Credits, Commitments & International Operations

Description

A credit file is judged on repayment capacity, not on the quality of its presentation. This two-day course covers the full origination chain: reading a company’s financial statements or a retail customer’s situation, building the analysis, formalising the decision, and setting the terms and collateral matched to the risk identified.

Learning objectives

By the end of the course, participants will be able to:

• Read and interpret the financial statements of a corporate borrower
• Build the main analytical ratios and judge their significance
• Assess repayment capacity against available cash flows
• Prepare a complete credit file and justify the decision
• Set the terms and collateral matched to the risk
• Identify the files that must be declined or escalated

Teaching methods and resources

Methodological input followed by exercises on real anonymised files. Guided financial analyses, ratio calculation exercises, credit committee simulations. File analysis template and collateral setting grid. Peer exchange between participants.

Course programme

1. Reading the financial statements

• Locate the structure of the balance sheet and income statement
• Restate the items that distort the reading
• Build the cash flow statement and derive repayment capacity
• Spot the warning signals in the accounts

Practical work: guided analysis of a corporate borrower’s accounts. Identification of the items that call for a question.

2. Building the analysis

• Calculate and interpret structure, activity and profitability ratios
• Locate the company within its sector and its cycle
• Assess the quality of management and governance
• Handle uncertified or outdated accounts

Practical work: building a complete analysis on a corporate file, then comparison between subgroups.

3. Preparing the file and deciding

• Formulate a reasoned credit proposal
• Identify the weak points and address them explicitly
• Build the funding plan and check its consistency
• Justify a decline decision defensibly

Practical work: credit committee simulation on three files, including one borderline case. Debrief on the quality of the argument.

4. Setting terms and collateral

• Calibrate rate and fees against the risk
• Choose appropriate collateral and assess its real value
• Draft the useful protective covenants
• Handle the negotiation of terms with the client

Practical work: setting terms and collateral on two approved files, with justification of the level chosen.

5. Organising post-origination monitoring

• Define the control points after drawdown
• Monitor covenant compliance and handle breaches
• Detect counterparty deterioration early
• Document the file for audit

Practical work: building a monitoring arrangement for an approved file, with alert thresholds defined.

Description

A badly handled non-performing loan costs twice: in final loss and in time consumed. This two-day course is about building a recovery strategy matched to the debtor profile, from amicable recovery to insolvency proceedings, and about the trade-off between restructuring, disposal and litigation.

Learning objectives

By the end of the course, participants will be able to:

• Segment a distressed portfolio by recovery potential
• Build a recovery strategy matched to each segment
• Conduct an amicable recovery conversation
• Locate insolvency proceedings and their consequences for the creditor
• Arbitrate between restructuring, loan sale and litigation
• Measure the performance of the recovery function

Teaching methods and resources

Methodological and legal input illustrated by real anonymised files. Segmentation exercises, recovery conversation role plays, insolvency proceedings case studies. Portfolio segmentation grid and treatment decision tree. Peer exchange between participants.

Course programme

1. Segmenting the distressed portfolio

• Distinguish technical arrears, temporary difficulty and insolvency
• Assess the recovery potential of each situation
• Identify the files where speed is decisive
• Prioritise the recovery effort

Practical work: segmentation of a distressed portfolio and allocation of a strategy to each segment.

2. Conducting amicable recovery

• Prepare the conversation and set a realistic objective
• Conduct the exchange with a good-faith debtor
• Handle the debtor who avoids contact
• Formalise a settlement agreement and secure its performance

Practical work: role plays on two contrasting debtor profiles. Debrief on how the conversation was conducted.

3. Restructuring a loan

• Assess the sustainability of a rescheduling
• Build a realistic restructuring plan
• Locate the accounting and prudential consequences of a restructuring
• Monitor performance and handle a second default

Practical work: building a restructuring plan on a corporate file, with a sustainability test.

4. Locating insolvency proceedings

• Identify the main proceedings and their effects on creditors
• Understand the ranking of claims and the consequences of collateral
• Organise the filing of claims and their monitoring
• Handle appeals and deadlines

Practical work: analysis of an insolvency file. Determination of the creditor’s position and the actions to take.

5. Arbitrating and steering

• Compare the expected return of litigation, disposal and write-off
• Decide on a portfolio sale and prepare the data for it
• Measure the performance of the recovery function
• Report to governing bodies on the quality of the distressed portfolio

Practical work: arbitration decision on three files with different profiles, with a quantified economic justification.

Description

A documentary credit secures an international transaction provided the documents presented are strictly compliant. That is where the difficulty lies: a badly handled discrepancy blocks payment and puts the commercial relationship at risk. This three-day course covers the full cycle, from issuance to settlement, based on real files and the International Chamber of Commerce rules.

