Instructor:              Anna Matysek-Jędrych, Ph.D.
E-mail:                  anna.jedrych@ue.poznan.pl
Office hours:
Room...
- Describe and understand fundamental investment banking activities of financing and
     valuing companies and of analyzi...
Grading scale:

    6         excellent                   100%
    5         very good                   95-99%
    4,5   ...
Class discussion
                         Analysis of examples of bank lending documentation


Unit 3: CREDIT RISKS
(types...
(SWOT analysis for economy, industry and business)

Readings:                Credit Risk Management. How to Avoid Lending ...
Unit 11 and 12: STOCK AND EQUITY UNDERWRITINGS: IPOs AND
SECONDARY EQUITY OFFERINGS – THE ROLE OF INVESTMENT BANKS
(Initia...
Unit 4: FINANCIAL ANALYSIS I
Students are expected to have some basic information about financial statements
(please refer...
Unit 14: ASSET SECURITIZATION
Please read The Business of Investment Banking: A Comprehensive Overview, chapter 9.

Unit 1...
Upcoming SlideShare
Loading in...5
×

Banking and Credit Analysis.doc

494

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
494
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
7
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Banking and Credit Analysis.doc

  1. 1. Instructor: Anna Matysek-Jędrych, Ph.D. E-mail: anna.jedrych@ue.poznan.pl Office hours: Room: 404A Telephone: +48 61 854 38 68 Name of the Course: BANKING & CREDIT ANALYSIS Objectives: This course introduces what students of international business need to know about banking and credit analysis. The objective of the course is to provide students with a fundamental understanding of the credit analysis in lending process (concentration on commercial banking) and the role of investment banks and how they operate (concentration on investment banking) and to provide a framework for analysis of the various business of commercial and investment banks. The focus of this course is on practical and comprehensive understanding of these issues and on the giving a framework of reference for future professionals in the commercial and investment banking industry. Learning outcomes: After completing the course students should be able to: - List the benefits of corporate credit analysis and banking analysis - Discuss the reasons why a bank lends money and why corporations borrow and identify the components of the lending process - Describe the areas of the financial statements that are the focus of company forecasting - Define, assess and interpret the different types of ratios used for credit analysis (perform ratio analysis and cash flow analysis) - Recognize the limitations of financial analysis in credit analysis - Apply different methods of quantitative analysis (define and interpret the five forces in the Porter model, recognize the elements of PEST analysis and apply this method of analysis, describe SWOT analysis and apply this method of analysis in real cases - Describe the role of rating agencies in credit analysis and apply ratings in real cases - List the benefits of different operations of investment banks
  2. 2. - Describe and understand fundamental investment banking activities of financing and valuing companies and of analyzing corporate transactions (M&A, securitization of assets, venture capital & private equity, stock and equity underwriting) Integration of the courses: Courses taken Courses drawing on Name of the course before this this particular course particular course Mathematics + Microeconomics Marketing Elements of Law Contemporary Polish and European Culture / History and Culture Statistics Information Technology Accountancy + Social Policy Macroeconomics Management + Intellectual Property Rights Sports Foreign Language European Integration Finance + International Politics International Economics I Tax Strategies Modern Philosophy /Modern Sociology International E-business International Commercial Law Seminar: International Economics/International Business International Finance Corporate Finance and Business Analysis + International Transactions Corporation on the Single European Market Applied Quantitative Methods for Business Development and Analysis International Logistics I Banking and Credit Analysis International Payments International Marketing Marketing Research on International Markets Structural Funds and other Financial Support Schemes International Strategic Business Analysis + Business letters/ Correspondence International Negotiations Organizational Behavior International Organizations Polish
