AE Handbook Spring 2012 Syllabus

AHKIB Examinations Handbook Spring 2012
Syllabus
Diploma in Banking and Financial Services

Banking Services and Professional Ethics Financial Systems and Risk Management Fundamentals of Accounting and Law in Banking
P.6
P.8-11 P.12-14 P.15-18
The Hong Kong Institute of Bankers
Syllabus
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 could be induced from the set of learning outcomes below: 1. 2. 3. 4. 5. 6. 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; 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; Apply advanced skills and professional knowledge on Accounting, Finance, Law and Regulations; Identify the types of risks faced by financial institutions today and select suitable tactics to manage them; Identify the relevant ethical issues faced by financial institutions today and recommend suitable course of actions to handle them; 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.
Syllabus
Core
Banking Services and Professional Ethics
Objective
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).
Learning Outcomes
On completion of this subject, participants should be able to:
identify the implications of the various regulatory frameworks underlying the operations of authorized 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.
Highlight
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.
Assessment Method

Examination: 100 multiple choice questions Passing mark for this subject is 70% Time allowed: 2.5 hours
Syllabus
Core
Part I - Banking Services & Operations (50%) A. An Overview of Banking Services

1 2 3 History of Banking Banks as Financial Intermediaries Banking Systems 3.1 3.2 3.3 3.4 3.5 4.1 4.2 4.3 4.4 4.5 Basel Committee Banking System in USA Banking System in Mainland China Banking System in Hong Kong Islamic Banking Objectives and Tools of Banking Regulation Capital Adequacy Requirement Liquidity Requirement The Three Pillars in Basel II Guidelines Industry-led Regulation
Banking Regulation
B. Risk Management in Banking Services

1 2 Types of Risk Characteristics of Risk 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 3.1 3.2 3.3 3.4 Credit risk Market risk Interest risk Liquidity risk Operational risk Reputation risk Legal risk Strategic risk Active Board and senior management oversight, Risk Management Committee Policies, procedures and limit structure Risk measurement, monitoring and management reporting systems Internal controls and comprehensive audits
Sound Risk Management System
C. Retail and Corporate Banking Services

1 General Bank / Branch Management 1.1 1.2 1.3 1.4 1.5 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 Board and management composition Organization structure and functional set-up Manned service: Customer Relationship Management vs Customer Service Online and electronic Banking Services Deposit Services: Local and Non-local currencies Wealth Management Services Insurance Products Mandatory Provident Fund Credit Card Residential Mortgage Loans Personal Lending Products Personal Renminbi Businesses Securities Dealing Margin Trading Facilities Retail Debt Securities Dealing Gold Bullion Dealing Structured Products Mandatory Provident Fund (MPF) Services Real Estate Investment Trust (REIT) SME Lending
Retail Banking Services
Syllabus
Core
3

3.1 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 market Trade 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)
Corporate and Commercial Banking Services
3.2
3.3
4. 5.
Corporate Advisory Services Corporate Risk Management Services
D. Treasury and Banking Operations

1 2 Treasury General Banking Operations 1.1 1.2 2.1 2.2 2.3 Investment and Treasury Currency Market Operations in Retail Banking Operations in Corporate Banking Operations in Treasury
Part II - Professional Ethics (50%) E. Introduction to Ethics and Social Responsibilities

1 2 3 What is Ethics Absolutism & Relativism Deontological & Teleological approach Social & Environmental Responsibilities 1,1 1.2 2.1 2.2 3.1 3.2 3.3 4.1 4.2 4.3 4.4 Historical Background Approaches to normative ethics Advantages Disadvantages Implications Benefits Limitations Social & environmental issues facing modern business organizations Public perception & reputation risk Globalization Sustainability environmental, economic & social perspectives
01
Syllabus
Core
F. Ethics & the Corporation or Individuals

1 Ethics & the Corporation 1.1 1.2 1.3 1.4 1.5 1.6 1.7 2.1 2.2 2.3 2.4 2.5 Corporate social responsibility Corporate accountability Ansoff-Business Objectives Stakeholder Theory Mendelows Stakeholder Theory Consensus Theory Corporate Citizenship What is a profession How if differs from other types of business activity Code of practice Code of Conduct Code of Banking Practice
Ethics & the Individual
G. Ethical Dilemmas & Corporate Governance

1 Ethical Dilemmas & Conflict of Interest 1.1 1.2 1.3 1.4 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 Ethical dilemmas & their implications Conflict of Interest How to resolve dilemmas & conflicts in practice Putting Ethical decisions into Practice Definition and History Stakeholders in corporate governance Ethical issues in corporate governance Composition of Board of Directors Assessment of Performance Remuneration Appointment and Removal of Directors Shareholders Right Annual general Meeting Reporting on Corporate Governance
Corporate Governance
H. Business Ethics & Internal Control

