Course Background

Everybody agrees that the financial crisis/ bank meltdown of 2008 and 2011 will fundamentally change the corporate banking business models. Not only will regulations (Basel III) force change but also bankers will have integrated lessons of the crisis. This training will review these changes and strategic impacts and discuss good management principles that will allow bankers to implement the new business models and thrive in a new banking environment.

There are no magic solution to adapt banks to the new challenges, except to build a flexible structure managed by bankers who can adapt to these challenges and respond to client requirements and regulatory constraints.

 

 

Day 1

 

Registration commences at 8:30 on day one

Programme runs from 9:00 - 5:00 daily

 

Corporate Banking strategy in the post crisis environment

Concepts

• How is the financial crisis (sub-prime, sovereign crisis) influencing banking and more specifically corporate banking?

Impact of the crisis and the Regulatory response (Volker rule, Sir John Vickers recommendations, B III, stress tests...)

Bank management response

Redefinition of the scope and organization of Corporate Banking, Investment Banking, Retail and SME Banking.

• Bank management impacts

Changes in customer requirements (the demand side) and the bank product and services (the offer side)

Changes in the bank business models

Changes in Management Information (the analytical tools and data requirements)

• A systematic analytical framework (POLDAT) for business impacts and technical impacts.

 

Workshop: Analysis by small groups and class room discussion on corporate customer requirements: Their needs, the bank’s response, key factors of success for the corporate banker, impact on the financial results and KPIs of the bank!

Day 2

Building a competitive product range

Group discussion

•           List and describe corporate banking product offering

•           How does this meet the customer requirements?

•           How do you create a competitive advantage to sell your products to the market?

•           How are your products priced and what is the pricing process -- who, when, how?

•           How do you assess product, client, portfolio and department ... profitability?

 

 Concepts

•         Banking product pricing and valuation

 

Pricing exercise: Which loan would you approve?

 

Pricing and Valuation principles as per Corporate Finance Theory

Remuneration of all risk classes and of equity allocations (Risk Based Pricing)

Remuneration of operating (fixed, variable, direct, indirect) expenses (Cost Based

Pricing)

Commercial Margin (Relationship Based Pricing)

•         Financial KPIs

Profitability measures (Volume, NP, RoA, RoE, RORAC...)

Value measures (SVA, EVA, VAR, EAR...)

A balanced scorecard approach

Other issues including product groupings, cross subsidization, loss leaders...

 

Exercise: Define a marketing budget on the basis of profitability and/or value KPIs and optimize the marketing budget (dollar value).

 

•         A quick review of financial engineering (spot/ cash products, forwards and options and their decomposition in banking products and in financially engineered structured solutions.

Financial Engineering Exercise: develop and price a solution to a specific customer requirement (the RfR loan) – Group work 

Classroom discussion A:

What are the risks associated with this product for the bank... and for the client?

How should you manage these risks?

How should you sell this product?

Classroom discussion B:

On the basis of the first discussion, what are your recommendations for the Bank’s organization for (1) Product Management (2) Client Management (3) Risk and Equity Management (4) Solvency Management?

Day 3

Effective Relationship Management

Concepts

•         Relationship Management versus Sales Management

•         From “Share of the Market” to “Share of the Wallet” and then to the “Share of the Mind”!

•         What Corporate Customers buy and why

•         Managing multidimensional relationships

Relationship dimensions and stages

Marketing yourself (the Relationship Manager -- RM -- and/or the Product Specialist – PS --), the products and services, the organization.

Relationship quality assessment (with a self-assessment exercise)

Determination of high potential relationship prospects

The relationship management process, from idea generation to delivery and deal assessment

Relationship planning and review process.

 

Case Study: the B&B case. Analyse the business opportunity, define an appropriate product/service offering; develop a relationship plan and marketing plan.