  3. 3. Grading scale: 6 excellent 100% 5 very good 95-99% 4,5 good plus 90-94% 4 good 80-89% 3,5 sufficient plus 70-79% 3 sufficient 60-69% 2 insufficient (failed) less than 60% Calculation of final course grade (%)*: 100 Assignments/ Course Participation Quiz Final Exam (test) ....... [other] Exercises & Activity 10 10 10 70 - * sum of all criteria = 100% Description of Course Activities: Class Schedule: Unit 1: INTRODUCTION TO BANKING AND CREDIT ANALYSIS (what is the banking and credit analysis, objectives of credit and banking analysis, rationale for banking and credit analysis, types of banking analysis, stages of credit analysis process, corporate credit analysis versus consumer credit analysis, sources of information for banking and credit analysis) Readings: Business Analysis and Valuation: Using Financial Statements, Text and Cases, chapter 10 (pp. 401-412) Credit Risk Management. How to Avoid Lending Disasters and Maximize Earnings, chapter 3 (pp. 51-68) Class Activity: Class discussion Brainstorming (sources of information) PART 1 CREDIT ANALYSIS Unit 2: LENDING PROCESS (stages of lending process, documentation, categories and types of loans, rationale for external sources of financing, borrowing causes, Six C’s of Credit – Collateral, Concentration, Cash Flow, Condition of Company, Credibility, Common Sense) Readings: Credit Risk Management. How to Avoid Lending Disasters and Maximize Earnings, chapter 2 (pp. 5-50) The sixth C of credit, R.G. Brody, K.E. Frank, Journal of Bank Cost & Management Accounting 1998 Class Activity: Quiz 1
  4. 4. Class discussion Analysis of examples of bank lending documentation Unit 3: CREDIT RISKS (types of risks, measuring the risks, risk limitation techniques, financial risk analysis – CAMEL) Readings: Credit Risk Management. How to Avoid Lending Disasters and Maximize Earnings , chapter 7 (pp. 207-248) Class Activity: Class discussion Assignment 1 (Analyze and assess country and sovereign risk in relation to your country) – short, maximum 1000 words essay Unit 4: FINANCIAL ANALYSIS I (profitability and performance ratios, liquidity and solvency ratios, leverage and capital structure ratios, market ratios, analysis and interpretation of financial ratios) Readings: Financial Statement Analysis: A Practitioner’s Guide, chapters 2-3 and 13 Business Analysis and Valuation: Using Financial Statements, Text and Cases, chapter 5 Class Activity: Class discussion Exercises in assessing and interpreting financial ratios Unit 5: FINANCIAL ANALYSIS II (cash flow statement: elements, analysis and interpretation, limitations of financial analysis) Readings: Financial Statement Analysis: A Practitioner’s Guide, chapters 4 and 13 Business Analysis and Valuation: Using Financial Statements, Text and Cases, chapter 5 Class Activity: Class discussion Exercises in assessing and interpreting financial information from cash flow statement Unit 6: NON-FINANCIAL ANALYSIS I (industry and economic factors, industry structure – Porter’s model, key market forces – PEST, corporate structure, corporate strategies and implementation) Readings: Credit Risk Management. How to Avoid Lending Disasters and Maximize Earnings, chapter 6 (pp. 175-206) Class Activity: Class discussion Exercises in applying different qualitative methods of analysis Unit 7: NON-FINANCIAL ANALYSIS II
  5. 5. (SWOT analysis for economy, industry and business) Readings: Credit Risk Management. How to Avoid Lending Disasters and Maximize Earnings, chapter 6 (pp. 175-206) Class Activity: Class discussion SWOT analysis (case study) Unit 8: CREDIT RATINGS AND CREDIT SCORING (credit rating and credit scoring definition, role and relevance of rating agencies, rating process and methodology, models of credit scoring) Readings: Credit Risk Management. How to Avoid Lending Disasters and Maximize Earnings, chapter 9 (pp. 287-330) Class Activity: Class discussion Analysis of an example of rating methodology (Fitch) Brainstorming (elements of credit scoring for consumer) Assignment 2 (Apply credit scoring methodology to assess your own creditworthiness) PART 2 BANKING ANALYSIS Unit 9: INVESTMENTS BANKING (operations in investment banking, role of investment bank in different operations, kinds of banking analyses in investment banking) Readings: The Business of Investment Banking: A Comprehensive Overview, chapter 1 (pp. 1-11) Class Activity: Quiz 2 Class discussion Unit 10: ANALYSIS FOR MARGERS AND ACQUISITIONS (motivation for M&A, types of M&A, due diligence – stages, analysis, acquisition pricing, acquisition financing and acquisition outcome) Readings: Business Analysis and Valuation: Using Financial Statements, Text and Cases, chapter 11 (pp. 434-451) The Business of Investment Banking: A Comprehensive Overview, chapter 6 (pp. 89-107) supplementary reading: Mergers, Acquisitions, and Other Restructuring Activities, chapter 1 (pp. 4-40) Class Activity: Class discussion Case study (Air France – KLM)
