Training Course: Asset Liability Management (ALM)

Introduction

The collapse of major financial institutions like SVB has shown that banks can fail for reasons beyond credit losses, such as unmanaged mark-to-market losses. This highlights the importance of effective Asset Liability Management (ALM) in safeguarding a bank's stability. In an environment of rising interest rates, younger bankers must adapt quickly to manage interest rate risk and understand the significance of ALM.

This Asset Liability Management training course is designed to equip banking professionals with the essential skills needed to manage assets and liabilities effectively. Participants will gain a comprehensive understanding of the ALM process, ALM techniques, and how to optimize risk management in banking. Whether you're seeking asset liability management certification or want to deepen your knowledge of asset liability management strategies, this course is for you.

Course Objectives

• Understand the meaning of Asset Liability Management (ALM) and its crucial role within a bank.
• Learn the asset liability management process and how it influences risk management and decision-making in banks.
• Examine regulations and compliance issues surrounding ALM and how they impact financial operations.
• Develop strategies to manage ALM risks effectively, including interest rate risk, liquidity risk, and funding stability.
• Understand how to optimize returns while operating within the bank’s risk appetite.
• Learn techniques and tools used in asset liability management, including gap analysis, repricing gaps, and hedging strategies.
• Enhance your knowledge of how ALM compliance contributes to the success of the bank and its overall risk management framework.
• Gain practical insights into ALM lifecycle and the application of stress testing and contingency planning.

Course Outlines

Day 1: Introduction to Banking

• Understanding the unique nature of banking and its balance sheet structure.
• What is Asset Liability Management: Exploring the foundation of ALM.
• Understanding the importance of asset liability management in the context of the banking system.
• Risks banks are exposed to and the role of ALM in managing them.
• Net interest margin and the yield curve.
• Regulatory capital requirements, including CET1, Tier 1, Tier 2, and MREL.
• Measuring bank performance: RORAC and EVA.

Day 2: Funding the Bank

• Understanding the nature of bank assets and liabilities.
• Liquidity regulations: Loan-to-deposit ratio, LCR, NSFR.
• Contingency Funding Plan and liquidity stress tests.
• Optionality and cash flow mismatch in bank balance sheets.
• Funds transfer pricing and managing liquidity risk.

Day 3: Market Risk in Banking

• Accrual accounting vs. mark-to-market accounting.
• The importance of managing market risk within ALM.
• Interest rate swaps, cross-currency swaps, and using derivatives for market risk management.
• ALM techniques for managing price sensitivity of assets and liabilities.
• Measuring market risk using VaR and expected shortfall.

Day 4: Interest Rate Risk in the Banking Book (IRRBB)

• Gap analysis for managing interest rate risk.
• Types of risks: Yield curve risk, customer optionality, and pipeline risk.
• Repricing gaps and structural hedging for interest rate management.
• Basel III IRRBB regulations and EBA guidelines.
• EVE vs. EAR: Understanding income and economic value measures.

Day 5: The ALM Process

• Overview of the Asset Liability Committee (ALCO) and its responsibilities.
• Setting risk appetite and integrating it into ALM strategy.
• Developing stress tests and implementing the structural hedge.
• The role of ALM compliance in maintaining the bank’s financial health.
• Finalizing the ALM foundation for successful risk management.

Why Attend this Course: Wins & Losses!

• If you're looking for asset liability management training, this course offers you a deep dive into the ALM lifecycle and its impact on the financial stability of banks.
• Learn how to develop robust ALM strategies that balance risk and return, ensuring long-term profitability and stability.
• By gaining a certification in asset liability management, you position yourself as a valuable asset in the financial services industry, trusted to handle complex risk management scenarios.
• Enhance your understanding of how to manage and mitigate key risks such as interest rate risk, liquidity risk, and funding risk—crucial components of ALM.
• This course will teach you essential ALM techniques such as gap analysis and repricing gaps, which are key to managing risk in your banking operations.
• By learning about ALM compliance and regulations, you will be prepared to navigate the complex regulatory landscape in banking, ensuring your institution stays compliant while maximizing returns.

Conclusion

In today's dynamic financial environment, Asset Liability Management (ALM) is essential for safeguarding a bank’s operations and ensuring sustainable growth. This course provides a comprehensive understanding of the ALM process, ALM strategies, and practical tools to manage risks effectively. By attending, you will acquire the skills to make informed decisions regarding asset-liability mismatches, interest rate risk, and liquidity management.

Whether you aim to achieve asset liability management certification or simply want to improve your ALM techniques, this training course will empower you with the knowledge to navigate the complexities of modern banking. Don’t miss out on this opportunity to elevate your expertise and contribute significantly to your institution’s success.