Learning objectives

By the end of the course, participants will be able to:

• Locate the documentary credit among the instruments securing international trade
• Draft and check the terms of a documentary credit issuance
• Check the compliance of the documents presented
• Handle a discrepancy and its consequences for the parties
• Locate the other instruments: documentary collection, guarantees, standby letters of credit
• Advise a client on the instrument suited to their transaction

Teaching methods and resources

Technical input based on the applicable rules and usages. Document checking exercises on real files, discrepancy case studies, processing simulations. Document checking checklist and comparative table of instruments. Peer exchange between participants.

Course programme

1. Locating the instruments of international trade

• Compare documentary collection, documentary credit and guarantees
• Identify the risks covered and those that are not
• Locate the roles of the banks involved
• Choose the instrument suited to the transaction and the counterparty

Practical work: reasoned selection of the appropriate instrument for three transactions with different risk profiles.

2. Issuing a documentary credit

• Draft the terms of issuance and avoid unworkable clauses
• Choose the method of availability and its implications
• Locate the notions of irrevocability and confirmation
• Handle amendment requests

Practical work: drafting the terms of an issuance from a commercial contract, then identifying the risky clauses.

3. Checking the documents

• Apply the principle of strict compliance
• Check each document and its consistency with the others
• Respect presentation and examination deadlines
• Document the check performed

Practical work: full document check of a set containing several irregularities. Presentation of the discrepancies found.

4. Handling discrepancies

• State a discrepancy precisely and within the deadline
• Locate the consequences of a discrepancy for each party
• Handle the waiver of a discrepancy and the applicant’s agreement
• Manage the commercial relationship during the blockage

Practical work: full handling of a file with discrepancies, from notification to resolution. Debrief on communication to the parties.

5. Settling and securing

• Organise payment, acceptance or negotiation
• Handle deferred payment credits and their financing
• Locate the residual risks after settlement
• Advise the client for subsequent operations

Practical work: analysis of a complete file from contract to settlement. Identification of the points where handling could have been improved.

Description

The International Chamber of Commerce’s Uniform Customs and Practice for Documentary Credits (UCP 600, in force since 1 July 2007) remain the reference for documentary credits. They never apply alone, however: ISBP 821, published in 2023, sets the practice for examining documents; eUCP 2.1 governs electronic presentations; other ICC rules cover reimbursement, guarantees and standbys. This three-day course reviews UCP 600 article by article where disputes concentrate, links it to these companion rules, and prepares teams for ongoing changes: the move to electronic documents and the options discussed for a future revision, presented as such until the ICC publishes anything.

Learning objectives

By the end of the course, participants will be able to:

• Position UCP 600 within the body of ICC rules and understand its contractual force
• Apply the UCP 600 articles where disputes concentrate: bank undertakings, complying presentation, examination periods, refusals
• Examine documents in line with ISBP 821 practice and justify a notice of refusal
• Handle an electronic or mixed presentation under eUCP 2.1
• Link UCP 600 with the rules on reimbursement, guarantees and standbys in an international transaction
• Monitor changes to the framework and assess their impact on the institution’s procedures

Teaching methods and resources

Guided reading of key articles, followed by examination exercises on real anonymised document sets. Analysis of ICC Banking Commission opinions on disputed cases. Drafting of refusal notices and credit clauses. A cross-reference table between UCP 600, ISBP 821 and eUCP 2.1, and a document checking grid. Validation quiz at each step.

Course programme

1. Positioning UCP 600 within ICC rules

• Understand the contractual nature of the rules and how they are incorporated into the credit
• Link UCP 600 with ISBP 821, eUCP 2.1 and the reimbursement rules (URR 725)
• Distinguish the rules for guarantees (URDG 758) and standbys (ISP98)
• Understand the role of national law and international sanctions

Practical work: identifying the applicable rules for five international trade transactions with different profiles.

2. Reading the key articles of UCP 600

• Definitions and interpretations: complying presentation, banking day
• Undertakings of the issuing bank and the confirming bank
• Independence of the credit from the underlying contract
• Examination periods, notices of refusal and the consequences of an irregular refusal

Practical work: analysis of three disputes decided by ICC opinions, followed by a discussion of each bank’s position.

3. Examining documents under ISBP 821

• Apply the standard for examination and the notion of discrepancy
• Check the invoice, transport documents and insurance document
• Handle non-documentary and administrative conditions
• Draft a complete and enforceable notice of refusal

Practical work: examination of a full presentation, listing of discrepancies and drafting of the notice of refusal.