  6. 6. Unit 11 and 12: STOCK AND EQUITY UNDERWRITINGS: IPOs AND SECONDARY EQUITY OFFERINGS – THE ROLE OF INVESTMENT BANKS (Initial Public Offerings and secondary equity offerings – definition, stages of these processes, motivation for IPO, pros & cons of IPO and secondary equity offerings) Readings: The Business of Investment Banking: A Comprehensive Overview, chapter 7 and chapter 8 (pp. 108-167) Too soon to IPO (HBS Case, preparation for case analysis) Class Activity: Class discussion Case study (Too Soon to IPO) Unit 13: VENTURE CAPITAL AND PRIVATE EQUITY (definition and types of venture capital and private equity, LBO and MBO, rationale for venture capital and private equity) Readings: The Business of Investment Banking: A Comprehensive Overview, chapter 5 (pp. 65-85) Class Activity: Class discussion Analysis of venture capital market Unit 14: ASSET SECURITIZATION (motives for asset securitization, process of asset securitization, role of investment bank in securitization process, advantages and disadvantages of securitization process) Readings: The Business of Investment Banking: A Comprehensive Overview , chapter 9 (pp. 168-189) Class Activity: Class discussion Analysis of example of securitization process Unit 15: FINAL EXAM Preparation for each class unit: Unit 1: INTRODUCTION TO BANKING AND CREDIT ANALYSIS Please come to class prepared to participate in all activities, and prepared to share your own thoughts about functioning of commercial and investment banks. Unit 2: LENDING PROCESS Please read Credit Risk Management. How to Avoid Lending Disasters and Maximize Earnings, chapter 2 (pp. 5-50) and the article The sixth C of credit before the lecture. There will be a short quiz at the end of this session. The quiz will cover Unit 1 and Unit 2. Unit 3: CREDIT RISKS Please read Credit Risk Management. How to Avoid Lending Disasters and Maximize Earnings, chapter 7.
  7. 7. Unit 4: FINANCIAL ANALYSIS I Students are expected to have some basic information about financial statements (please refer to Accountancy course). Please read Financial Statement Analysis: A Practitioner’s Guide, chapters 2-3 and 13 and Business Analysis and Valuation: Using Financial Statements, Text and Cases, chapter 5. Please bring Assignment 1 to the class. Unit 5: FINANCIAL ANALYSIS II Students are expected to have some basic information about financial statements (please refer to Accountancy course). Please read Financial Statement Analysis: A Practitioner’s Guide, chapters 4, 13 and Business Analysis and Valuation: Using Financial Statements, Text and Cases, chapter 5. Unit 6: NON-FINANCIAL ANALYSIS I Please read Credit Risk Management. How to Avoid Lending Disasters and Maximize Earnings, chapter 6. Unit 7: NON-FINANCIAL ANALYSIS II Please read Credit Risk Management. How to Avoid Lending Disasters and Maximize Earnings, chapter 6. Unit 8: CREDIT RATINGS AND CREDIT SCORING Please read Credit Risk Management. How to Avoid Lending Disasters and Maximize Earnings, chapter 9. Please read materials from rating agency (Fitch). Unit 9: INVESTMENTS BANKING Please read The Business of Investment Banking: A Comprehensive Overview, chapter 1 and be prepared for a discussion on investment banking. There will be a short quiz at the end of this session. The quiz will cover Unit 9. Please bring Assignment 2 to the class. Unit 10: ANALYSIS FOR MARGERS AND ACQUISITIONS Please read Business Analysis and Valuation: Using Financial Statements, Text and Cases, chapter 11 and The Business of Investment Banking: A Comprehensive Overview, chapter 6 (you can also read supplementary reading). Unit 11 and 12: STOCK UNDERWRITINGS: IPOs AND SECONDARY EQUITY OFFERINGS – THE ROLE OF INVESTMENT BANKS Please read The Business of Investment Banking: A Comprehensive Overview, chapter 7 and chapter 8. Unit 13: VENTURE CAPITAL AND PRIVATE EQUITY Please read The Business of Investment Banking: A Comprehensive Overview, chapter 5.
  8. 8. Unit 14: ASSET SECURITIZATION Please read The Business of Investment Banking: A Comprehensive Overview, chapter 9. Unit 15: FINAL EXAM FEEDBACK MECHANISMS: For each assignment and course work Students receive written or oral feedback. FINAL EXAM: Final exam will be a test consisting of 30 different types of questions (open question, multiple test). LITERATURE: Obligatory readings: 1. Credit Risk Management. How to Avoid Lending Disasters and Maximize Earnings, J. Colquitt, McGraw-Hill Professional 2007 – selected chapters 2. Financial Statement Analysis: A Practitioner’s Guide, M.S. Fridon, F. Alvarez, 3rd edition, Wiley, April 2002 – selected chapters 3. The Business of Investment Banking: A Comprehensive Overview, K.T. Liaw, Joh Wiley and Sons, 2006 – selected chapters 4. Business Analysis and Valuation: Using Financial Statements, Text and Cases, K.G. Palepu, P.M. Healy, 4th edition, Cengage Learning – selected chapters 5. The sixth C of credit, R.G. Brody, K.E. Frank, Journal of Bank Cost & Management Accounting 1998 Supplementary readings: 1. Mergers, Acquisitions, and other Restructuring Activities. An Integrated Approach to Process, Tools, Cases, and Solutions, Donald DePamphilis (chapter one) 2. Takeovers, Restructuring, and Corporate Governance (International Edition), J.F. Weston, M.L. Mitchell, J.H. Mulherin, Pearson Higher Education, 2004 3. The Standard & Poor’s Guide to Measuring and Managing Credit Risk, A. de Servigny, O. Renault, McGraw-Hill 2004. 4. Standard and Poor’s Fundamentals of Corporate Credit Analysis, B. Ganguin, J. Bilardello, McGraw-Hill 2004. NUMBER OF DIRECT CONTACT HOURS: 30 ADDITIONAL INFORMATION: -

×