Loan and Transaction Structuring Masterclass Course

Course Overview:

The Loan & Transaction Structuring Masterclass takes a step further in giving participants thorough and practical knowledge and skills to assess and manage credit risk, structures of loans and management of loans.

End of the course enables the participants to respond to questions about the clients’ actual borrowing needs, undertake cash flow analysis, investigate the risks of various loans and determine the method of loan and securities issue which is the most appropriate.

The course has learning outcomes which emphasis on the comprehension of the working capital cycle, assessment of the requirement for the short and the long-term fund, development of measures of credit risk exposure, and understanding the nature of the documents involved in the process.

The course will also deal with the broad managerial issues focusing on taking security, managing covenants, as well as the concept of following the money through the lifecycle of the loan. The course works for decision-makers in the finances, credit officers, investment bankers, and almost every professional that is involved with lending and risk management

Course Objectives:

By the end of this Loan & Transaction Structuring Masterclass training course, participants will be able to:

• identify the key elements of credit risk
• Understand the working capital cycle of a business
• Measure, quantify and evaluate the actual borrowing needs of the client (lend them what they need as opposed to what they want or think they need).
• Assess the risk of lending the client what they actually need
• Understand the difference between short, medium and long term loans and the risk profiles
• Analyze the cash flows – the source of our repayment over the length of the loan
• Select the most appropriate lending structure
• Decide whether security is required
• Select appropriate documentation and loan covenants to manage the loan
• Learn how ongoing management of the loan is vital
• Be clear that the practice of “following the bank’s money” must always be implemented

Who Should Attend?

Loan & Transaction Structuring Masterclass Training Course, is ideal for:

• Financial decision makers in corporations
• Bank credit officers
• Compliance officers
• Investment bankers
• Management consultants
• Bond credit analysts
• Fund managers
• Treasurers

Course Outlines:

Introduction To Credit Risk

• What is credit risk?
• The different types of credit risk
• Sovereign
• Corporate
• Retail
• Systemic
• Counterparty
• The current lending environment
• Risk appetite statements and their impact on lending strategy
• How do we assess, measure, manage and mitigate credit risk
• The three methods of calculating credit risk, standardized, foundation and advanced IRB
• The revised standardized approach
• The impact of IFRS 9

 Lending Refresher – overview

• Definitions & basic lending principles
• Lending policies, lending strategies, lending systems
• Data/information collection
• Approvals, security, drawdowns
• Management & monitoring systems

The Credit Risk of Specific Financial products

• Loans and overdrafts
• Term loans
• Project finance
• Construction finance
• Private-public partnerships
• Government and corporate bonds
• Equity and mezzanine debt
• Credit derivatives
• Counterparty exposure
• Off-balance sheet commitments
• Trade finance
• Mortgages
• Credit cards

The Working Capital Cycle

• Definition
• Understanding the mechanics
• Seasonal or non-recurring cycles
• The role of bank finance
• The role of the overdraft
• Understanding break-even analysis
• Understanding bankers cash flows
• How to lend in support of the cycle
• When an overdraft becomes a medium-term loan
• Managing multiple cycles

The Basic Principles of Lending

• Appraisal techniques
• Credit assessment
• Business clients
• Corporate Clients
• Private Wealth Clients
• Trade Finance
• Group credit appraisal
• Development finance
• Project finance

Establishing the borrower's actual needs

• What do budgets and cash flows actually measure
• Short-, medium- and long-term funding needs
• Short medium- and long-term lending products
• SWOT analysis
• Basic principles
• Data collection, refining and perfection
• Evaluation – back testing
• Selecting the appropriate lending mix in practice
• What goes wrong

Introduction to Credit Risk Strategy

• Measuring credit risk in structured loans
• Portfolio theory and correlation concepts
• Contagion risks
• Liquidity assumptions
• The importance of time

The different lending maturities

• Short term finance
• Medium-term finance
• Long term finance
• Working capital finance
• Trade finance
• Project finance
• The risks
• Best practice
• What goes wrong

Understanding cash flows

• Definitions
• Bankers cash flow
• What do we use them for
• The Rule of 72
• Discounted cash flow, NPV & PDV
• Are medium-term cash flows useful tools
• What are the pitfalls
• Where does it go wrong
• Stress testing and scenario analysis

Introduction to Lending structures

• What facilities does the client need
• What are we prepared to lend
• Is this enough
• Matching lending to cash flow
• Matching lending to use of funds
• Lending cycles
• Economic cycles
• Management and monitoring systems
• Cash flow monitoring
• Recovery management

 Bank security

• Why do banks take security
• Does it achieve recovery by itself
• We do lend unsecured
• Security does not improve the underlying deal
• Why take it then
• Safety net
• Risk transfer
• The importance of guarantees
• Type of security
• Completion and perfection of security
• Independent and direct bank control
• Monitoring security post lending drawdown
• Best practice
• What goes wrong

Loan Documentation

• What do we need
• Best practice
• The minimum
• The ideal
• Covenants
• Undertakings
• Key clauses
• Managing the loan
• Regular scrutiny
• Report processes
• What goes wrong

Following Our Money

• Why is this necessary
• How do we do it
• The role of the CRM
• The role of Credit & Risk Management
• Systems, Processes
• Best practice
• What goes wrong

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