4. Handling electronic presentations under eUCP 2.1

• Understand the concept of an electronic record and its validity conditions
• Organise an electronic or mixed presentation
• Handle electronic transferable records under the UNCITRAL model law
• Adapt back-office checks and procedures

Practical work: processing a mixed paper and electronic presentation, identifying the checks specific to the electronic format.

5. Applying the rules to international banking transactions and looking ahead

• Structure a transaction: confirmation, reimbursement, transfer, assignment of proceeds
• Build in compliance requirements: sanctions, anti-money laundering
• Follow the options discussed for a future revision of the UCP and assess their possible effects
• Organise regulatory monitoring and procedure updates

Practical work: building a complete transaction flow for an export case, then a plan to update the institution’s procedures.

Description

A credit derivative transfers a borrower’s default risk without selling the loan itself. For a bank, it is a portfolio management tool: reducing a concentration on a large client, hedging an exposed sector, freeing up capital or, conversely, taking on exposure without lending.

This three-day course starts from the lender’s needs. It presents the instruments, their valuation and documentation, then shows how to use them to manage a loan portfolio, while measuring the risks they create in turn: counterparty risk on the protection seller, basis risk and legal risk.

The CDS as a common thread

The credit default swap (CDS) is the reference throughout the course. The other instruments are presented by comparison: CDS indices, total return swaps, credit-linked notes, options on CDS and synthetic securitisation.

Learning objectives

By the end of the course, participants will be able to:

• Describe how the main credit derivatives work and choose the right instrument for a hedging need
• Read the key terms of a CDS confirmation and identify credit events
• Link a CDS spread to default probability and recovery rate, and derive a valuation
• Describe how a credit event is settled, from the determinations committee decision to auction settlement
• Build a loan portfolio hedge and measure its effect on capital requirements
• Identify the related risks and obligations: counterparty, basis, clearing, reporting, market abuse

Teaching methods and resources

Short presentations, analysis of anonymised market documents and confirmations, valuation calculations in a spreadsheet, and case studies drawn from corporate loan portfolios. Materials provided: instrument sheets, CDS valuation workbook, hedging instrument selection grid, typical credit event timeline and a bilingual glossary.

Course programme

1. Understanding the market and the instruments

• Place the uses: hedging, concentration management, diversification, taking positions
• Identify the players: banks, insurers, asset managers, central counterparties
• Distinguish the instruments: single-name CDS, indices, total return swaps, credit-linked notes, options
• Read ISDA documentation: reference entity, reference obligation, credit events

Practical work: choosing the best instrument to reduce a bank’s concentration on a large industrial borrower.

2. Valuing a CDS

• Break the CDS down into premium leg and protection leg
• Link the spread to implied default probability and recovery rate
• Understand the standard coupon and the upfront payment
• Analyse the basis between the CDS and the same issuer’s bond

Practical work: spreadsheet calculation of the implied default probability and upfront payment of a five-year CDS.

3. Settling a credit event

• Identify the events: bankruptcy, failure to pay, restructuring
• Place the role of determinations committees
• Understand auction, physical and cash settlement
• Handle special cases: succession, mergers, change of reference entity

Practical work: simulating a credit event on a reference borrower, from notice to auction settlement.

4. Hedging a loan portfolio

• Build a hedge on a single borrower, a sector or a portfolio
• Place synthetic securitisation and significant risk transfer
• Measure the effect on capital requirements under the CRR credit risk mitigation rules
• Assess counterparty risk on the protection seller and wrong-way risk

Practical work: designing a hedge for a sector concentration and estimating its effect on risk-weighted assets.

5. Managing risks and compliance

• List the risks: basis, counterparty, liquidity, documentation, model
• Place EMIR obligations: central clearing of certain indices, margins, reporting
• Prevent market abuse: inside information held by the lending bank, separation of activities
• Organise limits, monitoring and reporting to the risk committee

Practical work: review of a hedging file by a simulated risk committee, including a conflict-of-interest analysis.

Description

A company that exports, imports or borrows at a floating rate is exposed to risks outside its core business: a move in EUR/USD or a rise in rates can wipe out its margin. The bank offers hedging products to fix or cap these risks.

This three-day course takes the adviser’s point of view. It starts from diagnosing the client’s exposures, presents hedging instruments and how they work, then covers what makes advice sound: product suitability, cost transparency, documentation and ongoing monitoring.

A clear scope

The course covers hedging of corporate clients’ market risks: FX, interest rates and commodities. Credit risk transfer is covered in the Credit Derivatives course (Réf. HA-DDC).

