AE Handbook Spring 2012 Syllabus

7/31/2019 AE Handbook Spring 2012 Syllabus

1/64The Hong Kong Institute of Bankers 6

SyllabusAHKIB Examinations Handbook Spring 2012

Diploma in Banking and Financial Services P.6

Banking Services and Professional Ethics P.8-11

Financial Systems and Risk Management P.12-14

Fundamentals of Accounting and Law in Banking P.15-18




Diploma in Banking and Financial Services

Program Learning Outcomes

After completion of the three core subjects of the Diploma in Banking and Financial Services

program, participants are expected to demonstrate the level of knowledge and skills that couldbe induced from the set of learning outcomes below:

1. Understand the financial system and market settings in order to identify skills and

knowledge they should acquire to build their career in the banking industry;

2. Explain the wide range of generic knowledge and financial theories that are related to the

banking settings in Hong Kong and the globe and the application to their jobs;

3. Apply advanced skills and professional knowledge on Accounting, Finance, Law and

Regulations;

4. Identify the types of risks faced by financial institutions today and select suitable tactics tomanage them;

5. Identify the relevant ethical issues faced by financial institutions today and recommend

suitable course of actions to handle them;

6. Develop the necessary building blocks of knowledge that are pre-requisite to their later

progression of studies to the Advanced Diploma and Specialist Diploma levels under the

AHKIB program, where they would:

apply their knowledge drawn from the professional conceptual frameworks (on

Accounting, Finance, Law and Regulations) in an advanced platform of studies in the

next two stages of studies.

be prepared to analyze various risk management issues, and formulate strategies for

individual banking units or segments.

be able to analyze different ethical issues in the financial and banking environments

in order to know how to fulfill the expected roles in banks as responsible corporate

citizen.


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The Hong Kong Institute of Bankers


Banking Services and ProfessionalEthics

Core

This subject contributes to the achievement of the Program Learning Outcomes by providing

participants with a solid background and overview of the various facets of the banking service

sectors, including its system structure, the codes, regulations and ordinances binding

practitioners in this sector, the different operations (Program Outcome 1) and areas as well as the

risk management aspects, etc. (Program Outcome 4)

Apart from the above areas, this subject also explores such major areas of professional ethics as

the respective ethical aspects and issues faced by individuals and corporations today (Program

Outcome 5), and also its relevance in the context of corporate governance. Such element of

professional ethical issues pertaining to the different facets of understanding is very essential to

the current banking environment in Hong Kong and in the world (Program Outcome 2).

With the knowledge base of this subject on ethical issues, participants would be well-prepared to

examine and analyze further issues when they proceed to study specialist subjects such as Bank

Lending, Treasury Markets and Operations, Operational Risk & Quality Management in their

advanced level of studies under the AHKIB program (Program Outcome 6iii).

On completion of this subject, participants should be able to:

identify the implications of the various regulatory frameworks underlying the operations ofauthorized financial institutions in Hong Kong;

interpret and apply the banks guidelines which are applicable to the different aspects of

banking services and operations in the banking services industry;

explain the definitions of ethics in business and how these are related to their jobs;

identify and ensure compliance and fulfillment of professional ethical roles to meet

requirements of different stakeholders in the banking services and operation industry.

The subject is divided into two sections: Banking Services and Professional Ethics. No banking

practitioners or institutions would be deemed professional without attention to meet the ethical

standards to them by the society. These two sections are inter-related in content area by covering

banking services practices with reference to professional ethics.

Examination: 100 multiple choice questions

Passing mark for this subject is 70% Time allowed: 2.5 hours

Learnin Outcomes

Hi hli ht

Assessment Method

Ob ective


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Core Banking Services and Professional Ethics

Part I - Banking Services & Operations (50%)

A. An Overview of Banking Services

1 History of Banking

2 Banks as Financial Intermediaries

3 Banking Systems 3.13.23.33.43.5

Basel CommitteeBanking System in USABanking System in Mainland ChinaBanking System in Hong KongIslamic Banking

4 Banking Regulation 4.14.24.34.44.5

Objectives and Tools of Banking RegulationCapital Adequacy RequirementLiquidity RequirementThe Three Pillars in Basel II GuidelinesIndustry-led Regulation

B. Risk Management in Banking Services

1 Types of Risk

2 Characteristics of Risk 2.12.22.32.42.52.62.72.8

Credit riskMarket riskInterest riskLiquidity riskOperational riskReputation riskLegal riskStrategic risk

3 Sound Risk Management System 3.1

3.23.3

3.4

Active Board and senior management oversight,Risk Management CommitteePolicies, procedures and limit structureRisk measurement, monitoring and managementreporting systemsInternal controls and comprehensive audits

C. Retail and Corporate Banking Services

1 General Bank / Branch Management 1.11.21.31.4

1.5

Board and management compositionOrganization structure and functional set-upManned service: Customer RelationshipManagement vs Customer Service

Online and electronic Banking Services2 Retail Banking Services 2.1

2.22.32.42.52.62.72.82.92.102.112.122.132.142.152.16

Deposit Services: Local and Non-local currenciesWealth Management ServicesInsurance ProductsMandatory Provident FundCredit CardResidential Mortgage LoansPersonal Lending ProductsPersonal Renminbi BusinessesSecurities DealingMargin Trading FacilitiesRetail Debt Securities DealingGold Bullion DealingStructured ProductsMandatory Provident Fund (MPF) ServicesReal Estate Investment Trust (REIT)SME Lending


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3 Corporate and Commercial BankingServices

3.1

3.2

3.3

Bank Lending and Credit Analysis- Basic principles governing credit approval- Financial and cash flow analysis

-Different type of loan collaterals

Corporate Loan and Debt Market- Different types of corporate lending- Developments in the capital marketTrade Finance- Methods of payment- Roles of banks in international trade finance- Different types of documentary credits- Types of import and export financing- Introduction to Uniform Customs and Practice

for Documentary Credits (UCP600)

4. Corporate Advisory Services

5. Corporate Risk ManagementServices

D. Treasury and Banking Operations

1 Treasury 1.11.2

Investment and TreasuryCurrency Market

2 General Banking Operations 2.12.22.3

Operations in Retail BankingOperations in Corporate BankingOperations in Treasury

Part II - Professional Ethics (50%)

E. Introduction to Ethics and Social Responsibilities

1 What is Ethics 1,11.2

Historical BackgroundApproaches to normative ethics

2 Absolutism & Relativism 2.12.2

AdvantagesDisadvantages

3 Deontological & Teleologicalapproach

3.13.23.3

ImplicationsBenefitsLimitations

4 Social & EnvironmentalResponsibilities

4.1

4.24.34.4

Social & environmental issues facing modernbusiness organizationsPublic perception & reputation riskGlobalizationSustainability environmental, economic & socialperspectives


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F. Ethics & the Corporation or Individuals

1 Ethics & the Corporation 1.1

1.21.31.41.51.61.7

Corporate social responsibility

Corporate accountabilityAnsoff-Business ObjectivesStakeholder TheoryMendelows Stakeholder TheoryConsensus TheoryCorporate Citizenship

2 Ethics & the Individual 2.12.2

2.32.42.5

What is a professionHow if differs from other types of businessactivityCode of practiceCode of ConductCode of Banking Practice

G. Ethical Dilemmas & Corporate Governance

1 Ethical Dilemmas & Conflict of Interest 1.11.21.31.4

Ethical dilemmas & their implicationsConflict of InterestHow to resolve dilemmas & conflicts in practicePutting Ethical decisions into Practice

2 Corporate Governance 2.12.22.32.42.52.62.72.82.9

Definition and HistoryStakeholders in corporate governanceEthical issues in corporate governanceComposition of Board of DirectorsAssessment of Performance RemunerationAppointment and Removal of DirectorsShareholders RightAnnual general MeetingReporting on Corporate Governance

H. Business Ethics & Internal Control

1 Business Ethics 1.11.21.31.41.51.61.7

Law on Financial ServicesConsumer ProtectionCustomer and Employee PrivacySuitability ObligationsAnti-money LaunderingInsider TradingHealth & Safety at work

2 Code of Practice 2.1

2.22.32.42.5

Principles-based approach to corporategovernanceReasons for the development of codes ofpracticeRole of codes of practice at operational levelCode of Banking PracticeEmployee Code of Conduct

3 Internal Control and Audit 3.13.2

3.33.4

Elements of Internal Control SystemsAttributes of an Effective Control EnvironmentControl ProceduresInternal Audit and RiskCosts & Benefits of Internal Control

HKIB Textbook

Essential Readin s


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Core Financial Systems and Risk Management


participants with a solid and rigorous introduction to the basic functions of financial systems and

markets, as well as the roles of financial institutions within these systems (Program Outcome 1).

