|
Credit
Skills in Private Banking - Course Outline
Aim
This course will provide an
understanding of the principles and practice of credit analysis in the private
banking sector together with a comprehensive methodology to assess the key
risk factors.
Objectives
At the end of the course the
participants will be able to
- Apply to asset-rich clients, the principles of good
lending in line with a risk appraisal framework.
- Explain how structuring and monitoring can mitigate
the risks in this type of borrowing
- Explain the chief elements of a strong credit culture
including consistency of approach and interdependency with colleagues.
- Explain the wider influences and risks affecting
private banks including regulation, market volatility and the effects of
leverage.
Course Outline
Day One
Introduction
- The need for credit skills
- The nature of credit risk in private banking
- Credit culture
- Introduction to the risk appraisal framework
Credit Policy
- What should an effective credit policy seek to
achieve?
- Asset classes and volatility
- Security, leverage and loan to value ratios
- Types of transactions
- Exposure limits
Pricing and the Bank’s Capital
- Risk and reward: to what risks does this type of
lending activity expose the lender?
- Types of capital – an examination of a bank’s
balance sheet, and the factors behind availability of capital.
- Cost of capital – how the blended cost is achieved
- The risk-adjusted return on capital (RAROC)
- Internal risk ratings, and how much reliance may be
placed upon them
Day Two
Lending Principles
Day Two
Lending Principles
- The framework of analysis
- The Three Cs: character, capital and capacity
- Other frameworks: CAMPARI and IPARTS
Know Your Customer
- Character
- Information gathering
- Checklist and aides memoires
- Personal interviews
- Case studies/role play, which may be recorded for
subsequent review
Structuring
- Borrower, purpose, amount, repayment and terms
- Purpose of security as safety net
- Categories of security and their volatilities
- Some leading indicators on the likely trend of
security valuations
- Legal terms: charge, lien, pledge etc, and their
significance to a lender
- Guarantees and comfort letters
- Case exercises: security issues
Documentation
- Contents of loan agreements
- Covenants
- Security documentation
- Enforceability and other legal issues
- Case studies/role play: documentation issues.
Case Studies
- Bringing it all together: the application of the
framework to individual lending situations
|
