Non-Bank Financial Institutions

Fitch Learning
Course summary
3 days
2,995 GBP, 3,995 USD excl. VAT
Open / Scheduled
Next available date: 11/03/2020 - Singapore
Course Dates
3,995 USD
18/05/2020 09:00 
2,995 GBP
Hong Kong
3,995 USD

Non-Bank Financial Institutions

Non-Bank Financial Institutions: 3-Day Training Course

The overall goal of this intensive three day case study based course is to give participants a structured approach to the credit analysis of different types of NBFI; finance and leasing companies, securities companies (brokers and broker dealers), and investment funds and asset managers (funds and investment managers).

Key Learning Outcomes:

  • Distinguish the key business risks, financial indicators and accounting issues by sector, business line, type of institution or fund structure
  • Use market indicators, quantitative and qualitative analysis to identify strong and weak performers
  • Appreciate how economic, structural, competitive and regulatory issues impact strategy and financial health
  • Understand performance indicators and financial statements for each business model to uncover key credit issues and the impact of differing accounting policies

Suitability - Who should attend?

This Non-Bank Financial Institutions training programme is suitable for those delegates seeking a more structured approach to the credit analysis of different types of NBFI (Non-Bank Financial Institutions).

Training Course Content

Module I: Securities Companies

Analytic Overview

Section aims: apply a structured approach to the credit analysis of securities companies and compare this with the perspectives of regulators, rating agencies and debt and equity investors.

  • Perspective on securities companies: regulators, rating agencies, debt and equity investors
  • Purpose payback model – key issues in debt and counterparty exposures to securities companies
  • Illustration case study: Purpose Payback considerations for a securities company

Operating environment 

Section aims: understand the impact of macro competitive and regulatory issues on risk profile and strategy.

  • Securities markets: foreign exchange, equity, fixed income, futures and other derivatives, commodities, etc.
  • Differing business models: broker, broker dealer, wholesale, retail and internet based
  • Exercise: identifying risks in brokerage companies
  • Regulation and supervision: focal points of international, regional and local regulation; compare and contrast key markets

Management, franchise and ownership

Section aims: understand the key strategic, corporate governance and risk management challenges of securities companies

  • Shareholders: quality of financial and business support
  • Strategy, risk management (VAR and other models)
  • Corporate governance and key man issues
  • Exercise:Corporate governance in a securities company
  • Operational risk challenges

Financial Fundamentals

Section aims: benchmark key performance indicators of different types of securities companies in order to identify both strong and weak performers and recognise early warning signals of credit deterioration.

  • Statement logic: matching business model to expected financial statements; key accounting policies on fair valuation; risk of window dressing
  • Performance risk: revenue sources, earnings volatility and cost control
  • Business risk: risk profile of broking, trading underwriting, advisory, settlement and clearing
  • Market risk/asset quality: modelling market risk, securities haircuts, fair value techniques, off balance sheet exposures
  • Counterparty credit risk in brokerage and derivatives activities
  • Financial risk: managing funding stability and liquidity risk
  • Capital adequacy: regulatory and analytic tools to assess the strength of capital and the risks of leverage; net capital, working capital and core capital
  • Illustration case study: financial indicators for a securities broker

Module II: Regulated Funds and Fund ManagersIndustry Overview

Section aims: differentiate the key features and investment strategies of regulated funds.


  • Types of fund: regulated mutual funds/unit trusts, managed accounts, closed ended funds and investment trusts, tracker and exchange traded funds (ETFs), fund of funds, master feeders, REITs etc
  • Structure and legal status of funds and managed accounts

Investment strategies

  • Investment strategies: risk profile of strategy, policies, practices and restrictions
  • Traditional strategies: fixed income (money market, bond, municipals) equity and specialist funds; growth, value and balanced strategies
  • Alternative investment strategies: use of derivatives and leverage

Analytic overview

Section aims: apply the structured approach to analysis to fund transactions in order to recognise the key challenges of exposures to funds.

Structured approach to analysis

  • Purpose of transaction and sources of payback: Who is the counterparty? What assets or derivatives are being financed? How will the transaction be settled or the debt repaid at maturity?
  • Information sources: prospectus, financial statements, portfolio statements

Risk Analysis

I. Operating environment

Section aims: understand the macro competitive and regulatory drivers of performance, strategy and financial strength.