1 Business Ethics 1.1 1.2 1.3 1.4 1.5 1.6 1.7 2.1 2.2 2.3 2.4 2.5 3 Internal Control and Audit 3.1 3.2 3.3 3.4 Law on Financial Services Consumer Protection Customer and Employee Privacy Suitability Obligations Anti-money Laundering Insider Trading Health & Safety at work Principles-based approach to corporate governance Reasons for the development of codes of practice Role of codes of practice at operational level Code of Banking Practice Employee Code of Conduct Elements of Internal Control Systems Attributes of an Effective Control Environment Control Procedures Internal Audit and Risk Costs & Benefits of Internal Control
Code of Practice
Essential Readings
HKIB Textbook
11
Syllabus
Core
Financial Systems and Risk Management
Objective
This subject contributes to the achievement of the Program Learning Outcomes by providing 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).
Learning Outcomes
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.
Highlight
The subject is divided into 2 sections: Financial Systems and Markets, and Risk Management in Banking, 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.
Assessment Method

21
Syllabus
Core
Part I - Financial Systems and Markets (50%) A. Financial Systems

1 Global Financial System 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 2 Hong Kong Financial System 2.1 2.2 2.3 2.4 US Financial System UK & Euro Financial System China Financial System Recent financial crises Role of hedge funds Reforms to international financial architecture Importance, nature and composition of international liquidity Types of International Monetary Fund (IMF) facilities World Bank, Bank for International Settlements, Financial Stability Forum Role of Central Bank Hong Kong dollar inter-bank market Hong Kong dollar interest rate structure, inter-bank liquidity arrangement HKMA and monetary policy (linked exchange rate system and money supply mechanism) Hong Kong Mortgage Corporation and Deposit Insurance
B. Financial Markets
1 Hong Kong Financial Markets 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 Definition, classification, nature and importance of financial markets Financial instruments in money market Nature and functions of money and discount markets Roles of commercial banks in capital market Financial instruments in capital market Roles of capital market Derivatives market Development of debt market - Exchange Fund paper and corporate debt - Relationship between debt management and financial market International and regional financial markets: HK, Europe, US, China
1.9
C. Financial Institutions
1 Financial Institutions 1.1 1.2 1.3 1.4 Nature Roles Classification of financial institutions Distinctions between banks and non-bank financial institutions, such as funds managers and their relationship Monetary policy Banking supervision Reliability of payment system Lender of last resort Banker to government Issuer of currency
Functions of Central Bank:
2.1 2.2 2.3 2.4 2.5 2.6
31
Syllabus
Core
Part II - Risk Management in Banking (50%) A. Introduction & Process of Managing Risk
1 Introduction to Risk Management 1.1 1.2 1.3 1.4 2 Process of Managing Different Risks 2.1 2.2 2.3 2.4 2.5 Definition of risks Modern risk management Concepts of risk financing, risk control, hedging and insurance The need for risk management Identification of risk drivers Operational risk (include process risk, people risk and external risk) Financial risk for individuals Business and financial risk for corporate Agency risk
B. Requirement and Structuring of Risk Management

1 Regulatory and Corporate requirements 1.1 1.2 1.3 2.1 2.2 2.3 2.4 Inherent risks in banking activities Regulations of financial institutions Basel Committee on Banking Supervision - Basel I & II Defining a sound risk management system Key elements of prudent risk management framework Risk appetite and Use of risk capital Application for risk adjusted return on capital General risk management controls (HKMA Supervisory Policy) Case studies
Structuring Risk Management Functions in Banks
Management and controls-tools and skill
3.1
Essential Readings
HKIB Textbook
Reference Readings
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
41
Syllabus
Core
Fundamentals of Accounting and Law in Banking
Objective
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).
Learning Outcomes
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.
Highlight
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.
Assessment Method
51
Syllabus
Core
Part I - Law and Regulations in Banking (50%) A. Basic Law Principles

1 2 Law Practice in Hong Kong Law of Contract 1.1 2.1 2.2 2.3 2.4 3.1 Common Law The nature of a contract Formation, contents and vitiating elements Performance and discharge Termination and remedies in relation to banking Basic principles creation, formalities, trustees and beneficiaries
Trust Law
B. Negotiable Instruments
1 Cheques 1.1 1.2 1.3 1.4 1.5 1.6 1.7 2 Collection of Cheques 2.1 2.2 2.3 2.4 2.5 3.1 3.2 3.3 Characteristics of a cheque Relationship to bills of exchange Classification of cheques, indorsement Liability of parties, holder for value, holder in due course Crossings, statutory protection of paying/collecting bankers Discharge of liabilities Bills of Exchange Ordinance The Hong Kong clearing system Collecting bankers duties Bank as holder for value Claims by third parties against collecting bankers Defence for collecting banks Paying bankers duties Claims by third parties against paying bankers Statutory protection of paying banker
Payment of Cheques
C. Regulatory Framework in Banking and Financial Markets