Participants are expected to identify and analyze the types of risks that threaten the banking

industry today and how these risks are managed at institution level (Program Outcome 4). Topics

covered in this subject such as the macro-level foundation knowledge serves as an important

building block for participants as they proceed further to the ultimate specialist level of subjects

such as Credit Risk Management and Operational Risk & Quality Management (Program

Outcome 6ii).


identify the key differences in different financial systems and detect the deviations on the

operations of the financial institutions and markets;

assess the different roles performed by financial institutions and the risks and issues faced by

financial institutions nowadays;

identify and oversee the different types of risks;

understand how risk management are processed and institutionalized in the banking sector

and relate the process to their work;

explain the rationale for financial regulation and the compliance requirements in the financial

system.

The subject is divided into 2 sections: Financial Systems and Markets, and Risk Management inBanking, to make it more manageable from a teaching point of view. However, these sections are

not independent, and students should expect to subsequently return to ideas they have

considered previously, perhaps analyzed from a different perspective.


Passing mark for this subject is 70%

Time allowed: 2.5 hours

Objective

Learning Outcomes

Hi hli ht

Assessment Method


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Part I - Financial Systems and Markets (50%)

A. Financial Systems

1 Global Financial System 1.11.21.31.41.51.61.7

1.8

1.91.101.11

US Financial SystemUK & Euro Financial SystemChina Financial SystemRecent financial crisesRole of hedge fundsReforms to international financial architectureImportance, nature and composition ofinternational liquidityTypes of International Monetary Fund (IMF)facilitiesWorld Bank, Bank for International Settlements,Financial Stability ForumRole of Central Bank

2 Hong Kong Financial System 2.12.2

2.3

2.4

Hong Kong dollar inter-bank marketHong Kong dollar interest rate structure, inter-bankliquidity arrangementHKMA and monetary policy (linked exchange ratesystem and money supply mechanism)Hong Kong Mortgage Corporation and DepositInsurance

B. Financial Markets

1 Hong Kong Financial Markets 1.1

1.21.3

1.41.51.61.71.8

1.9

Definition, classification, nature and importance offinancial markets

Financial instruments in money marketNature and functions of money and discountmarketsRoles of commercial banks in capital marketFinancial instruments in capital marketRoles of capital marketDerivatives marketDevelopment of debt market- Exchange Fund paper and corporate debt- Relationship between debt management and

financial marketInternational and regional financial markets: HK,Europe, US, China

C. Financial Institutions

1 Financial Institutions 1.11.21.31.4

NatureRolesClassification of financial institutionsDistinctions between banks and non-bank financialinstitutions, such as funds managers and theirrelationship

2 Functions of Central Bank: 2.12.22.3

2.42.52.6

Monetary policyBanking supervisionReliability of payment system

Lender of last resortBanker to governmentIssuer of currency


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Part II - Risk Management in Banking (50%)

A. Introduction & Process of Managing Risk

1 Introduction to Risk Management 1.11.21.3

1.4

Definition of risksModern risk managementConcepts of risk financing, risk control, hedgingand insuranceThe need for risk management

2 Process of Managing Different Risks 2.12.2

2.32.42.5

Identification of risk driversOperational risk (include process risk, people riskand external risk)Financial risk for individualsBusiness and financial risk for corporateAgency risk

B. Requirement and Structuring of Risk Management

1 Regulatory and Corporaterequirements

1.11.21.3

Inherent risks in banking activitiesRegulations of financial institutionsBasel Committee on Banking Supervision- Basel I & II

2 Structuring Risk ManagementFunctions in Banks

2.12.2

2.32.4

Defining a sound risk management systemKey elements of prudent risk managementframeworkRisk appetite and Use of risk capitalApplication for risk adjusted return on capitalGeneral risk management controls (HKMASupervisory Policy)

3 Management and controls-tools andskill

3.1 Case studies

HKIB Textbook

Monetary and Financial System in Hong Kong

B. Julian Beecham

3rd edition 2002

HKIB

Financial Institutions, Markets and Money

David S. Kidwell, David W. Blackwell, David A . Whidbee, and Richard L. Peterson

11th edition John Wiley & Sons

ISBN: 9780470561089

Risk : the new management imperative in finance

James T. Gleason.Princeton, N.J.: Bloomberg Press. 2000

ISBN: 9781576600740

Essential Readings

Reference Readings


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Fundamentals of Accounting and Law inBanking

Core

This subject contributes to the achievement of the Program Learning Outcomes by enabling

participants to an understanding on the general principles of basic accounting and legal concepts

related to banking and finance (Program Outcomes 2 and 3). This is an introductory subject that

serves to equip participants with the fundamental but essential knowledge on the two professional

areas such that participants would be well-prepared to examine and analyze further issues in

these two areas when they proceed to study specialist subject such as Banking Law & Practice

in their advanced level of studies under the AHKIB program (Program Outcome 6i).


select the right course of actions based on understanding on the wide range of legal principles

and concepts rooted in banking practices.

handle different transactions of negotiable instruments independently based on

understanding on the laws related to negotiable instruments in relation to their documentation

and other legal aspects.

review the regulatory framework and identify relevant regulations and policy applicable to an

individual unit or segment in the banking industry.

apply the conceptual framework of financial reporting, concepts and accounting principles in

different areas of work.

explain concepts in corporate financial accounting which has high relevance to a spectrum of

related sectors in the banking industry such as corporate banking and investments.

employ the wide range of key accounting concepts and principles essential to the world of

banking areas in an appropriate manner.

The subject is divided into two sections of professional knowledge area: Law and Regulations in

Banking, and Accounting Principles in Banking. These sections are not independent, and they

are connected together to give participants a framework of professional-specific theory and

knowledge that allow them to explore and analyze related banking practice areas.


Passing mark for this subject is 70%

Time allowed: 2.5 hours

Ob ective

Learnin Outcomes

Highlight

Assessment Method


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Core Fundamentals of Accounting and Law in Banking

Part I - Law and Regulations in Banking (50%)

A. Basic Law Principles

1 Law Practice in Hong Kong 1.1 Common Law

2 Law of Contract 2.12.22.32.4

The nature of a contractFormation, contents and vitiating elementsPerformance and dischargeTermination and remedies in relation to banking

3 Trust Law 3.1 Basic principles creation, formalities, trusteesand beneficiaries

B. Negotiable Instruments

1 Cheques 1.11.21.31.4

1.5

1.61.7

Characteristics of a chequeRelationship to bills of exchangeClassification of cheques, indorsementLiability of parties, holder for value, holder in duecourseCrossings, statutory protection of paying/collectingbankersDischarge of liabilitiesBills of Exchange Ordinance

2 Collection of Cheques 2.12.22.32.42.5

The Hong Kong clearing systemCollecting bankers dutiesBank as holder for valueClaims by third parties against collecting bankersDefence for collecting banks

3 Payment of Cheques 3.13.23.3

Paying bankers dutiesClaims by third parties against paying bankersStatutory protection of paying banker

C. Regulatory Framework in Banking and Financial Markets

1 Regulatory Framework 1.11.21.3

1.4

Purposes and cause of regulationRole of the HKMARelationship between regulations andgovernmental policyRegulatory environment of prudential controls onliquidity and capital adequacy.

