Treasury Management for Islamic Banks

Course Background

Treasury management in Islamic banks is challenging for several reasons. First, access to long term funding sources is limited, whilst raising the liquidity profile of assets as a response by keeping them short-dated creates an income drag. Second, even though Shariah compliant derivative structures are now more widely accepted, using them to lay off market risks is not well understood.

This 2-day intensive course is closely tailored to the needs of treasury management for Islamic banks, and is delivered within a consistent focus on practical responses to evolving scenarios that can threaten the survival of Islamic banks. The course covers the full array of contemporary treasury products available to Islamic banks and their effective use in the management of liquidity and market risks. These products include liquidity investment and funding products, and Shariah compliant derivatives used for hedging purposes.

The course will also include a high level of interactive discussion, analysis of case studies, and thorough instruction in techniques which can be applied in everyday use to meet treasury management needs.

KEY LEARNING OUTCOMES

Understand cash management, liquidity investment and funding for Islamic banks
Learn and implement risk control, governance, and regulatory requirements for treasury management
Understand complex Shariah compliant derivatives and risk management structures and their application to the effective management of market risks
Learn advanced treasury operations, from deal execution to documentation in Islamic banks

Where & When

Date: 15^th & 16^th January 2020
Venue: Kuala Lumpur

Who Should Attend?

This course has been specifically designed to benefit:

Chief Risk Officers
Chief Financial Officers
Financial Risk Managers
Treasury and ALM professionals
Risk Analysts
Financial Analysts
Credit Managers
Credit Portfolio Managers
Asset Managers
Corporate bankers
Retail bankers
Supervisors, regulators and risk standard setters

Fee

Early bird : RM 2,835
Early Bird: Registrations received on or before 12^th December 2019, will receive a 10% discount. No discount shall be given to registrations received after this cut-off date.
Standard : RM3,150 per delegate
2 delegates (5% Discount) : RM2,995 per delegate
3 delegates (15% Discount) : RM2,680 per delegate
4 delegates (25% Discount) : RM2,365 per delegate
5 delegates (30% Discount) : RM2,205 per delegate

In-house/group training

If you are looking for an in-house training program or wish to send a group to an existing public program, kindly please contact Andrew Tebbutt at [email protected] or +603 2162 7802.
In-House Training Brochure

Manual Registration

Kindly complete the registration form and email to [email protected] or fax +603 2162 7810

For enquiries please contact:

Mathias Sosovele
Account Manager, REDmoney Seminars
[email protected]
Direct Line: +603 2162 7800 ext 25

Normariya Sariman
Account Manager, REDmoney Seminars
[email protected]
Direct Line: +603 2162 7800 ext 44

Ramesh Kalimuthu
Events Sales Director
[email protected]
Direct Line: +603 2162 7800 ext 65
Fax: +603 2162 7810

For sponsorship & speaking opportunities:

Andrew Tebbutt
Managing Director
[email protected]
Direct Line: +603 2162 7802

For marketing and media enquiries

Tiviaa James
Marketing Executive
[email protected]
Direct Line: +603 2162 7800 ext 62

Seminar Agenda

Day 1: Treasury Management and Products
Day 2: Islamic Derivatives and Treasury Operations

Day 1: Treasury Management and Products

Treasury Objectives and Governance

Treasury objectives
- Funding the bank
- Cash management and investing surplus liquidity
- Market risk management - Foreign exchange and interest rates
Treasury governance
- ALCO and gap analysis
- Treasury limits structure
  - Limits setting process
  - Breaches, escalations and resolutions
- Treasury Shariah audit
Relevant regulatory requirements for Islamic treasuries
- Interest rate risk in the banking book (IRBBB)
- Liquid assets and Net stable funding ratios
- High quality liquid assets and Sukuk eligibility

Islamic Treasury Funding

Core deposits as a stable source of funding
- Current, savings and profit-sharing investment accounts
- Relevance and importance of deposit insurance to Islamic banks
Short-term funding – interbank money market
- Products – Murabahah, Wakalah
- Pricing – importance of currency peg to US dollar
- Restrictions on commodities
Long-term funding products – fixed income market
- Sukuk Products
  - Types of Sukuk
  - Choice of rate fixing and maturity
  - Additional Tier 1 equity
- Sukuk pricing – understanding the swaps curve and credit ratings
- Characteristics of the Sukuk market
- Sukuk issuance process and the role of treasury

