Emerging Market Bank Analysis: Issues and Challenges

At the end of the training Participants will be able to:

• Apply a structured analytic approach incorporating the operating environment (sovereign and systemic risk), financial fundamentals, management and support
• Identify banking systems with high systemic risk and evaluate the potential impact on the banking system
• Evaluate the financial statements to identify strong and weak performers and recognize the key areas of vulnerability in emerging market bank financial statements
• Use both international and local financial, qualitative and market indicators to distinguish early warning signals of credit deterioration
• Recognise the impact of the sovereign economic health, systemic and regulatory change on bank performance and strategy and identify the need for and likelihood of support for different types of creditors in a crisis

Content:

Analytic Overview

structured approach to the credit analysis of emerging market banks with perspectives of regulators, rating agencies and debt and equity investors.

Operating Environment

• Sovereign risk
• Banking system
• Regulation and supervision

Financial Fundamentals

• Statement logic
• Business risk
• Performance risk
• Financial risk - liquidity
• Financial risk - capital adequacy
• Early warning signals

Management, Franchise and Ownership

Section aims: risk of differing management and shareholder structures prevalent in emerging markets and benchmarks of appropriate risk management and corporate governance behavior.

Support

Section aims: lessons learned from banking crises to anticipate the availability of support for the creditors of a failing bank from either Government or shareholders.

Final Case Study

• Preparation and presentation of a comprehensive credit analysis of an emerging market bank, covering operating environment, business risk, performance risk, financial risks and the quality of management
• Participants will evaluate the overall risk of failure or default, assign ratings and make appropriate recommendations on exposure levels

TRAINING METHODOLOGY

The training methodology combines lectures, discussions, group exercises and illustrations. Participants will gain both theoretical and practical knowledge of the topics. The emphasis is on the practical application of the topics and as a result participant will go back to the workplace with both the ability and the confidence to apply the techniques learned to their duties.