2 Major statutory and regulatory issues 2.12.2

2.32.4

2.5

Banking OrdinanceSecurities and Futures Commission Ordinance(notably the licence or registration andadministrations)Insurance AuthoritySupervisory regime - (Basel) InternationalstandardsCodes of Conduct and Banking Practices

3 Banking Compliance 3.13.23.3

Anti-Money LaunderingPersonal Data PrivacyCustomer credit data commercial and personal


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Part II - Accounting Principles in Banking (50%)

A. Financial Reporting

1 Essentials in Financial Reporting 1.1

1.2

1.3

1.4

Framework for the preparation of financialstatementsPractical application of Hong Kong FinancialReporting Standards (HKFRS) issued by the HongKong Institute of Certified Public AccountantsPractical application of Hong Kong AccountingStandards (HKAS) issued by the Hong KongInstitute of Certified Public AccountantsInternational Accounting Standard (IAS)

2 Understanding of company (includinggroup company) financial statements

2.12.22.3

2.4

Balance sheetsIncome statementsStatements of changes in equity

Cash flow statements

B. Interpretation of Financial Results

1 Objectives of financial statementanalysis

1.1

1.2

Financial statement analysis and investmentdecisionRelation between expected return and risk ofinvestment

2 Fundamental analysis 2.12.22.3

ProfitabilityRiskEffective interpretation of results of analysis ofprofitability and risk

3 Disaggregating accounting ratios 3.1

3.2

3.3

Return on assets as a measure of operatingprofitabilityReturn on shareholders equity as a measureof profitability that incorporates a mix offinancing ratiosUsefulness and limitation of ratio analysis

C. Valuation

1 Value of a firm 1.11.21.3

1.4

Present value of expected future cash flowNet Asset/Net Worth approachFundamental analysis of financial statement basedinformation

-Net assets

- EarningsGoodwill and fair values

D. Accounting for Planning & Budgeting

1 Planning decisions 1.11.2

Make or buyAllocation of scarce resources

2 Budgeting and evaluatingperformance

2.12.2

Basics of standard costingVariance analysis


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E. Capital Expenditure Analysis & Performance Measures

1 Capital expenditure analysis 1.1

1.2

Capital budgeting: investment and financing

decisionsDiscounted cash flow

2 Divisional performance measures andincentives

2.12.22.3

Return on investmentResidual incomeIncentives and controls

HKIB Textbook

Hong Kong Banking Law and Practice (HKIB)

Chan Bo-ching Simon

Vol. 1 & 2

(HKIB)

Fundamental Financial Accounting Concepts

Thomas P. Edmonds, University of Alabama Cindy D. Edmonds, University of Alabama

Philip R. Olds, Virginia Commonwealth University Frances M. McNair, Mississippi State

University Bor-Yi Tsay, University of Alabama Nancy Schneider, Lynchburg College

7thedition Mcgraw Hill

ISBN: 9780071220712

Essential Readings

Reference Readings




Advanced Diploma in Banking and Financial Services P.19

Business and People Management P.21-23

Corporate Finance Services P.24-26

Finance of International Trade P.27-31

Financial Planning and Management P.32-35

Management of Information System in Banking P.36-39

Regulations and Banking Essentials in Mainland China P.40-42




Advanced Diploma in Banking and Financial Services


After completion of the Advanced Diploma in Banking and Financial Services program,

participants are expected to demonstrate the level of knowledge and skills that could be

induced from the set of learning outcomes below:

1. Diagnose customers problems, needs, constraints and make critical considerations in the

real world before planning and designing for tactical solutions;

2. Compare different financing alternatives in the capital markets;

3. Identify and analyze the relevant risks, and suggest mitigation techniques;

4. Review evaluate the latest trends of the international trade finance environments,

commercial trade practices, and master specialized knowledge of the flow of

trade-financing transactions;

5. Analyze customers data and incorporate appropriate trade promotion and supporting

services in the design of international trade financing solutions;

6. Identify the types of risks involved by evaluating different international trade financing

alternatives, and formulate protection against those risks;

7. Examine the roles, importance and effects of information systems, keep abreast of

changes of information security to the financial services industry today;

8. Evaluate the wide-ranging application of information technology systems in todays

banking environment;

9. Evaluate the aid of information technology for different supervisory or management

functions within an organization;

10. Be equipped with a solid ground of knowledge and skills before progressing to the nextadvanced stage of specialist studies, where participants would:

critically assess the problems and issues that they and their organization face in a

chosen specific banking sphere related to credit management, treasury management

or banking operations and management today;

apply their knowledge and skills drawn from the professional framework on

Accounting, Law and Technology in the process of problem identification, evaluation

and strategy formation;

extend in-depth evaluation on the respective risk management issues in a specialist

area, and formulate viable solutions for the problems using an all-round approach.

11. Evaluate updated knowledge to react with adaptive strategies and practices that enable

them to ride on specific market growth at the global front as well as in the China market.

12. Apply knowledge and skills in cross-disciplinary perspectives in order to offer the best

possible solutions to the clients, or to come up with the best strategies for internal strategic

management purpose.

13. Propose possible changes of the market environment by evaluating the latest changes in

rules, regulations in the financial banking and system of a developing country such as

China.




Advanced Business and People Management

Completion of Diploma in Banking and Financial Services Program

This advanced subject contributes to the achievement of the Program Learning Outcomes by

offering participants an unique position and perspective to examine important issues in a

business and in an organization. This subject encompasses business planning, strategic

corporate management issues as well as the people element in a business and organization.

This blended focus effectively helps participants achieve outcome number 12, 13. The various

approach to analyze issues linked with people and business management by use of technological

aids would enable participants meet other program outcomes (7 and 9).


compare and contrast the different components of the business planning process;

evaluate how the process is critically applied in formulating business plans and corporate

strategies;

identify the prerequisites of personal leaders and the developmental areas for leadership;

manage team management issues by applying the most appropriate approaches after

appraising the particular situations.

The subject equips participants with the knowledge and mindset to examine how a business is

conducted by appropriate business planning and assessing issues at corporate strategic

management level, before exploring the role of people in a business and organization in respect

of leadership and team management.

Examination: Part I - 50-60 Multiple Choice questions

Part II - Essay type questions: 2 out of 3 questions from Part A & B

1 out of 2 questions from Part C & D

Passing mark for this subject is 60%.

Time allowed: Three hours.

Prerequisites

Objective

Learnin Outcomes

Hi hli ht

Assessment Method





A. Business Organization and Management

1 The management process 1.11.21.31.4

1.51.61.7

Working in contemporary organizationsOrganizational culture and diversityInternal environmental issues and cultureExternal environmental issues and competitiveforcesThe purpose of the business planThe elements of a typical business planEthical behaviour and social responsibility

2 Managing and developing humanresources

2.12.22.32.42.5

2.6

Foundations of human behaviourMotivation theory and practiceFinancial and non-financial methods of motivationMeasuring the effectiveness of the workforceTraining and appraising the workforce

Workforce planning3 Communication 3.1

3.23.33.43.5

3.6

The communication processImproving communicationCauses of conflict and conflict resolutionFormal and informal communicationThe nature and benefits of differentcommunication media, including information andcommunications technology (ICT)Understanding and overcoming the barriers tocommunication

4 Implementing and managing change 4.14.2

4.3

Understanding the causes and effects of changeUnderstanding and dealing with resistance to

changeImplementing and evaluating the change process

5 Strategic Management 5.15.25.3

5.4

The strategic management processStrategic analysisCorporate-level and business-level strategyformulationStrategy implementation

