COURSE OUTLINE
ADVANCE COMMERCIAL BANKING as a discipline has got immense significance especially in the light of the current global financial crisis. There were control mechanisms and razor sharp models in place to govern the ultra minds of the market , yet to the surmise of all, the market. its constituents and the participants all failed with competing disgrace. The reason was probably not the lack of ideas or poor forecasting , it’s the discipline and implementation ethics that mattered. The markets are broke and so are the brokers , who probably are rightly called so and the participants just there to see their final penny draining down the dumps. Does it really matter to know more of markets and try to manage the risk ?
The answer is a BIG YES. Historically, we have been exceptional at making mistakes and fortunately every time we have been building the bricks back to have a home in the market place with more discipline, more regulation, more transparency and more rationality. The way to success is customized methodically through the learnings from the failures and the financial world is not fond of those who make the same mistake twice. Infact in most cases , the first mistake is a death blow that you don’t get a chance to be there to make the second mistake. In this regard, it becomes imperative to understand the dynamics that led to the infamous global financial failures and how to tackle the same through systemic application of Risk Management principles and the associated Best Practices.
The purpose of the course, in short is to give the students, a competitive first hand look at the major financial failures and thereby understand the importance of ethics, principles and Best Practices.
Pedagogy
The course will be delivered through a scintillating series of case studies comprising the biggest challenges faced by the financial world. Each failure is analyzed in terms of the circumstances that led to the debacle, risks involved and potential mitigation techniques.
Snapshot of Course Learnings
· Important Banking Issues · Cross country Comparison · Major cases in Risk management and their implications · Identification of various risks and mitigation strategies under various circumstances · Best Practices in Risk Management · Effective Derivatives management strategies · Effective Hedge Fund management Strategies
Evaluation Criteria :
Class Participation - 20 %
Quiz - 45 %
End Term - 35 %
Note : 3 quizzes will be held. All of them will have 15 MCQs with 15 % weightage per quiz
Quiz 1 will be held after the 5th class
Quiz 2 will be held after the 10th class
Quiz 3 will be held after the 15th class
End term will be held after 20 classes. The portions for the end term will be the discussions covered from 16th class to 20th class.
End Term Composition
15 MCQs - 15 % weightage
Subjectives - 20 % weightage
Course Contents
1. Barings Bank - 2 classes
§ How Nick Leeson let Barings down § What led to the losses and why it went unnoticed § What is the role of the various key management professionals § How Barings could have avoided the debacle.
2. National Australia Bank - 2 classes
§ Events that led to the losses § An Analysis of the losses § Impact on customers and third parties § Risks incurred and the mitigation processes involved
3. Bankgesellschaft Berlin - 1 class
Quiz 1 - Multiple choice questions from the first five classes
Weightage – 15 %
4. Riggs Bank - 1 class
§ Findings regarding AML ( Anti-money Laundering ) § Regulations involved § Events leading up to the losse § Recommendations suggested
5. LTCM - 2 classes
§ Events that led to the collapse of LTCM § How UBS made a loss due to LTCM § Risks involved and the lessons learnt § Mitigation processes
6. Metallgesellschaft - 2 classes
§ The Trading Strategies employed by Metallgesellschaft § Causes for the disaster § Risks involved and the mitigations proposed
Quiz 2 - Multiple choice questions from classes 6 to 10
7. Worldcom - 1 class
§ Timeline of events § Lessons Learnt § Risks incurred and potential mitigation
8. Recommendations for Effective Derivatives Management - 2 classes
§ Recommendations for dealers § Recommendations for end-users § Recommendations for legislators, regulators and supervisors
9. Principles of Corporate Governance and Risk Management - 1 class
§ Key Competencies § Resources and Process § Independence of Key parties § Accountability § Education and Discernment § Disclosure and Transparency § External Validation
10. Best Practices and Conducts - 1 class
§ Professional Standards § Best Practices § Professional Conduct § Ethical Behavior § Conflict Resolution
Quiz 3 - Multiple choice questions from classes 11 to 15
11. California Power Crisis - 1 class
§ Timeline of Events § Risks Incurred § Mitigations Proposed
12. Hedge Fund Strategies and the Quants in 2007 - 3 classes
§ Equity Long –Short Strategy § Market Neutral and Market Timing Strategies § Pair Trading Strategies § Short Selling, Event Driven and Distressed Securities Strategies § Regulation D, Global Macro and Arbitration Strategies § The Role of Liquidity and August 2007 § The Role of Leverage and August 2007 § Herding Behavior and August 2007
13 . Risk Control Strategies in Hedge Fund Management - 1 class
§ Risks faced by a fund of hedge funds § Primary risk factors for various hedge fund strategies § Hedge Fund Transparency § Proactive Risk Management
Portions – classes 16 to 20
The above sessions will include the following modules
· Overview of Financial Market · Cross Country Comparison · Recent issues in Banking sector · Credit appraisal · Role of Banks in Monetary Plocy and Economic Growth · Credit Risk Model for Corporate borrowers · Rating of Banks · Country Risk Rating · Value at Risk: To quantify the Risk · Credit Risk · Basel Norms · Basel III · Operational & credit Risk Management · Current Issues in Financial Markets · Management Liquidity Risk · Management of Interest Risk · Projection of Balance sheet of Bank · Transfers Price Mechanism · Banking Regulation and Compliance · Fundamental Quantitative Tools for risk Management · Case Studies: Sub Prime Crisis, Greece effect · Credit Ratings and the Dodd-Frank Act · Glass Stegal Act on Commercial and Invest Banking
References
§ Case Studies Provided in class § Class notes and slides
Code of Ethics
For individual quizzes/End term, it is unethical to seek any direct help from others, whether or not you finally make use of the help. Discussions among individuals either in class-room or in the examination hall are completely forbidden. Those who will be identified disturbing in the class will be asked to leave the class immediately. The Tem Paper should be totally in the group/individual’s own style and language, and should reflect group/individual understands. Any form of copying from one another or from any outside source is forbidden. Any unfair means while writing the term Paper will be easily identified, and the respective group will be penalized in terms of lower score. No one is allowed to come to the class after the scheduled start time.
Feedback
I would also request you to give me continuous feedback. I would be in the class room for one hour after the class is over to take up your doubts and feed back. You may form a “focus group” (consisting of 6-7 students from the class with diverse backgrounds including the CR) that continuously interacts with the students and informs me about their problems, if any, with the course.
Contact
Though I am usually available in my office till late in the evening, it is better to check beforehand. I also come to office on weekends and would try to give you a weekend appointment if you need one. You can, of course, always reach me by e-mail at asit.mohanty@ximb.ac.in .
Created By: Bijoy Kar on 04/08/2011 at 11:33 AM Category: ExPGP-NR-III Doctype: Document