The Application of Derivatives by Banks to Manage Risk and Increase Net Income
A Two-Part Online Training Program
Date: 26th & 27th August 2020
2.00 - 5.00 (KL/Singapore time)
PROGRAM INTRODUCTION
Derivatives are an essential tool for managing risk. Banks commonly use derivatives to manage interest rate risk in the banking book, to transform the risk profiles of their investment portfolios, and to transfer away unwanted foreign currency exposure which is not core to their business objectives. However, derivatives’ use extends further. Banks also increasingly use derivatives to provide structured hedging solutions for their clients, which generates high fee income for bank shareholders.
This course provides an excellent opportunity for bankers from all departments to gain practice-based insights into how derivatives work, and how banks use them to manage their own risks, and the risks of their clients. The course explains complex ideas in simple ways, drawing from the experience of the instructor in risk management on the derivatives buy-side, and as a derivatives structurer and quantitative analyst on the derivatives sell-side.
This course provides the opportunity for a high level of interactive discussion aided by case studies, and provides thorough instruction in techniques to manage bank risks, reduce funding costs, and run a successful business delivering client-solutions to generate income.
KEY LEARNING OUTCOMES
- Learn how banks apply derivatives to manage FX risks and interest rate risks
- Understand how derivatives are applied to adjust the risk profile of a bank’s capital structure and in particular, to reduce funding costs
- Learn how banks generate income from derivatives in the provision of client hedging and investment management services
1 participant: RM950
2 participants: RM1,710
3 participants: RM2,423
4 participants: RM3,040
5 participants: RM3,563
Early Payment Discount: Payments made on or before 19th August will receive a 5% discount
* Further attractive packages are available for groups of more than five. Please contact us directly
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.
Learn More
Kindly complete the registration form and email to [email protected] or fax +603 2162 7810
Online Delivery
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
Anna Rozana Ramli
Marketing Director
[email protected]
Direct Line: +603 2162 7800 ext 22
PROGRAM INTRODUCTION
Derivatives are an essential tool for managing risk. Banks commonly use derivatives to manage interest rate risk in the banking book, to transform the risk profiles of their investment portfolios, and to transfer away unwanted foreign currency exposure which is not core to their business objectives. However, derivatives’ use extends further. Banks also increasingly use derivatives to provide structured hedging solutions for their clients, which generates high fee income for bank shareholders.
This course provides an excellent opportunity for bankers from all departments to gain practice-based insights into how derivatives work, and how banks use them to manage their own risks, and the risks of their clients. The course explains complex ideas in simple ways, drawing from the experience of the instructor in risk management on the derivatives buy-side, and as a derivatives structurer and quantitative analyst on the derivatives sell-side.
This course provides the opportunity for a high level of interactive discussion aided by case studies, and provides thorough instruction in techniques to manage bank risks, reduce funding costs, and run a successful business delivering client-solutions to generate income.
KEY LEARNING OUTCOMES
- Learn how banks apply derivatives to manage FX risks and interest rate risks
- Understand how derivatives are applied to adjust the risk profile of a bank’s capital structure and in particular, to reduce funding costs
- Learn how banks generate income from derivatives in the provision of client hedging and investment management services
This course is designed to be of most benefit to:
- Chief Executive Officers
- Chief Risk Officers
- Chief Financial Officers
- Financial Risk Managers
- Treasury managers
- Risk Analysts
- Financial Analysts
- Middle-office treasury risk
- Derivatives structuring and sales teams
- Derivatives product control
- Relationship managers
- Credit origination teams
- Credit Managers
- Credit Portfolio Managers
- Corporate bankers
- Retail bankers
- Operations managers and operations teams
- Supervisors, regulators and risk standard setters
This two-part training program will be delivered online through a stable, secure and free-to-access platform. The program itself will be delivered through lectures, worked examples and case studies in order to ensure a detailed and practical understanding of the program content. Participants will have plenty of opportunity to ask questions and interact with the program director. Login details and program materials will be sent to participants upon receipt of payment
1 participant: RM950
2 participants: RM1,710
3 participants: RM2,423
4 participants: RM3,040
5 participants: RM3,563
Early Payment Discount: Payments made on or before 19th August will receive a 5% discount
* Further attractive packages are available for groups of more than five. Please contact us directly
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.
Learn More
Kindly complete the registration form and email to [email protected] or fax +603 2162 7810
Online Delivery
AGENDA
Part 1: 26th August, 2.00pm – 5.00pm
- What is a derivative?
- Linear versus non-linear derivatives: forward versus option
- Types of exposures: the difference between stock and flow
- Why are derivatives credit risky and how can they be collateralised?
- How do banks use derivatives to hedge their own risks?
- Interest rate risk in the banking book
- Earnings at risk and net interest margin (NIM) volatility
- FX risk management
- How do banks make hedging decisions?
- Risk preferences and hedge benchmarks
- A budget for bought options
- Should having a ‘view on the market’ matter?
- How can banks get better pricing for themselves?
- What are the unwanted consequences of derivatives’ use?
- Impact of derivatives on net income statement
- Collateral cash flow uncertainty
- How do banks use derivatives to make income?
- What is a back-to-back trade?
- When should a bank retain residual risk and how can banks limit their potential losses?
- What are the steps in selling derivative solutions to clients?
- FX forwards: managing stock exposures and rolling forward hedges
- Cross currency swaps: applications in term-financing
Part 2: 27th August, 2.00pm – 5.00pm
- Forward Rate Agreements (FRA)
- Hedging single period borrowing costs
- Hedging single period rates of return
- Interest Rate Swaps (IRS)
- Relationship between FRAs and IRSs
- Risk transformation of funding costs
- Different ways to use IRSs: paired instrument versus pooled interest rate risk
- Basis risks and choice of the floating rate
- Interest rate caps and floors
- What are interest rate caps and floors?
- When to use caps and floors to manage interest rate risk
- Swaptions
- What is a swaption?
- How are swaptions used to reduce funding costs?
- LIBOR-in-arrears swaps
- What is a LIBOR-in-arrears swap?
- How do banks use a LIBOR-in-arrears swap to reduce bought option premia?
- What are the risks in using a LIBOR-in-arrears swap?
- Inverse Floating Rate Notes (IFRNS)
- What is an inverse FRN?
- How can inverse FRNs be used to reduce funding costs?
- Range accruals
- What are range accruals?
- How are range accruals used to reduce funding costs?
EXPERT COURSE DIRECTOR
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.
WHO WILL BENEFIT
- Chief Executive Officers
- Chief Risk Officers
- Chief Financial Officers
- Financial Risk Managers
- Treasury managers
- Risk Analysts
- Financial Analysts
- Middle-office treasury risk
- Derivatives structuring and sales teams
- Derivatives product control
- Relationship managers
- Credit origination teams
- Credit Managers
- Credit Portfolio Managers
- Corporate bankers
- Retail bankers
- Operations managers and operations teams
- Supervisors, regulators and risk standard setters
PROGRAM FORMAT
This two-part training program will be delivered online through a stable, secure and free-to-access platform. The program itself will be delivered through lectures, worked examples and case studies in order to ensure a detailed and practical understanding of the program content. Participants will have plenty of opportunity to ask questions and interact with the program director. Login details and program materials will be sent to participants upon receipt of payment
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
Anna Rozana Ramli
Marketing Director
[email protected]
Direct Line: +603 2162 7800 ext 22
