and counterparty credit exposures with credit derivatives and structured solutions
Marketing Solutions for Certain Tax Exposures
- Framework for tax challenges for clients
- Character, timing, and location tax problems and objectives
- Short examples and case studies of marketing tax situations and derivatives
- Marketing solutions for both domestic and international exposures
- Marketing processes that linking tax benefits to exposure management solutions in the line of normal business
- Reputational and legal risks of marketing tax structured solutions
Challenges in Marketing Exposure Management Solutions
- Reputational risks
- New “Know Your Client” rules in various markets
- Potential for fiduciary responsibilities
- Accounting changes affecting the bank
- CVA and DVA reporting surprises
- Documentary and legal challenges
- Regulatory changes impacting product markets and practices
- Impacts of Basel II and III on the bank
- New rules for credit, market, and operational risk capital
- Phase-in process of Basel III
- Benefits of managing client service businesses on an economic capital framework
- Cross-selling opportunities: breadth and depth of “client wallet”
- Potential new develops in the future
Workshop Summary and Conclusion
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William Allen
William Allen was previously a senior associate consultant with Seabrook Associates in Boston, Massachusetts. Prior to that he worked with J.P. Morgan in various securities and derivatives trading, arbitrage, hedging, and marketing activities in London and New York.
He pursued MBA and doctoral studies in international banking and capital markets at the Harvard Business School.
William received the Elijah Watts Sells Award and the John S. Glenn Gold Medal for outstanding performance on the Certified Public Accountants (CPA) examination while he was with Ernst and Whinney, an international accounting firm.
At the same time, he was awarded the Robert Beyer Bronze Medal for outstanding performance on the Certified Management Accounting (CMA) examination. Mr. Allen also earned the professional designation of Chartered Financial Analyst (CFA) while serving as the chief financial and investments officer of Rhodes College.
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