Learning objectives

By the end of the course, participants will be able to:

• Diagnose a company’s exposure to FX, interest rate and commodity risks
• Explain how the main hedging instruments work, what they cost and their payoff profiles
• Propose a hedging strategy suited to the client’s risk policy and situation
• Apply MiFID II and EMIR obligations when selling hedging products
• Monitor the valuation of existing hedges and report on it to the client
• Place the principles of hedge accounting under IFRS 9

Teaching methods and resources

Short presentations, spreadsheet calculations on historical market rates, corporate client case studies and role plays between relationship manager and CFO. Materials provided: instrument sheets with payoff profiles, exposure diagnostic grid, FX and interest rate strategy simulator, advisory meeting guide and glossary.

Course programme

1. Diagnosing the client’s financial risks

• Distinguish transaction, translation and economic FX risk
• Measure the interest rate exposure of debt and investments
• Identify commodity and energy exposures
• Formalise a hedging policy: horizon, hedge ratio, budget rates

Practical work: diagnosing the exposures of an exporting SME that invoices in dollars and borrows at a floating rate.

2. Hedging FX risk

• Calculate a forward rate and use FX forwards and FX swaps
• Understand FX options: premium, intrinsic value, time value
• Build option strategies: collars, participating forwards
• Compare solutions by cost, flexibility and residual risk

Practical work: comparing a forward, an option and a collar to hedge a six-month dollar receipt.

3. Hedging interest rate risk

• Use an interest rate swap to fix the cost of a floating-rate loan
• Cap the rate with a cap, a floor or a collar
• Place FRAs and swaptions
• Match the hedge to the loan’s amortisation profile

Practical work: hedging a floating-rate investment loan with a swap, then a cap, and comparing outcomes under three rate scenarios.

4. Selling within a controlled framework

• Apply MiFID II: client categorisation, suitability assessment, costs and charges disclosure
• Place product governance and target market
• Apply EMIR on the client side: reporting, LEI, clearing thresholds
• Document the transaction: master agreement, confirmation, credit lines for derivatives

Practical work: running a hedging advisory meeting with a CFO, from suitability assessment to confirmation.

5. Monitoring hedges over time

• Value existing hedges and explain their market value to the client
• Place hedge accounting under IFRS 9: designation, documentation, effectiveness
• Restructure or unwind a hedge that no longer fits
• Organise reporting and periodic reviews with the client

Practical work: reviewing a client’s hedge portfolio after a sharp move in EUR/USD: valuation, dialogue and decision.

Description

Structured finance relies first on the cash flows of a project, an acquired company or an asset, rather than on a borrower’s balance sheet. Deals combine several parties, several layers of debt, and contracts and security designed to allocate each risk to the party best placed to bear it.

This three-day course covers the main families of structured finance: project finance, acquisition and leveraged finance, asset finance and export finance. It deals with structuring, cash flow modelling, documentation and security, as well as prudential treatment and how the bank monitors transactions.

A common thread: a wind farm and a leveraged buyout

Participants analyse two fictitious deals: the non-recourse financing of an onshore wind farm and the buyout of a mid-sized industrial company by an investment fund. They identify the risks, size the debt, negotiate the main covenants and present their recommendation to a credit committee.

Learning objectives

By the end of the course, participants will be able to:

• Distinguish the main families of structured finance and the role of each party
• Analyse the risk matrix of a project finance deal and the contractual allocation of risks
• Size debt from cash flows and coverage ratios
• Structure an acquisition financing: debt layers, leverage, financial covenants
• Read the key clauses of the documentation and the security package
• Build prudential treatment, ESG requirements and monitoring into the life of the financing

Teaching methods and resources

Short presentations alternate with case studies and spreadsheet modelling exercises. Participants work in small groups on the two common-thread deals, then defend them before a simulated credit committee. Materials provided: simplified project finance model, risk analysis grid, annotated term sheet template and structured finance glossary.

Course programme

1. Overview of structured finance

• Define structured finance and how it differs from standard corporate lending
• Identify the parties: sponsors, arrangers, lenders, export credit agencies, advisers
• Review the families: project, acquisition and LBO, asset, export, real estate, securitisation
• Understand syndication and the role of the agent

Practical work: mapping the parties and contractual flows of the two common-thread deals.

2. Project finance

• Structure around a project company, with limited or no recourse
• Analyse construction, operating, market, counterparty and country risks
• Allocate risks through contracts: turnkey construction, operations, power purchase
• Size the debt: debt service coverage ratios, repayment profile, reserve accounts

Practical work: risk analysis of the wind farm and debt sizing using the financial model.