1 Regulatory Framework 1.1 1.2 1.3 1.4 2 Major statutory and regulatory issues 2.1 2.2 Purposes and cause of regulation Role of the HKMA Relationship between regulations and governmental policy Regulatory environment of prudential controls on liquidity and capital adequacy. Banking Ordinance Securities and Futures Commission Ordinance (notably the licence or registration and administrations) Insurance Authority Supervisory regime - (Basel) International standards Codes of Conduct and Banking Practices Anti-Money Laundering Personal Data Privacy Customer credit data commercial and personal
2.3 2.4 2.5 3 Banking Compliance 3.1 3.2 3.3
61
Syllabus
Core
Part II - Accounting Principles in Banking (50%) A. Financial Reporting

1 Essentials in Financial Reporting 1.1 1.2 Framework for the preparation of financial statements Practical application of Hong Kong Financial Reporting Standards (HKFRS) issued by the Hong Kong Institute of Certified Public Accountants Practical application of Hong Kong Accounting Standards (HKAS) issued by the Hong Kong Institute of Certified Public Accountants International Accounting Standard (IAS) Balance sheets Income statements Statements of changes in equity Cash flow statements
1.3 1.4 2 Understanding of company (including group company) financial statements 2.1 2.2 2.3 2.4
B. Interpretation of Financial Results

1 Objectives of financial statement analysis 1.1 1.2 2 Fundamental analysis 2.1 2.2 2.3 3.1 3.2 3.3 Financial statement analysis and investment decision Relation between expected return and risk of investment Profitability Risk Effective interpretation of results of analysis of profitability and risk Return on assets as a measure of operating profitability Return on shareholders equity as a measure of profitability that incorporates a mix of financing ratios Usefulness and limitation of ratio analysis
Disaggregating accounting ratios
C. Valuation
1 Value of a firm 1.1 1.2 1.3 Present value of expected future cash flow Net Asset/Net Worth approach Fundamental analysis of financial statement based information - Net assets - Earnings Goodwill and fair values
1.4
D. Accounting for Planning & Budgeting

1 2 Planning decisions Budgeting and evaluating performance 1.1 1.2 2.1 2.2 Make or buy Allocation of scarce resources Basics of standard costing Variance analysis
71
Syllabus
Core
E. Capital Expenditure Analysis & Performance Measures

1 Capital expenditure analysis 1.1 1.2 2 Divisional performance measures and incentives 2.1 2.2 2.3 Capital budgeting: investment and financing decisions Discounted cash flow Return on investment Residual income Incentives and controls
Essential Readings
HKIB Textbook
Reference Readings
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 7th edition Mcgraw Hill ISBN: 9780071220712
81
Syllabus
Advanced Diploma in Banking and Financial Services

Business and People Management Corporate Finance Services Finance of International Trade Financial Planning and Management Management of Information System in Banking Regulations and Banking Essentials in Mainland China
P.19
P.21-23 P.24-26 P.27-31 P.32-35 P.36-39 P.40-42
19
Syllabus
Advanced Diploma in Banking and Financial Services

Program Learning Outcomes
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. 2. 3. 4. Diagnose customers problems, needs, constraints and make critical considerations in the real world before planning and designing for tactical solutions; Compare different financing alternatives in the capital markets; Identify and analyze the relevant risks, and suggest mitigation techniques; 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; Analyze customers data and incorporate appropriate trade promotion and supporting services in the design of international trade financing solutions; Identify the types of risks involved by evaluating different international trade financing alternatives, and formulate protection against those risks; Examine the roles, importance and effects of information systems, keep abreast of changes of information security to the financial services industry today; Evaluate the wide-ranging application of information technology systems in todays banking environment; Evaluate the aid of information technology for different supervisory or management functions within an organization; Be equipped with a solid ground of knowledge and skills before progressing to the next advanced 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. 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. 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. 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.
5. 6. 7. 8. 9. 10.
11. 12.
13.
20
Syllabus
Advanced
Business and People Management
Prerequisites
Completion of Diploma in Banking and Financial Services Program
Objective
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).
Learning Outcomes
On completion of this subject, participants should be able to: 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.
Highlight
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.
Assessment Method
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.
21
Syllabus
Advanced
A. Business Organization and Management