B. Marketing

1 Marketing 1.11.21.3

1.4

1.5

1.61.7

1.81.9

Understanding the marketing conceptThe nature and benefits of marketing researchThe nature and benefits of market segmentation

Understanding the nature and use of themarketing mix (4Ps and 7Ps)Understanding the nature and significance of theproduct life cycle- Conducting a product portfolio analysisAnalysing the different marketing environmentsAssessing the competition and the key competitiveforcesMarketing planning and objective settingDeveloping and implementing appropriatemarketing strategies





C. Leadership

1 Leadership 1.1

1.21.3

1.4

1.51.6

1.7

1.8

The nature of leadership

The characteristics of leadersDeveloping an appropriate leadership style andapproachUnderstanding the different types of groups andteamsUnderstanding the stages of group developmentUnderstanding the different roles of individualswithin a teamRecognising the nature and importance of teambuildingUnderstanding the role of leadership in managingchange

D. Team Management

1 Team Management 1.11.21.31.41.51.61.71.81.9

The nature and functions of managementEssential managerial skills and competenciesThe decision-making processFundamentals of planningTypes of plans and planning toolsFundamentals of organizingOrganization structuresFundamentals of controlThe control process and control tools andtechniques

Introduction to Management

John R. Schermerhorn, Jr

10thEdition, John Wiley & Sons, Inc, 2010

ISBN: 9780470418871

Business Studies

Dave Hall, Rob Jones, Carlo Raffo and Alain Anderton (Edited by Ian Chambers and

Dave Gray)

4thEdition, Pearson Education, 2008 (Reprinted 2010)

ISBN: 9781405892315

Reference Readings

Essential Readin s




Advanced Corporate Finance Services


Corporate finance bankers nowadays may also act as advisors to provide specific corporate

finance applications, by helping corporations analyze their financing needs and to recommend

tailored-made solutions. This subject contributes to the achievement of the Program Learning

Outcomes by drawing participants attention to the market segments where the financing needs of

corporate borrowers are identified (Program Outcome 1), before applying their knowledge to

discuss the different financing alternatives for customers under different situations (Program

Outcome 2). Together with the considerations for risk management options in the corporate

financing market, (Program Outcome 3), the topics covered in this subject serve to equip

participants with the necessary techniques for the next stage of studies under the AHKIB

program, such as Bank Lending, Credit Risk Management, Treasury Markets & Operations

(Program Outcome 10).


plan and design an appropriate package of credit solutions and capital-raising strategies tomeet the domestic or international financing needs of customers in different markets.

identify and assess the risks involved in the corporate financing transactions to both the

borrowers and the financiers.

present to and discuss with peers of all levels the strategies for managing the risks issues in

the lending process.

The subject is divided into 2 sections: the financing options and strategies of corporations today;the types of risks involved in this service area and most importantly, how those risks are

managed. While these two content areas are commonly taught in a lot of finance courses

nowadays, they are covered in this course in both the perspectives of corporations and bankers.

This would altogether give participants a platform of solid understanding and application of the

related concepts in the real banking world.

Examination: 50-60 Multiple Choice questions and TWO Essay questions out of THREE



Prerequisites

Objective

Learnin Outcomes

Hi hli ht

Assessment Method





A. Sources and Types of Finance for Corporations

1 Corporate Lending 1.1

1.2

1.3

Term loans; syndicated loans; and leveraged

leasing; standby facilities, revolving credits andnote issuance facilities.Choice of debt market (e.g. euro-dollar market,domestic market).Lending policy and procedure (e.g. credit analysis,loan review).

2 Debt financing 2.1

2.2

2.3

2.42.52.62.7

Alternatives to bank finance including bonds,foreign bonds; euronotes; commercial paper, andMedium Term Note (MTN) facilities,.Bond issuing (e.g. bond price, bond covenants,call provision)Bond rating

Convertible bondsLeasingMortgage backed securities, CMOs and CDOsDevelopments in the Hong Kong bond market.

3 Equity financing 3.1

3.23.3

3.43.5

Features of common stock; preferred stocks;ETFs; convertible securities and warrants, andADRs.IPO and Costs & benefits of new issuesMethods of listing; offer for subscription; offer forsale; open offer; and rights issues.The private equity marketsDevelopments in Hong Kong and characteristics ofthe Hong Kong equity market: e.g. H shares and

over subscription problems4 Financing special transactions or

projects4.1

4.2

Project finance - limited recourse; impact onborrowers and project sponsors balance sheet;Advantages of borrowing on project terms.

B. Sources and Types of Risks for Financial Management in Banks

1 Cross-Border Risks 1.1

1.2

Use and parameters for country risk analysisCross border lending risks, e.g. exchange control;regulatory and tax considerations, etc.

2 Corporate Treasury Management 2.1

2.2

Currency and interest rate risk and exposuremanagement;

Understanding of currency swaps; interest rateswaps; asset swaps; financial futures; forwardcontracts; options; negotiable instruments

3 Credit Risk Management in BankLending

3.1 Credit derivatives and its limitations(documentation, counterparty issues, etc.) for themanagement of risk.





Corporate Finance

Ross, Westerfield, and Jaffe and Jordan,

9th edition McGraw-Hill (RWFJ)

ISBN: 9780071081825

Financial Institutions Management: A Risk Management Approach

Saunders and Cornett,

7th edition McGraw-Hill

ISBN: 9780071289559

Essential Readings

Reference Readin s




Advanced Finance of International Trade



participants a very important background on the international trade environment today, in which

not only importing and exporting corporations operate alone but also financiers aid to offer their

package of financing solutions (Program Outcome 4). Leveraging on the above essential

knowledge on the settings, participants would extend their analytical skills to the more technical

side of international trade financing activities (Program Outcome 5). Participants would also

explore and assess other areas of import/export trade such as trade promotions and support

programs, and also the related risks involved in international trade-financing (Program Outcome

6), in order to achieve a complete discussion of this specialist banking area.


demonstrate specialized knowledge on international trading terms and practice which serve

as a solid ground of communications with a range of audiences including international trade

finance customers, peers and internal operation units within banks.

interpret and evaluate the real financing needs of trade borrowers, and to react to their

needs and problems by planning and designing tailored-made financing solutions.

diagnose the key issues, and manage the risks involved in the trade financing transactions.

The subject is very comprehensive and contains the most important and must-know knowledge

on international trade financing. It starts with a rigorous introduction on the fundamentals related

to trade practice and terms of the trading businesses, before investigating the hearts of

international trade financing practices: documentary credits and collections, as well as risk

management in all the related areas of import and export trade financing operations. Participants

without prior knowledge on international trade finance would have access to a set of skills and

knowledge which are essential in the financing practices on both external management with

borrowers and internal operation and management levels.




