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Bank and Building Society Credit Analysis

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Analysing Bank and Building Society Credit Risk, (One Day)

Credit exposures are perhaps the greatest risks a treasury can run. That means you have to ask a few simple questions.

  • Do you deposit money or have derivative exposures that lead to credit risk on banks and/or building societies?
  • Do you have a structured approach for analysing and reviewing credit risk?
  • Are you entirely comfortable with the decisions that have been made?
  • Can you justify them?
  • Are you too reliant on ratings?

This one day "in-house" course is designed for small and medium sized financial insitutions that don't have unlimited resources. It will give you a structured and rigorous approach to analysing financial institutions and monitoring your counterparty risk.

Here are the details:


What sort of institution are you dealing with?

  • Nature of the bank’s activities
  • Franchise strength and diversity
  • Strategy and risk tolerance
  • Management quality/reputation
  • Ownership and legal status
  • Size and status within domestic market
  • Ratings history

Financial Analysis – both absolute and relative to the peer group

Earnings capacity

  • Sources of revenue
  • Consistency
  • Net interest margins – how to judge
  • Efficiency
  • Impairment risk

Asset Quality

  • Composition of loan portfolio, concentrations in regions or sectors
  • Growth rates in asset portfolios
  • Scale of non-performing loans and reserve coverage
  • Quality of non-loan portfolios


Funding and Liquidity

  • Mix of funding – retail versus wholesale
  • Stability of retail deposit base
  • Access to wholesale debt markets – inter-bank borrowing, bonds, securitisation
  • Size of liquid assets


  • Capital ratio levels and trends
  • Cushion above regulatory minimum requirements
  • Access to equity markets

End of workshop and review

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