1 The management process 1.1 1.2 1.3 1.4 1.5 1.6 1.7 2 Managing and developing human resources 2.1 2.2 2.3 2.4 2.5 2.6 3.1 3.2 3.3 3.4 3.5 Working in contemporary organizations Organizational culture and diversity Internal environmental issues and culture External environmental issues and competitive forces The purpose of the business plan The elements of a typical business plan Ethical behaviour and social responsibility Foundations of human behaviour Motivation theory and practice Financial and non-financial methods of motivation Measuring the effectiveness of the workforce Training and appraising the workforce Workforce planning The communication process Improving communication Causes of conflict and conflict resolution Formal and informal communication The nature and benefits of different communication media, including information and communications technology (ICT) Understanding and overcoming the barriers to communication Understanding the causes and effects of change Understanding and dealing with resistance to change Implementing and evaluating the change process The strategic management process Strategic analysis Corporate-level and business-level strategy formulation Strategy implementation
Communication
3.6 4 Implementing and managing change 4.1 4.2 4.3 5 Strategic Management 5.1 5.2 5.3 5.4
B. Marketing
1 Marketing 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 Understanding the marketing concept The nature and benefits of marketing research The nature and benefits of market segmentation Understanding the nature and use of the marketing mix (4Ps and 7Ps) Understanding the nature and significance of the product life cycle - Conducting a product portfolio analysis Analysing the different marketing environments Assessing the competition and the key competitive forces Marketing planning and objective setting Developing and implementing appropriate marketing strategies
22
Syllabus
Advanced
C. Leadership
1 Leadership 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 The nature of leadership The characteristics of leaders Developing an appropriate leadership style and approach Understanding the different types of groups and teams Understanding the stages of group development Understanding the different roles of individuals within a team Recognising the nature and importance of team building Understanding the role of leadership in managing change
D. Team Management
1 Team Management 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 The nature and functions of management Essential managerial skills and competencies The decision-making process Fundamentals of planning Types of plans and planning tools Fundamentals of organizing Organization structures Fundamentals of control The control process and control tools and techniques
Essential Readings
Introduction to Management John R. Schermerhorn, Jr 10th Edition, John Wiley & Sons, Inc, 2010 ISBN: 9780470418871
Reference Readings
Business Studies Dave Hall, Rob Jones, Carlo Raffo and Alain Anderton (Edited by Ian Chambers and Dave Gray) 4th Edition, Pearson Education, 2008 (Reprinted 2010) ISBN: 9781405892315
23
Syllabus
Advanced
Corporate Finance Services
Prerequisites
Objective
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).
Learning Outcomes
plan and design an appropriate package of credit solutions and capital-raising strategies to meet 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.
Highlight
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.
Assessment Method

Examination: 50-60 Multiple Choice questions and TWO Essay questions out of THREE Passing mark for this subject is 60%. Time allowed: Three hours.
24
Syllabus
Advanced
A. Sources and Types of Finance for Corporations

1 Corporate Lending 1.1 Term loans; syndicated loans; and leveraged leasing; standby facilities, revolving credits and note issuance facilities. Choice of debt market (e.g. euro-dollar market, domestic market). Lending policy and procedure (e.g. credit analysis, loan review). Alternatives to bank finance including bonds, foreign bonds; euronotes; commercial paper, and Medium Term Note (MTN) facilities,. Bond issuing (e.g. bond price, bond covenants, call provision) Bond rating Convertible bonds Leasing Mortgage backed securities, CMOs and CDOs Developments in the Hong Kong bond market. Features of common stock; preferred stocks; ETFs; convertible securities and warrants, and ADRs. IPO and Costs & benefits of new issues Methods of listing; offer for subscription; offer for sale; open offer; and rights issues. The private equity markets Developments in Hong Kong and characteristics of the Hong Kong equity market: e.g. H shares and over subscription problems Project finance - limited recourse; impact on borrowers and project sponsors balance sheet; Advantages of borrowing on project terms.
1.2 1.3 2 Debt financing 2.1
2.2 2.3 2.4 2.5 2.6 2.7 3 Equity financing 3.1 3.2 3.3 3.4 3.5
Financing special transactions or projects
4.1 4.2
B. Sources and Types of Risks for Financial Management in Banks

1 Cross-Border Risks 1.1 1.2 2 Corporate Treasury Management 2.1 2.2 Use and parameters for country risk analysis Cross border lending risks, e.g. exchange control; regulatory and tax considerations, etc. Currency and interest rate risk and exposure management; Understanding of currency swaps; interest rate swaps; asset swaps; financial futures; forward contracts; options; negotiable instruments Credit derivatives and its limitations (documentation, counterparty issues, etc.) for the management of risk.
Credit Risk Management in Bank Lending
3.1
25
Syllabus
Advanced
Essential Readings
Corporate Finance Ross, Westerfield, and Jaffe and Jordan, 9th edition McGraw-Hill (RWFJ) ISBN: 9780071081825
Reference Readings
Financial Institutions Management: A Risk Management Approach Saunders and Cornett, 7th edition McGraw-Hill ISBN: 9780071289559
26
Syllabus
Advanced
Finance of International Trade
Prerequisites
Objective
This subject contributes to the achievement of the Program Learning Outcomes by providing 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.
Learning Outcomes
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.
Highlight
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.
Assessment Method