Prerequisites

Ob ective

Learnin Outcomes

Hi hli ht

Assessment Method





A. Introduction to International Trade Finance

1 What is International Trade Finance? 1.1

1.2

1.3

1.41.5

Meaning and importance of international tradefinance;Types of customers in Hong Kong and abroad;their needs and the opportunities for banks andother bodies that these present;Various roles of banks in facilitating internationaltrade; growth of world trade and changes in itscommodity and geographical composition;Importance of services in international trade;Basic understanding of logistic management andtrade finance; non-bank trade service providers,e.g. Bolero (Bolero.net), Tradecard(Tradecard.com), upscapital.com

B. International Trading Practice

1 Methods of Payment in InternationalTrade

1.1 Collection; documentary credit; advancedpayment; counter trade; barter/compensationtrade; bilateral payment agreement/arrangementand forfeiting

2 International Payment, Settlementand Clearing Systems

2.1

2.2

2.3

2.4

Payment settlement and clearing; cheques, drafts,mail and telegraphic payment orders (includingexpress money transfers); SWIFT; nostro andvostro accounts and procedures (in generalterms); general concept and procedures of RealTime Gross Settlement (RTGS)

Electronic banking services including payment andcredit cards, giro transfers and means of makingregular paymentsPayment and collection services available fromcorrespondent banks abroadSettlement in Foreign Currencies (Rates ofexchange; factors affecting the movement of rates;protection against exchange risks; mechanics offorward contracts)

3 Commercial and Shipping TermsUsed in International Trade

3.13.2

Common shipping terms and meaningPurpose of the relevant Incoterms; risks andresponsibilities of the parties involved, Incoterms

2000 (ICC Publication 560)4 Documents Used in International

Trade4.1

4.2

4.3

Types and uses of bills of exchange; features andfunctions of basic, shipping, transport andinsurance documents;Control and transfer of ownership of goods andinsurance;Implications of Electronic Data Interchange (EDI)on international trade





C. Documentary Collections & Documentary Credits

1 Documentary Collections 1.1

1.2

1.3

Collection of cheques and bills of exchange, both

clean and documentary. Terminology andprocedures.Actions to be taken in the event of dishonour;protection of goods; avalisation of inward bills.A detailed knowledge of Uniform Rules forCollections ICC publication 522 and the relevantfeatures of Bills of Exchange Ordinance

2 Documentary Credits 2.1

2.2

2.3

2.4

2.5

Main types of documentary letters of credit andtheir documentary requirements and proceduresnamely, opening, advising, confirmation,negotiation, payment and reimbursement;Liabilities and responsibilities of the parties;

Examination of documents and treatment ofdiscrepancies.Uses of credits including acceptance/deferredpayment credits, red clause letters of credit,revolving credits, standby credits, transferable andback-to-back credits.A detailed knowledge of Uniform Customs andPractice for Documentary Credits UCP600 andUniform Rules for Bank-to-Bank Reimbursementsunder Documentary Credit, ICC publication 525,International Standby Practice ISP 98, ISBP andeUCP





D. Trade Finance Services and Trade Related Risk

1 Import and Export Finance 1.1

1.2

1.3

Import financing, including produce/ merchandiseadvances against security of goods and trustreceipt.Export financing, including purchasing,negotiating, accepting and discounting bills underdocumentary credits or documentary collections;packing loan; factoring; invoice discounting;advance under ECIC policies; bankersacceptance.Risks involved in granting trade finance facilities toimporters and exporters. Difference betweenforeign L/C and local L/C.

2 Trade Promotion and SupportingServices

2.1

2.2

2.3

2.4

2.5

Trade promotion services from banks, official andsemi-official bodies (e.g. Trade and IndustryDepartment, Trade Development Council, ExportCredit Insurance Corporation, Chambers ofCommerce) to develop trade and investmentLetters of introduction; sources ofinformation/advice; using correspondent banksincluding status reports, economic conditions,entry to overseas markets.Types and procedures of bank guarantees andbonds in facilitating international trade; risks andresponsibilities of issuers; ways to minimize risks;Uniform Rules for Demand Guarantees, etcOther government involvement in export creditarrangement; need for export credit; exportpromotion schemes and facilities in other countriessuch as UK ECGD and other EC countries,USA EXIM bank, China Import- Export Bank(general basic understanding).WTO and GATT and other agencies involved ininternational trade.

3 Trade Fraud 3.13.23.33.43.5

Types of trade fraudFake goodsForged documentsMoney launderingPrevention measures

4 Risk and Risk Management inInternational Trade

4.1

4.24.3

4.4

Types of risk: political and economic risk, creditrisk, performance risk, documentary risk, foreignexchange risk, transfer risk, interest rate riskFraudRisk Management, including protection againstabove risksRules and regulations governing fraud and moneylaundering





International Trade Finance: A Practical Guide

2ndedition, Luk Kwai Wing, City University of Hong Kong

ISBN: 9789629371852

Finance of International Trade

8thedition, Paul Cowdell & Derek Hyde, Financial World Publishing

ICC Guide to Incoterms 2010, (ICC Publication 715E) International Chamber of Commerce)

ICC Guide to Incoterms 2000, (ICC Publication 620) (International Chamber of Commerce)

ICC Guide to the eUCP, (ICC Publication 639) (International Chamber of Commerce)

ICC Uniform Customs and Practice for Documentary Credits, (ICC Publication 600) +

eUCP, International Chamber of Commerce

ICC Uniform Rules for Bank-to-Bank Reimbursements - A Commentary, (ICC

Publication 725)(International Chamber of Commerce)

ICC Uniform Rules for Collections (ICC Publication 522) (International Chamber ofCommerce)

Incoterms 2000, (ICC Publication 560) (International Chamber of Commerce)

ISBP - International Standard Banking Practice for Examination of L/C, (ICC Publication

681) (International Chamber of Commerce)

ISP 98 - International Standby Practice - The Commentary, (ICC Publication 947)

(International Chamber of Commerce)

ISP 98 - International Standby Practice - The Rules, (ICC Publication 590) (International

Chamber of Commerce)

Essential Readin s

Reference Readings




Advanced Financial Planning and Management


This subject contributes to the achievement of the Program Learning Outcomes by offering a

comprehensive overview of the major key areas of interests in financial planning and

management and this sector. Updates on the development of this sector in Hong Kong and China

contribute to fulfill (Program Outcomes 11 and 13); Understanding of the workflow of the financial

planning process would help participants achieve other outcomes (1, 2 and 3), in order to apply

risk management concepts and skills (Program Outcome 10 iii) in a cross-disciplinary areas

related to the practice of financial planning in real life (Program Outcome 12).


Integrate the broad range of specialized knowledge and skills in financial planning to provide

advisory services tailoring to the different needs of clients

Analyze information provided by clients to identify their financial needs

Evaluate different investment options against the financial needs and goals of clients todetermine the most appropriate investment mix

Demonstrate competent communication skills in financial counseling for assessing the needs

of clients and presenting solutions to them

The subject provides a holistic view over the necessary and key areas that one would find

interesting in financial planning and the industry. It will not only pinpoint currently what the

common scope of financial planning service areas are in Hong Kong and in the fast-growing

China market and how to implement the respective services, other important aspects such as the

risks to manage and the skills to possess would also be reviewed.

Examination: 50-60 Multiple Choice questions and ONE Case Study question



Prerequisites

Objective

Learnin Outcomes

Hi hli ht

Assessment Method





A. Recent Trends and Development of the Financial Planning Industry

1 International trends anddevelopment

1.11.21.31.41.51.6

Increased customer orientationWidespread adaptation of information technologyDeregulation of the financial services industryConsolidation of financial institutionsIncreased attention to personal financial servicesInternet banking and roles of internet in bankinginstitutions

2 Financial planning industry in HongKong and China

2.1

2.2

Development of financial planning industry inHong KongDevelopment of financial planning industry inChina

B. Financial Planning Process1 Framework of Financial Plans 1.1

1.2

1.31.4

1.5

The need for financial planningSingle-purpose verse comprehensive financialplanningProcess of financial planningThe professionals who provide financial servicesThe skills and traits of a successful financialplanner

2 Essentials of Financial Planning 2.1

2.2

2.32.42.52.6

Five steps in Financial Planning process TRUST- Trusting relationship- Recognizing the financial position and goals- Understanding the financial status

- Structuring the financial plan- Timely implementation and management of

the planCommunication principles and relationshipbuilding in financial planningGeneric financial needs in life cycleClient needs analysisQuantifying and prioritizing clients needsDevelop and implement financial plan

3 Identifying and Gathering FinancialPlanning Information

3.1

3.2

3.3

3.4

3.5

Fact-finding and its importance for financialplanningMethods of fact-finding and their strengths andweaknessesTypes of information needed for financial planning- Personal and family- Financial situation- Planning objectives and assumptionsMain areas of financial planning- Cash flow management- Investment planning- Tax planning- Risk and insurance planning- Retirement planning- Estate planningFinancial planning fact finder checklists