 

Day 4

Building an Efficient Corporate Banking Organisation

 

Guest Speaker Presentation:   Day After Tomorrow - The Coming Changes in Banking -       The cracks in the world's financial system appeared in 2007, but it is only in 2012 that Europe will really address the imbalances that created the crisis. What are the implications and what changes can industry participants expect in the next 5 years   Andrew Nevin Director, Financial Services Strategy Group, PwC

 

Concepts

•         Responding to the corporate market characteristics

Segmentation (industry, geography, service..., why – what and how?)

Tailor made offerings versus other strategies (Operational efficiency, innovation)

Organisational impacts, the POLDAT analysis (Process; Organisation; Location; Data; Applications; Technology)

•         Challenges, risks and their mitigants

 

Case Study: a POLDAT analysis

 

Day 5

Dealing with Risk

Concepts

•         Risk Models

Borrower variance analysis (internal risk rating models) and optimisation strategies

Portfolio risk management analysis (variance/ covariance models) and optimisation strategies

Expected Loss calculations and Value at Risk analysis

Stress Testing architecture

Systemic risk

•         Risk management techniques (underwriting, managing and hedging strategies)

•         Credit Risk Corporate Borrowers

•         Credit Risk, Institutional Borrowers (banks, insurances, sovereign, parastatals...)

 

Case Study: Managing loan portfolios (corporate, institutional, investment portfolios and trading portfolios) within targeted Solvency constraints (bank’s risk rating strategic target)

 

• Clive Wykes

  Born in Belgium of British nationality, Clive Wykes was raised and educated both in England and Belgium, where he graduated from the University of Louvain (UCL) with a Masters in Applied Economic Sciences.

  From 1973 to 1991 he developed his career in banking with American Express and Chase Manhattan Bank. During those years he covered many areas of banking: credit and marketing, risk management, product development and management, budgeting / MIS and strategic planning as well as general management. He was exposed to local and international markets in retail, SMEs, large global corporations and institutions. He a wealth of experience in tactical and strategic Risk Management and Corporate Finance, and successfully applied this to the development of new products and markets.

  In 1991, he founded a Management Consultancy firm, and developed his business with financial institutions including BIL, Crédit Agricole, ING, San Paolo IMI, First Rand Group and many other local and foreign institutions. His consulting firm collaborates with other organisations, consultants, and solution vendors, to offer a full range of services in training and in management consultancy.

• Speaker: Andrew S. Nevin, PhD

  Andrew S. Nevin, PhD is one of PwC’s leading global thinkers, working at the complex intersection of economics, strategy, and regulation. He has over 24 years of professional experience as a Strategy Consultant, line manager, and private equity investor, and has lived in Toronto, Paris, Hong Kong, London, and Beijing, as well as running businesses in Shanghai, Sydney, and Tokyo.

  He is the lead author of PwC’s most comprehensive Financial Services intellectual capital (Project Blue – Future of Financial Services, and Day After Tomorrow – PwC’s perspective on the Financial Crisis), a frequent speaker at external conferences (e.g. IFC/Palestinian Monetary Authority Conference, Managing Bank Risks, Jan 17th, 2010, Jericho, West Bank) and has lectured recently at both Oxford and Cambridge business schools

  His current emphasis is on helping both sovereign and private sector clients look beyond the immediate pressures and consider more carefully the implications of the mega-trends that are shaping the financial services landscape globally – rise of SAAAME (South America, Asia, Africa, and the Middle East), demographics, the war for resources, and the rise of state-directed capitalism. He has been significantly involved in the national level financial system issues in two of the countries most affected by the crisis.

  Prior to joining PwC, he spent 10 years living in China, and was the President of United Family Hospitals (China’s pre-eminent international hospital chain) during the SARS crisis in 2003 (and speaks Mandarin at an advanced intermediate level).

  Andrew started his career at McKinsey & Company, serving in the Toronto and Paris offices.

  He holds a PhD in Economics from Harvard University and a MA in Philosophy and Politics from Oxford University, and a BSc (Hon) in Computer Science and Mathematics from the University of Western Ontario. In April 2011, he was named Strategy Consultant of the Year by the Management Consultants Association in the UK.

London School of Corporate Banking

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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