BAC 104 - CREDIT RISK MANAGEMENT (BASEL II & III)

INTRODUCTION

The workshop presents strategies and methods for banks to reduce losses caused by credit risks. Based on case studies solutions and options for the following questions will be discussed:

  •       Sources of risk within a bank or financial institution;
  •       Basel Committee standards on Credit Risk, Objectives and functions;
  •       Credit Rating and Credit Scoring as a tool for risk classification;
  •       Standard Approach and IRB Approach
  •       Risk Management on the basis of Basel II – Management of Individual Risks and Portfolio Management

The course also provides an in-depth insight into the credit risk mitigation tools and the implementation of Basel II.  A practical guide to the latest developments within credit risk, this course will provide you with structured presentations, practitioners' expertise and market examples.

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BRIEF OUTLINE

    Lending Environment Challenges Ahead – increasing competition, more demanding customers, regulatory controls, changing focus of lending portfolio, how the banks are meeting the challenges, global crisis and lessons for lenders

    Credit Risk Management – forms of credit risk, components of credit risk, organizational structure for credit risk management, credit policy, procedures and culture, credit risk models for individual loans – qualitative models, credit rating, credit scoring models

    Capital Adequacy and Basle II – three measures of risk – expected loss, unexpected loss and exceptional loss, what regulators prescribe, Basle committee - definition of capital , three pillars of Basle II model, capital charge for credit risk-standardized approach, internal ratings based approach, probability of default, exposure at default, loss given default, default loss, expected loss

    Evaluation of Financial Risk – limitations of financial ratios, optimal capital structure for a firm, sustainable growth rate as a new tool in bank lending, ROE decomposition analysis, interpreting ratios, limitations of ratios, window dressing of accounts – purpose and methods

Those with minimum two years’ experience of working in retail, SME, corporate or commercial lending

 

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