4 Assessing Clients Needs 4.14.2

4.34.44.54.6

4.7

Types of needs: perceived, real, present, futureStages of life cycle

Generic financial needs in life cycleIndividual-specific needs for different clientsFactors affecting clients needsFinancial needs of unmarried/divorced persons,late married, and single parentsQuantifying and prioritizing clients needs

5 Designing Financial Plan accordingto Clients Financial Needs

5.15.2

5.35.45.55.6

Duty of an adviserEnsuring recommendations are suitable for clients(integrity)Relation with other advisers or professionalsContents of a financial planPotential risks of a financial planClients future needs and review

C. Financial Planning Elements

1 Investment Products and Services 1.11.21.31.41.51.61.7

Direct investment servicesStructured productsInvestment fund servicesMandatory Provident Fund ServicesReal Estate Investment (REIT)Mortgage Backed Security (MBS)Exchange fund bills and notes

2 Investment-linked Long TermInsurance

2.12.2

2.3

2.4

2.5

Investment-linked long term insuranceInvestment risk and return

Characteristic and types of investment-linkedpoliciesBenefits and risks of investing in investment-linkedpoliciesRegulatory framework of investment-linkedlong-term insurance in Hong Kong

3 Tax Planning and Anti-avoidance 3.13.23.33.43.53.63.7

3.8

Tax planning and tax evasionTechniques for profits tax planningElements of international tax planningIntroduction to PRC taxTax planning for business done in the MainlandFiscal nullity general anti-avoidance provisionsAdvance rulings

Role of financial planners in the tax planningprocess

4 Retirement Planning and MandatoryProvident Fund (MPF)

4.14.24.34.4

The need for retirement planningRetirement plansMandatory Provident Fund (MPF)Types of MPF schemes

5 Estate Planning 5.15.25.35.45.5

Need for and objectives of estate planningCommon tools in estate planningEstate planning processDocuments in estate planningRole of financial planners in the estate planningprocess





D. Essentials in Financial Planning

1 Risks and Risk ManagementConcepts

1.11.21.31.41.51.6

Credit riskMarket riskInterest rate riskLiquidity riskOperational riskReputation risk

2 Communication Skills in FinancialCounseling

2.12.22.32.42.52.62.7

Elements of communication processSteps in developing effective communicationCharacteristics of the effective counselorBasic communication principlesNon-verbal communicationsSkills of active listening and physical attendingEffective use of questions and silence




Advanced Management of Information System inBanking


This subject contributes to the achievement of the Program Learning Outcomes by offering

participants a technical platform of understanding to the world of information of systems

(Program Outcome 7), and its vital assisting roles for managerial functions in the financial

services industry (Program Outcomes 8 and 9). The framework of technical evaluation on

information system and technology covered in this subject would supplement participants other

finance knowledge with an added technical perspective before they are ready in all aspects forspecialist subjects of the next stage such as Operational Risk & Quality Management (Program

Outcome 10) .


evaluate the changing roles and functions of information systems in a banking organization;

integrate the wide range of key principles of information security for formulating suitable

strategies;

determine resources deployed in the applications of information technology by evaluating

the market development;

evaluate the benefits and feasibility of applying information technology in different

managerial aspects to improve the effectiveness and efficiency of financial institutions

The subject is divided into several areas of what information system is and how information

technology is applied in the different levels of operations and management in an organization.This subject altogether gives participants solid understanding on technology in banking by

drawing different applications of technology in management within a banking organization today.




Prere uisites

Ob ective

Learnin Outcomes

Highlight

Assessment Method




Advanced Management of Information System in Banking

A. Information Systems in the Organization

1 Importance of Information System 1.1 The importance of IS in business, and in particular

the financial services industry and its effect uponthe organization and the people who work in it. Youshould be able to quote examples of ISapplications in the financial services industry tosupport any assertions made

2 Information Systems in variousfunctional areas

2.1

2.2

2.3

2.4

2.5

Business- The effect of information systems on the type

of business carried out and the response ofthe business to opportunities and competition

Employees- The effects of information systems on

employees and their working environment;- Impact on employment patterns and on

individual clerical and management functions.Management- The application of systems to support

management effectiveness anddecision-making.

- Management of change as a result ofimplementing new systems.

- Achieving the business benefits frominformation systems

Training- The importance of training in the effective use

of IS and the dangers of inadequate training

Strategic Issues- Business planning and the importance of a

coherent IS policy;- Evaluation and achievement of benefits of

implementing information systems.- The use of IS in achieving competitive

advantage: EDI (Electronic Data Interchange),EFT (Electronic Funds Transfer), EC(Electronic Commerce), TBS (TelephoneBanking System), CRM (CustomerRelationship Management) System etc.





B. Information Security

1 Importance of Information Security 1.1

1.2

The reasons for securing data and the general

principles which apply when assessing risks anddetermining what security measures need to betakenIT Security Policy

2 Elements of Information Security 2.1

2.2

2.3

Confidentiality- The classification of data, types of exposure,

associated risks and methods of reducing oreliminating the risk.

Availability- Maintaining computer system availability,

assessment of the level of contingency andrecovery required. Disaster recovery

-

Business Continuity Planning and BusinessImpact AnalysisIntegrity- Protecting system and data integrity from:

Internal threats: software and hardwarefailures, data corruption during input,processing or transmission.

- External threats: outsourcing, accidental ordeliberate misuse, hacking

C. Management of Information Systems

1 General IT processing and topology

concepts

1.1 Commercial application of systems used in

banking services and products, e.g. telephonebanking, internet banking, debit/credit card,options bank book, home banking (e.g.HSBCOne) and smart card (e.g. Octopus, Visacash), etc.

2 Data Resource Management 2.1

2.2

2.3

The role of data management in businessinformation systems and its contribution toorganizational performanceWays to develop an effective conceptual datamodels based on a set of business requirementsImportance of the development of user-friendlydatabase application program

3 IT Service Management 3.1

3.2

3.3

3.43.5

The major operations and information flow of theRetail Banking, Corporate & Commercial Bankingand TreasuryThe roles of information systems for the differentoperationsApplication of information systems concepts tosupport and manage various functionsDataminingDatabase marketing





4 System Development Lifecycle &

Quality

4.1

4.2

4.3

4.4

Development and maintenance of systems, with

emphasis on those steps where users are mostheavily involved, including post-implementationreviewsBusiness re-engineering: use of process mappingin the understanding and analysis of improvingdelivery of products and services, use of IS tore-engineer rather than just automate manualprocesses.User involvement: use of techniques such as jointapplication design and prototyping.Quality: measurement of quality in systems designand implementation

5 Change Management 5.1

5.2

The definition of a project and its management,

including an understanding of tools used to controlprojects, such as Gantt charts and networkanalysisConcepts underlying the transformation ofbusiness processes with an emphasis onreengineering the supply chain, explains theenabling role of information technology (IT), anddemonstrates the application of different tools tothe redesign of business processes

Introduction to Information Systems

OBrien, J. & Marakas, G.M.

15thedition Irwin/McGraw-Hill

ISBN:9780070167087

Business Information Management Improving performance using information

systems

2ndedition Chaffey D. and Wood S, Prentice Hall

ISBN: 9780273711797

Essential Readin s

Reference Readin s




AdvancedRegulations and Banking Essentials inMainland China


This subject contributes to the achievement of the Program Learning Outcomes by placing a

strong focus in enhancing participants China knowledge with updates on a wide range of

financial and banking information in China (Program Outcomes 10 i ,ii and iii). This holistic

approach to review the banking and business environment in China draws on participants

integration of knowledge in macro-economics, legal and banking areas (Program Outcome 12),

in order to develop a clear understanding of the market prospects and constraints for their further

strategy making (Program Outcome 11 and 13).


understand the key legal hierarchy in China that govern the banking industry for planning of

appropriate strategies;

identify the key regulators and players in the China financial system and the banking industry

and assess their impacts;

identify and evaluate the key factors of growth as well as the constraints that might threaten

the overall China businesses from growing further.