27
Syllabus
Advanced
A. Introduction to International Trade Finance

1 What is International Trade Finance? 1.1 1.2 1.3 1.4 1.5 Meaning and importance of international trade finance; Types of customers in Hong Kong and abroad; their needs and the opportunities for banks and other bodies that these present; Various roles of banks in facilitating international trade; growth of world trade and changes in its commodity and geographical composition; Importance of services in international trade; Basic understanding of logistic management and trade 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 International Trade 1.1 Collection; documentary credit; advanced payment; counter trade; barter/compensation trade; bilateral payment agreement/arrangement and forfeiting Payment settlement and clearing; cheques, drafts, mail and telegraphic payment orders (including express money transfers); SWIFT; nostro and vostro accounts and procedures (in general terms); general concept and procedures of Real Time Gross Settlement (RTGS) Electronic banking services including payment and credit cards, giro transfers and means of making regular payments Payment and collection services available from correspondent banks abroad Settlement in Foreign Currencies (Rates of exchange; factors affecting the movement of rates; protection against exchange risks; mechanics of forward contracts) Common shipping terms and meaning Purpose of the relevant Incoterms; risks and responsibilities of the parties involved, Incoterms 2000 (ICC Publication 560) Types and uses of bills of exchange; features and functions of basic, shipping, transport and insurance documents; Control and transfer of ownership of goods and insurance; Implications of Electronic Data Interchange (EDI) on international trade
International Payment, Settlement and Clearing Systems
2.1
2.2 2.3 2.4
Commercial and Shipping Terms Used in International Trade
3.1 3.2
Documents Used in International Trade
4.1 4.2 4.3
28
Syllabus
Advanced
C. Documentary Collections & Documentary Credits

1 Documentary Collections 1.1 Collection of cheques and bills of exchange, both clean and documentary. Terminology and procedures. Actions to be taken in the event of dishonour; protection of goods; avalisation of inward bills. A detailed knowledge of Uniform Rules for Collections ICC publication 522 and the relevant features of Bills of Exchange Ordinance Main types of documentary letters of credit and their documentary requirements and procedures namely, opening, advising, confirmation, negotiation, payment and reimbursement; Liabilities and responsibilities of the parties; Examination of documents and treatment of discrepancies. Uses of credits including acceptance/deferred payment credits, red clause letters of credit, revolving credits, standby credits, transferable and back-to-back credits. A detailed knowledge of Uniform Customs and Practice for Documentary Credits UCP600 and Uniform Rules for Bank-to-Bank Reimbursements under Documentary Credit, ICC publication 525, International Standby Practice ISP 98, ISBP and eUCP
1.2 1.3
Documentary Credits
2.1
2.2 2.3 2.4
2.5
29
Syllabus
Advanced
D. Trade Finance Services and Trade Related Risk

1 Import and Export Finance 1.1 Import financing, including produce/ merchandise advances against security of goods and trust receipt. Export financing, including purchasing, negotiating, accepting and discounting bills under documentary credits or documentary collections; packing loan; factoring; invoice discounting; advance under ECIC policies; bankers acceptance. Risks involved in granting trade finance facilities to importers and exporters. Difference between foreign L/C and local L/C. Trade promotion services from banks, official and semi-official bodies (e.g. Trade and Industry Department, Trade Development Council, Export Credit Insurance Corporation, Chambers of Commerce) to develop trade and investment Letters of introduction; sources of information/advice; using correspondent banks including status reports, economic conditions, entry to overseas markets. Types and procedures of bank guarantees and bonds in facilitating international trade; risks and responsibilities of issuers; ways to minimize risks; Uniform Rules for Demand Guarantees, etc Other government involvement in export credit arrangement; need for export credit; export promotion schemes and facilities in other countries such as UK ECGD and other EC countries, USA EXIM bank, China Import- Export Bank (general basic understanding). WTO and GATT and other agencies involved in international trade. Types of trade fraud Fake goods Forged documents Money laundering Prevention measures Types of risk: political and economic risk, credit risk, performance risk, documentary risk, foreign exchange risk, transfer risk, interest rate risk Fraud Risk Management, including protection against above risks Rules and regulations governing fraud and money laundering
1.2
1.3
Trade Promotion and Supporting Services
2.1
2.2
2.3
2.4
2.5 3 Trade Fraud 3.1 3.2 3.3 3.4 3.5 4.1
Risk and Risk Management in International Trade
4.2 4.3 4.4
30
Syllabus
Advanced
Essential Readings
International Trade Finance: A Practical Guide 2nd edition, Luk Kwai Wing, City University of Hong Kong ISBN: 9789629371852
Reference Readings
Finance of International Trade 8th edition, 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 of Commerce) 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)
31
Syllabus
Advanced
Financial Planning and Management
Prerequisites
Objective
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).
Learning Outcomes
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 to determine the most appropriate investment mix Demonstrate competent communication skills in financial counseling for assessing the needs of clients and presenting solutions to them
Highlight
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.
Assessment Method