Macro and competitive drivers

  • Sub-sectors of the industry: institutional, retail, wealth management
  • Competitive drivers: sources of advantage

Regulation and supervision

  • Regulation and supervision by region (focus depends on location of workshop)
  • Mutual fund regulations: investment and leverage restrictions, disclosure
  • Fund manager regulation; capital adequacy, licensing, business practices

II. Financial fundamentals

Section aims: benchmark key performance indicators of different types of finance and leasing company in order to identify both strong and weak performers and recognise early warning signals of credit deterioration.

  • “S”: Size: reviewing size, diversification and market position of fund
  • “M”: Market risk: volatility measures e.g. standard deviation, VaR
  • “A”: Asset quality: liquidity and valuation of assets, haircuts
  • “L”: Liquidity: redemption risk on open ended funds
  • “L”: Leverage: use of financial and derivative leverage; funded status for pension funds
  • “P”: Performance: bench marking performance – NAV measures, information and Sharpe ratios
  • Illustration case study: Assessing a fund using SMALLP approach

III. Management

  • Section aims: evaluate the roles and responsibilities of key parties to a fund with a focus on the fund manager

Key parties

  • Roles and responsibilities of various parties: manager, trustee, directors, administrator, custodian etc

Due diligence fund manager

  • Business structure: staff and organisation: experience levels; size, affiliation
  • Independence and controls: affiliation; conflicts of interest
  • Investment process: structure and implementation of portfolio management decision making
  • Risk management: operational, market, credit and regulatory
  • Communication: disclosure and client relationships

Fund manager as counterparty

  • Purpose payback: why do fund managers borrow and how do they service debt
  • Risk profiles of different business models
  • Financial analysis a) Performance measurement b) Cash-flow analysis c) Balance sheet strength

Module III: Finance and Leasing CompaniesAnalytic overview

Section aims: apply the purpose payback model to understand the key credit issues of finance and leasing companies.

  • Perspective on finance and leasing companies: rating agencies, debt and equity investors and banks
  • Purpose payback model: dependence of finance companies on debt markets and refinance; warehouse and borrowing base facilities and other structural issues

Operating environment

Section aims: understand the impact of macro competitive and regulatory issues on risk profile and strategy.

  • Key risks and competitive issues by sub-sector: sales finance, direct finance, captive finance, equipment finance and leasing, credit cards
  • Impact of regulation and supervision

Management, franchise and ownership

Section aims: evaluate the business model of different types of finance and leasing company to ensure they have adequate franchise value to succeed.

  • Franchise: assessing the validity of the business model, residual marketing and reliance on parent company
  • Critical management issues for finance and leasing companies: processes and systems, market knowledge, strategy, etc
  • Shareholders: quality of financial and business support, risks and benefits of cross subsidies

Financial fundamentals

Section aims: benchmark key performance indicators of different types of finance and leasing company in order to identify both strong and weak performers and recognise early warning signals of credit deterioration.

  • Statement logic: accounting policies for income, receivables, delinquencies and leases (finance versus capital leases)
  • Business risk: use of financial tools to assess quality of lease and loan book; reserve adequacy, owned versus managed book; residual risk
  • Funding risk: stability and variety of wholesale funding sources, gap management, availability of contingency funding, liquidity and capital adequacy
  • Securitization: benefits and risk of off balance sheet funding vehicles; residual risk, mortgage servicing rights and gain on sale accounting
  • Performance risk: balancing risk and return; income stability and expense control
  • Illustration case study: apply the financial fundamentals to a leasing company

Leasing companies

  • Issues specific to leasing companies: types of leasing companies, residual values, cash flow
  • Operating leases
  • Hire purchase agreements
  • Key ratios for leasing companies


The cost of this course includes a light breakfast, lunch and two additional refreshment breaks during each day of the course.

In-house training

Fitch Learning can also deliver this course as in-house training for your company, anywhere in the world. Tailored courses by Fitch Learning are designed to reflect your goals at both a corporate and a team level and help meet your specific training requirements.

Provider: Fitch Learning

Part of the Fitch Group, Fitch Learning partners with clients to enhance knowledge, skills and conduct. With centers in London, New York, Singapore, Dubai and Hong Kong, we are committed to questioning and understanding client needs across the globe and...

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