3. Acquisition finance and LBOs

• Build the structure: acquisition holding company, senior debt, unitranche, mezzanine
• Assess leverage, debt capacity and enterprise value
• Set financial covenants: leverage ratio, interest cover, mandatory prepayments
• Take into account the ECB guidance on leveraged transactions

Practical work: structuring the industrial company buyout and stress-testing the business plan.

4. Asset finance and export finance

• Finance assets: aircraft, ships, equipment, leasing
• Set up a buyer credit guaranteed by an export credit agency
• Place the framework of the OECD Arrangement on Officially Supported Export Credits
• Analyse asset value and remarketing risk

Practical work: structuring a buyer credit for the export of industrial equipment.

5. Documentation, security and monitoring

• Read a term sheet and the key clauses of the facility agreement: representations, covenants, events of default
• Organise the security package and the intercreditor agreement
• Factor in the prudential treatment of specialised lending and the Equator Principles
• Monitor the financing: covenant compliance, early warnings, renegotiation and restructuring

Practical work: negotiating the LBO term sheet, then presenting both deals before a simulated credit committee.

A credit-decision approach

The course goes beyond structuring technique: each module comes back to the question a credit committee asks, namely whether the financing can be repaid under adverse scenarios. The cases and figures used are fictitious; the practices presented reflect European market usage.

Description

A participatory development project involves the people concerned at every stage: identifying needs, design, implementation and monitoring. This approach improves ownership and the sustainability of results, but it complicates financing: amounts are often small and fragmented, project owners loosely structured, and donors demanding on governance and results measurement.

This three-day course teaches how to build the financing plan for this type of project by combining several sources: grants and loans from development institutions, microfinance, crowdfunding, contributions from local authorities and communities, and blended finance. It covers proposal preparation, participatory governance, risk management and impact measurement.

A common thread: a rural water and agriculture programme

Participants support a fictitious programme providing access to drinking water and support to farming cooperatives in a rural region. It is co-financed by a donor, a microfinance institution and a crowdfunding campaign. Participants design the financing structure, prepare the funding proposal and define the monitoring system with village committees.

Learning objectives

By the end of the course, participants will be able to:

• Explain the principles of participatory development and their effects on financing
• Identify suitable funding sources and their requirements: donors, microfinance, crowdfunding, blended finance
• Build a financing plan and budget consistent with the project’s logical framework
• Organise governance that involves communities in decisions and fund management
• Manage financial, operational, compliance and reputational risks
• Measure and report results and impact to funders and beneficiaries

Teaching methods and resources

Short presentations alternate with case studies and small-group workshops on the common thread or on a project brought by a participant. Simulation of a donor selection committee and a village assembly. Materials provided: logical framework template, multi-source financing plan template, risk analysis grid, funding proposal outline and examples of results and impact indicators.

Course programme

1. Participatory development and its financing challenges

• Define the participatory approach and community-driven development
• Understand a project’s value chain: needs, design, implementation, monitoring
• Build the theory of change and the logical framework
• Assess what participation changes for funders

Practical work: simulated participatory diagnosis and drafting of the common-thread programme’s logical framework.

2. Funding sources

• Draw on development institutions: grants, concessional loans, calls for proposals
• Use microfinance for income-generating activities
• Use crowdfunding: donations, loans, investment, the European framework for providers
• Combine resources through blended finance and involve local authorities and communities

Practical work: mapping potential funders for the programme and selecting the most suitable ones.

3. Building the financing plan and the proposal

• Draw up the budget by activity and by source
• Build a multi-source financing plan and a cash flow plan
• Meet donor requirements: eligibility, co-financing, disbursements
• Write a convincing funding proposal

Practical work: financing plan for the programme and presentation before a simulated donor selection committee.

4. Governance and risk management

• Set up shared governance: management committees, roles, transparency
• Manage funds: procedures, controls, accountability to communities
• Prevent fraud, corruption and misuse of funds
• Identify operational, currency, compliance and reputational risks

Practical work: designing the governance and fund control system with the village committees.

5. Monitoring, evaluation and impact measurement

• Choose results and impact indicators
• Organise participatory monitoring and data collection
• Evaluate against international criteria: relevance, coherence, effectiveness, efficiency, impact, sustainability
• Report to funders and beneficiaries, and plan for sustainability

Practical work: results monitoring table for the programme and feedback session before a simulated village assembly.

A course open to the public, private and non-profit sectors

Participants come from different backgrounds: banks, microfinance institutions, donors, NGOs, local authorities. The case studies are fictitious and can be transposed to different countries and sectors (water, agriculture, energy, health, education). The crowdfunding regulatory framework presented is that of the European Union; specific features of other jurisdictions are discussed on request.