Examination: 50-60 Multiple Choice questions and ONE Case Study question Passing mark for this subject is 60%. Time allowed: Three hours.
32
Syllabus
Advanced
A. Recent Trends and Development of the Financial Planning Industry

1 International trends and development 1.1 1.2 1.3 1.4 1.5 1.6 2.1 2.2 Increased customer orientation Widespread adaptation of information technology Deregulation of the financial services industry Consolidation of financial institutions Increased attention to personal financial services Internet banking and roles of internet in banking institutions Development of financial planning industry in Hong Kong Development of financial planning industry in China
Financial planning industry in Hong Kong and China
B. Financial Planning Process

1 Framework of Financial Plans 1.1 1.2 1.3 1.4 1.5 2 Essentials of Financial Planning 2.1 The need for financial planning Single-purpose verse comprehensive financial planning Process of financial planning The professionals who provide financial services The skills and traits of a successful financial planner 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 plan Communication principles and relationship building in financial planning Generic financial needs in life cycle Client needs analysis Quantifying and prioritizing clients needs Develop and implement financial plan Fact-finding and its importance for financial planning Methods of fact-finding and their strengths and weaknesses Types of information needed for financial planning Personal and family Financial situation Planning objectives and assumptions Main areas of financial planning Cash flow management Investment planning Tax planning Risk and insurance planning Retirement planning Estate planning Financial planning fact finder checklists
2.2 2.3 2.4 2.5 2.6 3 Identifying and Gathering Financial Planning Information 3.1 3.2 3.3
3.4
3.5
33
Syllabus
Advanced

4.1 4.2 4.3 4.4 4.5 4.6 4.7 Types of needs: perceived, real, present, future Stages of life cycle Generic financial needs in life cycle Individual-specific needs for different clients Factors affecting clients needs Financial needs of unmarried/divorced persons, late married, and single parents Quantifying and prioritizing clients needs Duty of an adviser Ensuring recommendations are suitable for clients (integrity) Relation with other advisers or professionals Contents of a financial plan Potential risks of a financial plan Clients future needs and review
Assessing Clients Needs
Designing Financial Plan according to Clients Financial Needs
5.1 5.2 5.3 5.4 5.5 5.6
C. Financial Planning Elements

1 Investment Products and Services 1.1 1.2 1.3 1.4 1.5 1.6 1.7 2.1 2.2 2.3 2.4 2.5 3 Tax Planning and Anti-avoidance 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 4.1 4.2 4.3 4.4 5.1 5.2 5.3 5.4 5.5 Direct investment services Structured products Investment fund services Mandatory Provident Fund Services Real Estate Investment (REIT) Mortgage Backed Security (MBS) Exchange fund bills and notes Investment-linked long term insurance Investment risk and return Characteristic and types of investment-linked policies Benefits and risks of investing in investment-linked policies Regulatory framework of investment-linked long-term insurance in Hong Kong Tax planning and tax evasion Techniques for profits tax planning Elements of international tax planning Introduction to PRC tax Tax planning for business done in the Mainland Fiscal nullity general anti-avoidance provisions Advance rulings Role of financial planners in the tax planning process The need for retirement planning Retirement plans Mandatory Provident Fund (MPF) Types of MPF schemes Need for and objectives of estate planning Common tools in estate planning Estate planning process Documents in estate planning Role of financial planners in the estate planning process
Investment-linked Long Term Insurance
Retirement Planning and Mandatory Provident Fund (MPF)
Estate Planning
34
Syllabus
Advanced
D. Essentials in Financial Planning

1 Risks and Risk Management Concepts 1.1 1.2 1.3 1.4 1.5 1.6 2.1 2.2 2.3 2.4 2.5 2.6 2.7 Credit risk Market risk Interest rate risk Liquidity risk Operational risk Reputation risk Elements of communication process Steps in developing effective communication Characteristics of the effective counselor Basic communication principles Non-verbal communications Skills of active listening and physical attending Effective use of questions and silence
Communication Skills in Financial Counseling
35
Syllabus
Advanced
Management of Information System in Banking
Prerequisites
Objective
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 for specialist subjects of the next stage such as Operational Risk & Quality Management (Program Outcome 10) .
Learning Outcomes

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
Highlight
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.
Assessment Method

