Course dates
The first module of this two module course provides a better insight into cash and liquidity management, focusing on the need to provide good, accurate forecasts important to the understanding and operation of any business. The second module is designed to extend knowledge of balance sheet management. As the course integrates both modules, for a more complete understanding of the total balance sheet management approach, it is appropriate to attend both modules.
You will also benefit from more in-depth sessions that will focus on the total balance sheet management approach giving you a more complete understanding of the subject.
On completion of this course, you will:
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Understand the importance of accurate cashflow forecasting
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Appreciate modern approaches to forecasting
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Understand and implement "best practice" in liquidity management and the implementation of liquidity at risk
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Implement state-of-the-art approaches to balance sheet management
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Improve ALCO reporting "packs"
- Appreciate the need to improve product development
Who should attend
The course will be of value to professionals in the following areas:
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Financial analysts and staff
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Alco support personnel
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Risk management staff
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Treasury personnel
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Internal audit and control staff
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Heads of retail / regional managers
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Product development staff
Day 1
Session 1: Budgets, forecasts, cash flows and variance analysis
- Budgeting alternatives and variance analysis
- Budget vs. actual vs. forecast
- Revenues, costs and the breakeven point
- The basics of cash management
- Cash flow studies
- Benefits from accurate cash flow forecasts
Session 2: Liquidity management and default
- Who is responsible for liquidity management?
- The dangers of unrealistic assumptions
- The current situation
- The need to manage growth
- Debt maturity profile
- Recognising contingent liabilities
- Future liquidity and capital resources
- Liquidity and activity ratios
- Leverage and default issues
- Contingency planning
Session 3: Cash and short term assets
- Handling cashflows
- Important studies and requirements
- Analysing short term asset liquidity
- Issues of cash and demand deposits
- Impact of changes in loans policies
- Recognising material adverse change clauses
Session 4: The time value of money concept
- Present and future values
- Annuities
- Net present value
Session 5: Time value of money exercises
Delegates, in small groups, will work through a number of simple exercises to reinforce their understanding of the concepts.
Day 2
Short term investments/borrowings
- Types of instruments
- The repurchase agreement
- Discount vs. interest bearing
- Short dated bonds
Session 7: Money markets exercises
Delegates, in small groups, will work through several examples to reinforce their understanding of short dated instruments.
Assets, liabilities and the balance sheet
- Implementing an effective approach
- Modern philosophies
- What drives you?
- ALCO composition and objectives
- Effective data collection
Session 9: Measuring risk - gap analysis
- The technique
- Does today matter?
- Liquidity vs. repricing gaps
- Static, cumulative and dynamic reports
- Specific issues
- Advantages and disadvantages
- Preparing a balance sheet gap report
Session 10: Measuring risk - duration and convexity
- Macaulay duration
- Modified duration
- The convexity adjustment
- Hedging with duration and convexity
- Duration gap of equity
- Earnings vs. shareholder value
- Derivatives and duration
Session 11: Duration and convexity - exercise
Delegates will calculate the duration of a typical liability structure.
Day 3
Session 12: Overview of interest rate and currency derivative products
- The cashflow approach
- Analysing derivatives
- Interest rate futures
- Interest rate swaps
- Advantages vs. disadvantages
- Derivatives in gap analysis
- Using derivatives in A/L management
Session 13: Derivative products - valuation techniques
- Time value of money
- Zero coupon yield curves
- Par values
- Implied forwards and futures
- Creating discount factors
- Fair vs. market value
- Practical examples
Day 4
Session 14: Creating and using discount factors
Delegates, in small groups, will build a set of discount factors and value a number of cashflows using simple arithmetic techniques.
Session 15: Measuring risk simulation techniques
- Rate shocks
- Simple simulation
- Monte Carlo approach
- Virtual balance sheets
Session 16: Case study
Delegates will use a typical set of balance sheet risk reports to assess the implications and effectiveness of a hedge
Session 17: Case study results
Delegates will present their decisions to the total group including the justifications for their decision.
Case study - additional analysis
- Path risk analysis
- Benefits of simulation
- Risk profiles
- Probability analysis
- Embedded options
Case study - a worked example
Delegates will assume the role of an ALCO and will be required to approve a hedging strategy.
Harare Hotel, Harare, Zimbabwe
This programme takes place on a non-residential basis at a central Harare hotel. Non-residential course fees include training facilities, documentation, lunches and refreshments for the duration of the programme. Delegates are responsible for arranging their own accommodation, however, a list of convenient hotels (many at specially negotiated rates) is available upon registration.
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Keith Corsby
Keith Corsby is a specialist in capital markets and treasury with over 20 years experience in trading, risk management, treasury and assetliability management. Keith was formerly Assistant Treasurer to the UK-based Portman Building Society where his responsibilities included managing the liquidity books and the balance sheet. Prior to this, Keith gained extensive experience with Bank of America as the Senior Financial Engineer / Structured Finance Consultant and Executive Director / Chief Trader (FRNs, Euronotes and EuroCP). Keith was also with Ford Motor Company as a manager in banking, portfolio and FX, a role which included the structuring and application of risk management strategies to specific underlying exposures as well as day-to-day corporate treasury management. Keith has extensive training experience both in the UK and internationally. He is much in demand for his clear teaching style and practical market insights.
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.
Course dates