The subject serves as a one-stop station to offer the must-know background information on the

regulatory framework of banking and financial system in China. Prospective participants who

expect to gain the necessary information on the market structure, environment, practices and

challenges in the growing China banking businesses would find this subject effective in their

learning process.




Prere uisites

Objective

Learnin Outcomes

Hi hli ht

Assessment Method




AdvancedRegulations and Banking Essentials in MainlandChina

A. Regulatory Framework of Banking in Mainland China

1 Banking regulation and anti-moneylaundering law

1.11.21.3

Banking supervision and control measuresViolations of sanctions under the BankingAnti-Money Laundering Banking law

2 The main business banking law 2.12.22.3

Deposit-taking regulationsCredit business laws and regulationsProhibition of banking business

3 The basic provisions of civil law 3.13.23.3

The main civil codeCivil litigationContract law system

4 The basic provisions of CommercialLaw

4.14.24.3

4.4

4.5

Corporate Law SystemBankruptcy LawNotes Legal System

Security Law- Vigorous Development of the Security SectorBanking of crime and criminal

5. The China Foreign ExchangeSystem

5.1

5.2

5.3

Supervision of Foreign Exchange Accounts andthe Foreign Exchange MarketCurrent Account Transactions and Capital AccountTransactionsRegistration System for External Debt

B. Banking and Financial System in Mainland China

1 Overview of China's banking sector 1.1

1.21.3

Central banks, regulatory agencies and

self-regulatory organizationChina Banking Regulatory Commission (CBRC)China Banking Association (CBA)

2 Banking Financial Institutions 2.12.22.32.42.5

Policy BankLarge commercial banksSmall and Medium Commercial BanksRural financial institutionsForeign Funded Financial Institutions




AdvancedRegulations and Banking Essentials in MainlandChina

C. Banking Structure and Business Environment in Mainland China1 Financial Environment 1.1

1.21.3

Financial marketsFinancial InstrumentsMonetary Policy

2 Banking major business 2.1

2.2

2.3

Deposit-taking business- personal, public- foreign currencyLoans- Personal Loans- Corporate LendingOther banking operations- Bill of Exchange- Payment and settlement operations

- Bank Card Business- Agency- Guarantee Business- Trust Services- Consulting Business- Wealth Management Business- E-banking- Derivatives

D. Business Prospect and Constraint in Mainland China

1 Economic Environment 1.1

1.21.3

Macroeconomic

Economic StructureEconomic Globalization

2 SWOT Analysis on BankingBusiness in Mainland China

2.12.22.32.4

StrengthWeaknessOpportunitiesThreats




Specialist Diploma P.43

Specialist Diploma in Credit Management

Bank Lending P.46-48

Credit Risk Management P.49-51

Specialist Diploma in Treasury Management

Bank Asset and Liability Management P.52-54

Treasury Markets and Operations P.55-57

Specialist Diploma in Operations Management

Banking Law and Practice P.58-61

Operational Risk and Quality Management P.62-64

Specialist Diploma in Wealth Management

Business Strategy in Wealth Management P.65-66

Global Assets Portfolio Management P.67-69




Specialist Diploma


The Specialist Diploma program is the capstone stage of studies under the AHKIB program. Ithas an integrated aim to facilitate a learning platform for participants to enhance the capability

to promptly identify a problem, critically analyze the core issue, formulate strategies, and offerappropriate solutions for a specialized banking area that requires sophisticated knowledge andprofessional skills.

Upon completion of this specialist program, participants are expected to demonstrate the levelof knowledge and skills that could be induced from the set of sub-learning outcomes below:

1. Critically evaluate new information, concepts and evidence independently, consolidateknowledge and extend critical thinking and application for a specialized banking area ofpractice;

2. Utilize data, tools and resources effectively. Demonstrate competency and numeric skillsthat helpconduct research, analyze, interpret historical data and infer future trend, before

drawing justified conclusions;3. Anticipate the future trend or new requirements arising in the banking industry and to

interact by critically evaluating the implications of such development and transferring theknowledge and techniques unique for such change for the whole bank or for a specializedsector of banking practice;

4. Synthesize both qualitative and quantitative methodologies when interpreting stochasticmodels commonly applied by market practitioners, in order to form a holistic analyticalview and to strengthen decision-making skills;

5. Compare and select the right research framework when evaluating internal managementof the whole bank and their external environment;

6. Manage complex tasks that involve planning, design and management functions in abroad range of professional work activities such as deploying accounting and legal skills

for a specific banking area of practice.




Specialist Diploma

Bank Lending Credit Risk Management

Subjects under this stream of specialist studies are designed to consolidate and build onprevious diploma level studies of some topic areas that participants need to assimilatesuccessfully in order to progress through the programme. They encourage participants todraw together, think across and understand the links among a broad range of knowledgeareas critical to both the front office and the middle office of credit management.

Bank Asset and Liability Management Treasury Markets and Operations

Serving the same purpose as the other specialist studies, subjects under TreasuryManagement mark a high level achievement for participants who demonstrate a strongpersonal commitment to professional development. The learning experiences would allowparticipants to make use of their quantitative and technical knowledge learnt previously todiscuss and analyze internal treasury functions from the perspectives of bankmanagement.

Banking Law and Practice Operational Risk and Quality Management

Through combining professional knowledge with practical experience, the specialist streamof Operations Management enables participants to develop critical, contextualisedunderstandings of the issues, challenges and opportunities offered to bank operations andmanagement worldwide, thereby enhancing participants competency as a specialist in thisarea.

Business Strategy in Wealth Management Global Asset and Portfolio Management

Subjects under this stream of specialist studies are designed for financial planningpractitioners who would like to prepare their career advancement in Private Banking to servehigh net worth customer. On the other hand, for those participants who has working inwealth management or private banking and would like to equip with structured knowledge inwealth management areas.

Specialist Diploma in Credit Management

Specialist Diploma in Treasury Management

Specialist Diploma in Operations Management

Specialist Diploma in Wealth Management




Bank LendingSpecialist

Completion of Advanced Diploma in Banking and Financial Services Program

Corporate Finance Services and Finance of International Trade

This subject contributes to the achievement of the knowledge and skills embedded in the

Program Learning Outcomes by bringing participants to discuss the entire knowledge of the

lending regime. One of the focal objectives is to examine the requirements of businesscustomers such that participants are led to i) discuss how to match those needs by structuring

the best appropriate loan facility for their customers (Program Outcome 1); and ii) to manage the

lending risks involved by designing appropriate loan provisions and adopting other

administration strategies (Program Outcome 5).

A further mission of the subject is to strengthen participants analytical skills by extending critical

thinking when applying accounting and financial knowledge in the practice of lending (Program

Outcome 6), particularly assessing borrowers financial position during and after a lending

decision is made (Program Outcome 2).


evaluate critically the major differences of lending to personal customers and to business

borrowers by utilizing professional knowledge in cross disciplines;

conduct in-depth credit analysis by discretionally utilizing financial information and

undertaking non-financial research and analysis for customer evaluation;

develop credible business propositions by offering appropriate credit facilities after

synthesizing different research regarding customers business needs;

compare and contrast different methods and techniques of credit monitoring and to direct

supervisory role over problem loan management.

Lending is a core business area of commercial banking. The subject consists of two parts:

lending to individual borrowers, and lending to corporate customers of different scales. It places

considerable focus on the practical knowledge and application related to business lending.

However, the two sections are not independent, and participants should expect to subsequently

return to ideas they have considered previously, and analyzed issues and scenarios of lending

from a different perspective.