Islamic Treasury Investment

Inter-bank money market placement
Investment funds and syndicated Murabahah
Trading in Sukuk for treasury management purposes

Liquidity Management

Stability and sustainability of funding sources
Liquid assets buffer: amount and choice of liquid assets; portfolio management
Scenarios and back-testing
Stress-testing liquidity
Contingency planning and lender of last resort for Islamic banks
Key metrics: Cash forecast, roll-off forecast, liquidity forecast, concentrations

Analysis and Discussion of Case Studies:

Arcapita Bank
Northern Rock

Day 2: Islamic Derivatives and Treasury Operations

Islamic Derivatives and Risk Management Tools

Shariah compliant contracts for structuring Islamic derivatives
- Waad
- Murabahah
Applications of Waad and Murabahah
- FX forwards
- Profit rate swaps
- Currency swaps
- FX and interest rate options
How to use Islamic derivatives for FX exposures
- Measuring FX risk: from nominal exposure to Value-at-Risk
- Mitigating FX exposures with Islamic derivatives
How to use Islamic derivatives for interest rate risk exposures
- Measuring interest rate risk: earnings at risk
- Mitigating interest rate risk with Islamic derivatives
Other uses for Islamic derivatives
- Commodity and equity linked notes for investment and funding
Latest developments in the structuring and use of Shariah compliant derivatives
Practical challenges to overcome in using Islamic derivatives

Group Discussion: Deutsche Bank’s white paper on Islamic derivatives

Treasury Operations

Treasury limits and delegated authorities
Liquidity and FX deal management
- Procedural requirements, control, conditions of use
- Shariah requirement for dealing with late payments
- Dealing with brokers
- Settlement and confirmation
- Back-to-back deals and netting arrangements
- Reducing operational risk
Treasury placement - MATP
Islamic derivatives
- Documentation - ISDA, IIFM Master Agreement
- Valuation and collateral management

Final Discussion and Course Wrap-Up

Where & When

Date: 15^th & 16^th January 2020
Venue: Kuala Lumpur

Who Should Attend?

This course has been specifically designed to benefit:

Chief Risk Officers
Chief Financial Officers
Financial Risk Managers
Treasury and ALM professionals
Risk Analysts
Financial Analysts
Credit Managers
Credit Portfolio Managers
Asset Managers
Corporate bankers
Retail bankers
Supervisors, regulators and risk standard setters

Fee

In-house/group training

If you are looking for an in-house training program or wish to send a group to an existing public program, kindly please contact Andrew Tebbutt at [email protected] or +603 2162 7802./p>

Manual Registration

Kindly complete the registration form and email to [email protected] or fax +603 2162 7810

Course Background

KEY LEARNING OUTCOMES

Understand cash management, liquidity investment and funding for Islamic banks
Learn and implement risk control, governance, and regulatory requirements for treasury management
Understand complex Shariah compliant derivatives and risk management structures and their application to the effective management of market risks
Learn advanced treasury operations, from deal execution to documentation in Islamic banks

Seminar Agenda

Day 1: Treasury Management and Products
Day 2: Islamic Derivatives and Treasury Operations

Day 1: Treasury Management and Products

Treasury Objectives and Governance

Treasury objectives
- Funding the bank
- Cash management and investing surplus liquidity
- Market risk management - Foreign exchange and interest rates
Treasury governance
- ALCO and gap analysis
- Treasury limits structure
  - Limits setting process
  - Breaches, escalations and resolutions
- Treasury Shariah audit
Relevant regulatory requirements for Islamic treasuries
- Interest rate risk in the banking book (IRBBB)
- Liquid assets and Net stable funding ratios
- High quality liquid assets and Sukuk eligibility

Islamic Treasury Funding

Core deposits as a stable source of funding
- Current, savings and profit-sharing investment accounts
- Relevance and importance of deposit insurance to Islamic banks
Short-term funding – interbank money market
- Products – Murabahah, Wakalah
- Pricing – importance of currency peg to US dollar
- Restrictions on commodities
Long-term funding products – fixed income market
- Sukuk Products
  - Types of Sukuk
  - Choice of rate fixing and maturity
  - Additional Tier 1 equity
- Sukuk pricing – understanding the swaps curve and credit ratings
- Characteristics of the Sukuk market
- Sukuk issuance process and the role of treasury

Islamic Treasury Investment

Inter-bank money market placement
Investment funds and syndicated Murabahah
Trading in Sukuk for treasury management purposes

