The Application of Derivatives by Banks to Manage Risk and Increase Net Income 2021

The Application of Derivatives by Banks to Manage Risk and Increase Net Income
A Two-Part Online Training Program

Date: 16^th & 17^th August 2021

COURSE 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 HIGHLIGHTS

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

Fee

1 participant: RM1,450/$375
2 participants: RM2,900/$750
3 participants: RM4,350/$1,125
4 participants: RM5,800/$1,500
5 participants: RM7,250/$1,875

Early Payment Discount: Payments made on or before 9^th August 2021 will receive a 7.5% discount. Payments received after this date will be re-invoiced for the full amount.

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.
Learn More

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

COURSE INTRODUCTION

KEY HIGHLIGHTS

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

Who Will Benefit Most?

This course has been specifically designed for the benefit of bank employees from across the institution:

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

Fee

1 participant: RM1,450/$375
2 participants: RM2,900/$750
3 participants: RM4,350/$1,125
4 participants: RM5,800/$1,500
5 participants: RM7,250/$1,875

Early Payment Discount: Payments made on or before 9^th August 2021 will receive a 7.5% discount. Payments received after this date will be re-invoiced for the full amount.

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.
Learn More

AGENDA AND FORMAT

Each session will be interactive in a seminar format, with participants encouraged to engage with questions throughout.

PLATFORM

AGENDA

Part 1: 16^th August

Derivative Fundamentals and FX Applications

Overview of derivatives

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?
Quiz

Using derivatives to manage bank risks

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
Quiz

Structuring client derivatives solutions

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?

The practical application of vanilla derivatives to FX risks

FX forwards: managing stock exposures and rolling forward hedges
Cross currency swaps: applications in term-financing
Quiz

Part 2: 17^th August

Interest Rate Derivatives and Applications

Vanilla Interest rate derivatives

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?
Quiz

Exotic interest rate derivatives

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?
Quiz

Course Conclusion & Wrap

EXPERT COURSE DIRECTORS

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 MOST?

This course has been specifically designed for the benefit of bank employees from across the institution:

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

REGISTRATION

*Please note there is a fee for attending this program. Please contact us for more details.

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Before completing this registration form please read and understand our booking and cancellation policy. Thank you.

Booking, Payment and Cancellation Policy – important, please read carefully

By completing, signing and revised, sent separately us this registration form you are conﬁrming participants on the program. You are also conﬁrming your understanding of our Booking, Payment and Cancellation Policy.

Cancellation Policy: If participants cannot attend the program, replacement participants are always welcome. Otherwise, participants must notify us any of cancellations or requests to transfer to a diﬀerent program at least 14 days before the program date to be eligible for a refund, less a 5% administration on fee. Participants who cancel within 14 days of the program start date are liable to pay the full program fee and no refunds will be given. Instead fees will be converted to a REDmoney Seminars voucher equivalent to the original fee, less a 10% administration charge. This voucher is transferable within your organization and must be redeemed within one year of issue or become void. If a program is postponed for whatever reason registrations and fees will be automatically transferred to the new program date. Participants who wish to transfer to a diﬀerent program will be subject to the same terms as above and charged any diﬀerence in fees. No refunds or program vouchers will be issued for a no-show.
Payment Terms: All program fees are payable upon invoice. REDmoney shall receive the full program fee with no deductions of any description. All telegraphic transfer fees, taxes and levies (domestic or otherwise) shall be borne by the sponsoring organization.

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CPE/CPD Applicable:

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

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COURSE INTRODUCTION

Fee

In-house/group training

COURSE INTRODUCTION

Who Will Benefit Most?

Program Format

Fee

In-house/group training

AGENDA AND FORMAT

PLATFORM

AGENDA

Part 1: 16th August

Part 2: 17th August

EXPERT COURSE DIRECTORS

WHO WILL BENEFIT MOST?

REGISTRATION

Approving Manager

Verification

Part 1: 16^th August

Part 2: 17^th August