Examination: Part I Case Study question (40%)Part II THREE essay questions out of FIVE (60%)

Passing mark for this subject is 50%. Time allowed: Three hours.

Prerequisites

Objective

Learning Outcomes

Highlight

Assessment Method

Suggested Advanced Subjects





A. Personal & Corporate Lending

1 Advance to Personal Customers 1.1

1.2

1.3

Advances to personal customers: home mortgages

(including Home Ownership Scheme, villagehouses etc); bridging loans; probate advances;investment loan and advances relating to consumerexpenses; personal loans/overdrafts; tax loans;credit card, etc.Hong Kong Mortgage Corporation Limited Mortgage Insurance ProgrammeConsumer Credit Data

2 Interpretation and Analysis ofFinancial Statements

2.1

2.2

2.3

2.4

2.5

2.6

Interpretation and critical analysis (including keyratios) for lending purposes of accountingstatements including:- Balance sheets-

Profit and loss accounts- Cash flow statements- Budgets and cash flow forecastsAssessing the reliability of accounting informationby its sourceInterpretation of budgets and cash flow forecastsand critically testing their underlying assumptionsRatio Analysis:- Profitability understanding the importance of

different measures of profitability- Liquidity understanding how liquidity should

be assessed- Working capital management understanding

the WC management of a business is pivotal tothe candidates understanding of the expectedpatterns of cash flow

- Capital structure understanding therelationship between shareholders; capital anddebt

Understanding of the limitation of financialstatements and candidates should have a goodunderstanding of creative accounting as well.Analysis of the operating risks of the borrowerincluding qualitative aspects such as:- The owner(s): background, experience, other

interests, related company(ies);

-Management: roles, background, capability,depth and control; business strategies andpolicies; IT and human resources; businesssuccession plan

- Business and Industry: competition, SWOTanalysis, relevant domestic, international,economic, political and social factors.

B. Corporate Credit

1 Credit Assessment 1.1

1.21.3

A reasoned assessment of a lending propositionrelated to both locally and China to produce arecommendation or decision.

Credit Scoring concepts/models/systemsCommercial Credit Data





2 Terms for a Loan Facility 2.1

2.2

2.3

An appreciation of what security (if any) would beappropriate and setting the terms and conditions

for a loan facility: pricing, repayment provisions,collateral security and other conditions orcovenants.SME Funding Schemes by the Hong KongGovernmentCollateral risk and valuation

3 Understanding Business Needs 3.1

3.2

3.3

An understanding of the requirements of differenttypes of businesses, including:- Import/export; Retailing; Wholesaling;

Manufacturing; Building;- Professionals e.g. doctors, dentists,

solicitors, accountants.- New Economy: e-business or knowledge

based industries.- Multinational Corporations, Local Corporations

and Small & Medium EnterprisesProvide appropriate type of credits and in suitablesize depending on the field of business, mode ofoperation and the available security.Appropriateness of banking facilities re theiramount, purpose, tenor and structure

4 Credit Administration and Dealingwith Problem Loans

4.1 Monitoring to ensure that:- business performance is in line with

projections.- business is in compliance with regulations and

bank/company policy.- loan being utilised for stated purpose.- Identifying problems with repayment and loan

delinquency. Handling loan default. Identifysymptoms of overtrading and misappropriationof credit limits.

- Identifying early warning signs, remedialaction and implications of winding up abusiness

- Risk Management Managing market risksand credit risks

Bank Lending study pack (Wiley), 2012

Standard and Poors Fundamentals of Corporate Credit Analysis

Blaise Ganguin and John Bilardello, McGraw-Hill, Dec 2004

ISBN: 9780071441636

Corporate LendingLyons, Peter

Institute of Financial Services, c2004

ISBN: 9781845160661

Essential Readin s

Reference Readin s




Credit Risk ManagementSpecialist




Program Learning Outcomes by familiarizing participants with the essential organization of credit

risk management and the capital adequacy framework for banking institutions today (Program

Outcomes 1 and 3). With the subsequent coverage on credit risk and portfolio models, content ofthe subject is designed to strengthen participants quantitative skills relevant in the credit risk

management environment (Program Outcome 2). Most importantly, participants are expected to

equip themselves with rounded skills to share their insights with internal management on any

on-going issues related to credit risks (Program Outcomes 5 and 6).


evaluate critically the organization of credit risk management;

undertake critical evaluation and communicate the current global capital requirements oncredit risks;

subsume the broad range of credit risk knowledge into numeric and quantitative reasoning

when formulating strategies on credit risk management;

critically examine all advanced types of credit risk products, and align different units of the

whole bank which are related in business to such products.

The subject offers a systemic and coherent body of knowledge on the latest topics of credit risk

management. Two major sections are covered in the discussion: the first section is a critical

review of the global and local banking regulations related to credit risk management such as the

Basel II standards and the HKMA rules on capital adequacy. It would be followed by a

specialized discussion of the latest professional and stochastic methodologies on credit risk and

product management. Key concepts and practices in advanced credit risk management are

introduced in this subject with the expectation to upskill participants with the technical and

qualitative skills that are widely used by market practitioners today

e

Examination: FIVE essay questions out of SEVEN

Passing mark for this subject is 50%. Time allowed: Three hours.

Prerequisites

Ob ective

Learning Outcomes

Highlight

Assessment Method

Su ested Advanced Sub ects





A. Organization of Credit Risk Management in Banks

1 Credit Risk Management in

Banks

1.1

1.21.3

Principles of Risk Management and Internal Controls

Capital Adequacy FrameworkCredit Asset Classification- Sovereign exposures- Bank exposures- Corporate exposures- Regulatory retail exposures- Residential mortgage loans- Others- Standardized vs Internal-ratings based Approaches

B. Capital Requirements on Credit Risk under Basel II

1 Standardized Approach 1.1 Risk weights on different asset types

2 Internal-ratings-based (IRB)Approach

2.1

2.22.32.42.5

PD, LGD and EAD requirements ratings design and riskfactorsValidation of IRB modelsUse tests of an IRB SystemMeasurement on power of risk differentiationValidation on accuracy of PD calibration

C. Credit Risk and Portfolio Models

1 Credit Risk Models 1.11.21.3

1.41.51.61.71.8

Regression models on defaultBinomial probability model of defaultBeta distribution for LGD and EAD

PD inference from corporate bond yieldsPD inference from equity pricesRating migration and credit VaRExpected loss versus unexpected lossEAD for counterparty risk

2 Credit Portfolio Models 2.12.22.32.42.52.62.72.8

Simulation AnalysisCorrelation of defaultsRating migration and credit portfolio riskPortfolio theory and credit risk diversificationActuarial models on default riskSingle-factor model on default correlationStress credit loss and capital charge equationsStress testing credit risk portfolios

D. Credit Derivatives and Structured Credit Products

1 Types of Products 1.11.21.31.41.51.61.71.81.9

Credit default swapsTotal return swapsCredit spreads forwards and optionsCredit-linked notesFirst-to-default baskets and nth-to default basketsPricing of credit derivativesCollateral Debt ObligationsCapital charge requirements on securitized credit productsLimitations on CDS/CDOs as risk management tools





Credit Risk Management study pack (Wiley), 2012

Active Credit Portfolio Management in Practice

Jeffery R. Bohn & Roger M. Stein (Wiley) 2009

ISBN: 9780470080184

The Basel II Risk Parameters

2ndedition Engelmann, Bernd and Robert Rauhmeier (Springer)

ISBN: 9783642161131 Measuring and Managing Credit Risk

Servigny, Arnaud de and Olivier Renault (McGraw-Hill)

ISBN: 9780071417556

Essential Readin s

Reference Readings




Bank Asset and Liability ManagementSpecialist




Program Learning Outcomes by setting a scene for participants to extend critical thinking over

the practical areas of asset-liability management (Program Outcome 1). By making thoroughapplication of their accounting and professiona