Liquidity Management

Stability and sustainability of funding sources
Liquid assets buffer: amount and choice of liquid assets; portfolio management
Scenarios and back-testing
Stress-testing liquidity
Contingency planning and lender of last resort for Islamic banks
Key metrics: Cash forecast, roll-off forecast, liquidity forecast, concentrations

Analysis and Discussion of Case Studies:

Arcapita Bank
Northern Rock

Day 2: Islamic Derivatives and Treasury Operations

Islamic Derivatives and Risk Management Tools

Shariah compliant contracts for structuring Islamic derivatives
- Waad
- Murabahah
Applications of Waad and Murabahah
- FX forwards
- Profit rate swaps
- Currency swaps
- FX and interest rate options
How to use Islamic derivatives for FX exposures
- Measuring FX risk: from nominal exposure to Value-at-Risk
- Mitigating FX exposures with Islamic derivatives
How to use Islamic derivatives for interest rate risk exposures
- Measuring interest rate risk: earnings at risk
- Mitigating interest rate risk with Islamic derivatives
Other uses for Islamic derivatives
- Commodity and equity linked notes for investment and funding
Latest developments in the structuring and use of Shariah compliant derivatives
Practical challenges to overcome in using Islamic derivatives

Group Discussion: Deutsche Bank’s white paper on Islamic derivatives

Treasury Operations

Treasury limits and delegated authorities
Liquidity and FX deal management
- Procedural requirements, control, conditions of use
- Shariah requirement for dealing with late payments
- Dealing with brokers
- Settlement and confirmation
- Back-to-back deals and netting arrangements
- Reducing operational risk
Treasury placement - MATP
Islamic derivatives
- Documentation - ISDA, IIFM Master Agreement
- Valuation and collateral management

Final Discussion and Course Wrap-Up

Seminar Speaker

Dr Ken Baldwin
Former Director Financial Policies & Planning, Islamic Development Bank

Dr. Ken Baldwin has worked as a practitioner in banking and finance for over 25 years in senior positions spanning the front and middle offices. Having graduated from Oxford University with a first-class honors degree in Physics in 1989, he qualified as a Chartered Accountant with PWC, before joining UBS, and then later Credit Suisse, in derivatives risk and control functions based in London.

He gained a PhD in the microeconomic theory of risk sharing in Islamic contracts, and worked in the GCC for 15 years in Islamic retail and Islamic investment banks. Whilst at Abu Dhabi Islamic Bank, Dr. Ken built an ALM analytic technology platform capable of capturing liquidity and interest rate risks inherent in the many varied Islamic financing products used at retail and corporate levels. He then moved to take up the position of MENA Regional Head of Quantitative Analysis for Citigroup. At Citicorp, Dr. Ken worked on structuring complex products used by Gulf-regional corporations to hedge FX and interest risks. Still residing in Bahrain, Dr. Ken then joined Investcorp, where he worked on the risk due diligence of corporate private equity and real estate private equity transactions and portfolio management. After leaving Investcorp, he set up the risk management department for venture capital bank, providing Basel III compliance and deal analysis for the bank. He then operationalized a new Islamic investment bank as its Chief Operating Officer for 3 years, before his most recent industry role at the Islamic Development Bank, where he set up and ran a new department tasked with developing Financial Policies and Planning underpinned by robust financial analytic tools and methodologies designed specifically for the IDB. Dr. Ken is currently a senior university lecturer in finance in the UK. He has published quantitative finance articles in peer-reviewed academic journals including the Journal of Risk, and during his earlier career, taught CFA and FRM professional certifications as a pastime for the Bahrain Institute of Banking and Finance.

Ken is a British Muslim.

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For enquiries please contact:

Mathias Sosovele
Account Manager, REDmoney Seminars
[email protected]
Direct Line: +603 2162 7800 ext 25

Normariya Sariman
Account Manager, REDmoney Seminars
[email protected]
Direct Line: +603 2162 7800 ext 44

Ramesh Kalimuthu
Events Sales Director
[email protected]
Direct Line: +603 2162 7800 ext 65
Fax: +603 2162 7810

For sponsorship & speaking opportunities:

Andrew Tebbutt
Managing Director
[email protected]
Direct Line: +603 2162 7802

For marketing and media enquiries

Tiviaa James
Marketing Executive
[email protected]
Direct Line: +603 2162 7800 ext 62