36
Syllabus
Advanced
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 upon the organization and the people who work in it. You should be able to quote examples of IS applications in the financial services industry to support any assertions made Business - The effect of information systems on the type of business carried out and the response of the 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 and decision-making. - Management of change as a result of implementing new systems. - Achieving the business benefits from information 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 (Telephone Banking System), CRM (Customer Relationship Management) System etc.
Information Systems in various functional areas
2.1
2.2
2.3
2.4
2.5
37
Syllabus
Advanced
B. Information Security
1 Importance of Information Security 1.1 The reasons for securing data and the general principles which apply when assessing risks and determining what security measures need to be taken IT Security Policy Confidentiality - The classification of data, types of exposure, associated risks and methods of reducing or eliminating the risk. Availability - Maintaining computer system availability, assessment of the level of contingency and recovery required. Disaster recovery - Business Continuity Planning and Business Impact Analysis Integrity - Protecting system and data integrity from: Internal threats: software and hardware failures, data corruption during input, processing or transmission. - External threats: outsourcing, accidental or deliberate misuse, hacking
1.2 2 Elements of Information Security 2.1
2.2
2.3
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. telephone banking, internet banking, debit/credit card, options bank book, home banking (e.g. HSBCOne) and smart card (e.g. Octopus, Visa cash), etc. The role of data management in business information systems and its contribution to organizational performance Ways to develop an effective conceptual data models based on a set of business requirements Importance of the development of user-friendly database application program The major operations and information flow of the Retail Banking, Corporate & Commercial Banking and Treasury The roles of information systems for the different operations Application of information systems concepts to support and manage various functions Datamining Database marketing
Data Resource Management
2.1 2.2 2.3
IT Service Management
3.1 3.2 3.3 3.4 3.5
38
Syllabus
Advanced
System Development Lifecycle & Quality
4.1
4.2
4.3 4.4 5 Change Management 5.1
Development and maintenance of systems, with emphasis on those steps where users are most heavily involved, including post-implementation reviews Business re-engineering: use of process mapping in the understanding and analysis of improving delivery of products and services, use of IS to re-engineer rather than just automate manual processes. User involvement: use of techniques such as joint application design and prototyping. Quality: measurement of quality in systems design and implementation The definition of a project and its management, including an understanding of tools used to control projects, such as Gantt charts and network analysis Concepts underlying the transformation of business processes with an emphasis on reengineering the supply chain, explains the enabling role of information technology (IT), and demonstrates the application of different tools to the redesign of business processes
5.2
Essential Readings
Introduction to Information Systems OBrien, J. & Marakas, G.M. 15th edition Irwin/McGraw-Hill ISBN:9780070167087
Reference Readings
Business Information Management Improving performance using information systems 2nd edition Chaffey D. and Wood S, Prentice Hall ISBN: 9780273711797
39
Syllabus
Advanced
Regulations and Banking Essentials in Mainland China
Prerequisites
Objective
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).
Learning Outcomes
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.
Highlight
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.
Assessment Method

40
Syllabus
Advanced
A. Regulatory Framework of Banking in Mainland China

1 Banking regulation and anti-money laundering law The main business banking law 1.1 1.2 1.3 2.1 2.2 2.3 3.1 3.2 3.3 4.1 4.2 4.3 4.4 4.5 5. The China Foreign Exchange System 5.1 5.2 5.3 Banking supervision and control measures Violations of sanctions under the Banking Anti-Money Laundering Banking law Deposit-taking regulations Credit business laws and regulations Prohibition of banking business The main civil code Civil litigation Contract law system Corporate Law System Bankruptcy Law Notes Legal System Security Law - Vigorous Development of the Security Sector Banking of crime and criminal Supervision of Foreign Exchange Accounts and the Foreign Exchange Market Current Account Transactions and Capital Account Transactions Registration System for External Debt
The basic provisions of civil law
The basic provisions of Commercial Law
B. Banking and Financial System in Mainland China

1 Overview of China's banking sector 1.1 1.2 1.3 2 Banking Financial Institutions 2.1 2.2 2.3 2.4 2.5 Central banks, regulatory agencies and self-regulatory organization China Banking Regulatory Commission (CBRC) China Banking Association (CBA) Policy Bank Large commercial banks Small and Medium Commercial Banks Rural financial institutions Foreign Funded Financial Institutions
41
Syllabus
Advanced
C. Banking Structure and Business Environment in Mainland China

1 Financial Environment 1.1 1.2 1.3 2.1 Financial markets Financial Instruments Monetary Policy Deposit-taking business personal, public foreign currency Loans Personal Loans Corporate Lending Other 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
Banking major business
2.2 2.3
D. Business Prospect and Constraint in Mainland China

1 Economic Environment 1.1 1.2 1.3 2.1 2.2 2.3 2.4 Macroeconomic Economic Structure Economic Globalization Strength Weakness Opportunities Threats
SWOT Analysis on Banking Business in Mainland China
42
Syllabus
Specialist Diploma
Specialist Diploma in Credit Management
Bank Lending Credit Risk Management
P.43
P.46-48 P.49-51
Specialist Diploma in Treasury Management

Bank Asset and Liability Management Treasury Markets and Operations P.52-54 P.55-57
Specialist Diploma in Operations Management

