Asset and Liability Management in Banks

In today’s dynamic and volatile financial environment, Asset and Liability Management (ALM) plays a pivotal role in maintaining stability, optimizing profitability, and ensuring regulatory compliance within the banking sector. These specialized training courses equip banking professionals with the expertise to balance assets and liabilities, strengthen liquidity positions, and mitigate key financial risks effectively. Through a structured learning approach, participants gain both theoretical knowledge and practical insights into ALM principles, regulatory frameworks, liquidity management, interest rate risk control, and capital planning. The courses incorporate real-world case studies, allowing professionals to translate ALM concepts into actionable strategies within their institutions. A key focus of the program is to help banks avoid exposures similar to those that led to the collapse of institutions such as SVB, by analyzing funding stability, assessing asset acquisition strategies, and developing robust risk management practices. Key Highlights of the ALM Training Courses: Core ALM principles designed for the banking industry, with emphasis on regulatory requirements, risk management, and balance sheet resilience. Strategies to address interest rate, liquidity, and credit risks to ensure sustainable financial performance. Techniques for effective asset–liability alignment to maximize profitability and support long-term stability. Advanced liquidity and capital management approaches that align with global banking standards. Application of ALM concepts through real-world banking case studies, enhancing analytical and decision-making skills. These courses provide banking professionals with essential tools to navigate today’s evolving financial landscape, ensuring they can contribute effectively to their institution’s stability, growth, and regulatory compliance.

The course is designed to provide an overview of the asset and liability management (ALM) function. This function is important for a number of roles to understand including: Relationship managers covering financial institutions Compliance staff Regulators Internal auditors Market and credit risk professionals Middle office staff Technology staff responsible for related systems

Program Outline: Unit 1: The Evolving Role of Asset and Liability Management (ALM): Defining the role and strategic importance of ALM in modern banking. Global Financial Crisis including causes, resolution, and key takeaways. Impact of Basel III on capital adequacy, risk constraint ratios, and leverage ratios. Standardized methodologies for credit risk: Adjustments for collateral and gearing. Importance of linking ALM optimization to Return on Equity (ROE) and Basel III implications. Unit 2: Asset and Liability Gap Analysis: Frameworks for addressing the challenges of maturity transformation in banking portfolios. Behavioral modeling techniques for prepayment and redemption adjustments. Techniques for managing non-traded market risks including IRRBB vs. CSRBB and their measurement. Liquidity risk measures under Basel III focusing on LCR, NSFR, and their strategic impact. Beyond Pillar I, ICAAP, ILAAP, and RRP enhance risk management and ensure financial stability. Unit 3: Evolution of FTP and Non-Wholesale Portfolio Management: Fundamentals of FTP and its role in optimizing banking portfolios. Evolution of FTP methodologies and deriving accurate FTP curves. Frameworks for behavioralizing portfolios through FTP to align incentives and drive business behavior. Optimizing tools and products through pricing strategies, regulatory integration, and FTP trends. Governance and ownership of FTP, including effective reporting and alignment strategies. Unit 4: Tools for Managing FX and Interest Rate Risk: How to apply cash FX instruments in risk mitigation. Types, pricing, and valuation techniques of Interest Rate Swaps (IRS). Overview of Cross Currency Swaps (XCCY) and its application in managing FX and IR risks. Importance of leveraging FX swaps for optimized funding solutions. Frameworks for managing long-term FX risk with XCCY swaps through pricing and valuation strategies. Unit 5: Structural Hedging and Future Challenges for ALM: Frameworks for establishing governance, defining scope, and ensuring effective execution. How to manage the costs of unwinding structural hedges. Preparing for future ALM challenges by addressing TLAC/MREL requirements and Basel IV compliance. Strategic responses to emerging regulatory and market dynamics.