(2 days)
This is a sample course outline. Courses can be modified to fit your needs and schedule.
Decisions taken by banks profoundly impact everyone. As financial intermediaries, banks mobilize funds from savers and channel them to capital users to finance economic activities. Equally important is the fiduciary role of banks as custodians of deposits. In emerging economies like Malaysia, banks also play important socio-economic and developmental roles.
Therefore, directors of banking institutions have an enormous responsibility to shareholders and the public at large to ensure, through effective oversight of the board, that banks are operating in a sound manner. As banking business becomes more complex, a strong foundation in knowledge about banking is critical.
So what is it that the banks do that makes them unique? How do banks transform liquidity and generate profits? What are the considerations for assessing credit, and how are assets, liabilities, capital, liquidity, and risks managed? What are the challenges facing the industry today, and how is the landscape evolving? Are past business models and strategies of banking still relevant going forward? These are some of the topics that will be covered in our program.
- The business of banking, the inherent risks, and how to manage them
- Frameworks for analyzing bank performance and motivating and rewarding superior performers
- The important differences between commercial banking and investment banking, and the role each played in the global financial crisis of 2008
Day 1
The Business of Banking – What Do Banks Do?
What services do traditional banks perform? How does a bank make money?
What are some of the primary risks in this business? How are these risks managed?
How do we measure the financial performance of a bank?
Assessing Bank Financial Performance and Valuation
Case Study: MayBank 2009
An overview of bank financial statements
What do the financial statements tell us? What are we looking for?
What indicators can we obtain from financial statements to tell us how the bank is doing relative to its peers?
What trends can we spot and what do they mean?
Credit Analysis
Case Study: Butler Lumber
Different financial ratios for different purposes
Tracking cash flow needs – where is money coming from, and where does it go?
Projecting future cash requirements
Sustainable growth rates and the Dupont formula
Managing Assets and Liabilities, Liquidity and Solvency
Case Study: Banc One Corporation
Review of bank assets and liabilities
What happens to assets and liabilities under certain economic scenarios? What if interest rates rise or fall?
What should Banc One do with this information? What risk can be managed? How? What risk cannot be managed?
Day 2
Risk Management
Case Study: Risk Exposure and Risk Management at Korea First Bank
What risks did Korea’s banking system face in 1997?
How was Korea First Bank performing? What risks was it exposed to?
How should Korea First Bank analyze its portfolio of risks? What should the board focus on?
Introduction of risk management framework
Performance Evaluation and Compensation
Case Study: Citibank: Performance Evaluation
How should performance be evaluated? How do we choose the right variables to measure?
In this case, Citibank introduces a new performance-scorecard system and a regional president struggles with how to evaluate an outstanding branch manager who has scored poorly on customer satisfaction.
The case gives us the opportunity to discuss good and bad measures, and to identify three criteria managers must evaluate in choosing those measures.
The Future of Commercial and Investment Banking
Case Study: Investment Banking in 2011: A Brave New World
Case Study: What Happened at Citigroup
Using two case studies, we review what happened during the recent financial crisis and discuss what the future of the industry may hold.
How did Citigroup try to create shareholder value? What was its strategy? What risks was it taking? Why?
What is securitization? How does it work? Why did many of these transactions go so horribly wrong?
How are commercial and investment banks different? What implications do those differences have in times of crisis?
What reactions have we seen and can we expect from regulators, executives, and shareholders?