Banking Law and Practice Operational Risk and Quality Management P.58-61 P.62-64
Specialist Diploma in Wealth Management

Business Strategy in Wealth Management Global Assets Portfolio Management P.65-66 P.67-69
43
Syllabus
Specialist Diploma Program Learning Outcomes

The Specialist Diploma program is the capstone stage of studies under the AHKIB program. It has 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 offer appropriate solutions for a specialized banking area that requires sophisticated knowledge and professional skills. Upon completion of this specialist program, participants are expected to demonstrate the level of knowledge and skills that could be induced from the set of sub-learning outcomes below: 1. 2. 3. Critically evaluate new information, concepts and evidence independently, consolidate knowledge and extend critical thinking and application for a specialized banking area of practice; Utilize data, tools and resources effectively. Demonstrate competency and numeric skills that help conduct research, analyze, interpret historical data and infer future trend, before drawing justified conclusions; 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 the knowledge and techniques unique for such change for the whole bank or for a specialized sector of banking practice; Synthesize both qualitative and quantitative methodologies when interpreting stochastic models commonly applied by market practitioners, in order to form a holistic analytical view and to strengthen decision-making skills; Compare and select the right research framework when evaluating internal management of the whole bank and their external environment; Manage complex tasks that involve planning, design and management functions in a broad range of professional work activities such as deploying accounting and legal skills for a specific banking area of practice.
4. 5. 6.
44
Syllabus
Specialist Diploma Specialist Diploma in Credit Management

Bank Lending Credit Risk Management
Subjects under this stream of specialist studies are designed to consolidate and build on previous diploma level studies of some topic areas that participants need to assimilate successfully in order to progress through the programme. They encourage participants to draw together, think across and understand the links among a broad range of knowledge areas critical to both the front office and the middle office of credit management.
Specialist Diploma in Treasury Management

Bank Asset and Liability Management Treasury Markets and Operations
Serving the same purpose as the other specialist studies, subjects under Treasury Management mark a high level achievement for participants who demonstrate a strong personal commitment to professional development. The learning experiences would allow participants to make use of their quantitative and technical knowledge learnt previously to discuss and analyze internal treasury functions from the perspectives of bank management.
Specialist Diploma in Operations Management

Banking Law and Practice Operational Risk and Quality Management
Through combining professional knowledge with practical experience, the specialist stream of Operations Management enables participants to develop critical, contextualised understandings of the issues, challenges and opportunities offered to bank operations and management worldwide, thereby enhancing participants competency as a specialist in this area.
Specialist Diploma in Wealth Management

Business Strategy in Wealth Management Global Asset and Portfolio Management
Subjects under this stream of specialist studies are designed for financial planning practitioners who would like to prepare their career advancement in Private Banking to serve high net worth customer. On the other hand, for those participants who has working in wealth management or private banking and would like to equip with structured knowledge in wealth management areas.
45
Syllabus
Specialist
Bank Lending
Prerequisites
Completion of Advanced Diploma in Banking and Financial Services Program
Suggested Advanced Subjects
Corporate Finance Services and Finance of International Trade
Objective
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 business customers 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).
Learning Outcomes

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.
Highlight
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.
Assessment Method
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. The Hong Kong Institute of Bankers 46
Syllabus
Specialist
Bank Lending
A. Personal & Corporate Lending

1 Advance to Personal Customers 1.1 Advances to personal customers: home mortgages (including Home Ownership Scheme, village houses etc); bridging loans; probate advances; investment loan and advances relating to consumer expenses; personal loans/overdrafts; tax loans; credit card, etc. Hong Kong Mortgage Corporation Limited Mortgage Insurance Programme Consumer Credit Data Interpretation and critical analysis (including key ratios) for lending purposes of accounting statements including: - Balance sheets - Profit and loss accounts - Cash flow statements - Budgets and cash flow forecasts Assessing the reliability of accounting information by its source Interpretation of budgets and cash flow forecasts and critically testing their underlying assumptions Ratio 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 to the candidates understanding of the expected patterns of cash flow - Capital structure understanding the relationship between shareholders; capital and debt Understanding of the limitation of financial statements and candidates should have a good understanding of creative accounting as well. Analysis of the operating risks of the borrower including qualitative aspects such as: - The owner(s): background, experience, other interests, related company(ies); - Management: roles, background, capability, depth and control; business strategies and policies; IT and human resources; business succession plan - Business and Industry: competition, SWOT analysis, relevant domestic, international, economic, political and social factors.
1.2 1.3 2 Interpretation and Analysis of Financial Statements 2.1
2.2 2.3 2.4
2.5
2.6
B. Corporate Credit
1 Credit Assessment 1.1 A reasoned assessment of a lending proposition related to both locally and China to produce a recommendation or decision. Credit Scoring concepts/models/systems Commercial Credit Data
1.2 1.3
47
Syllabus
Specialist
Bank Lending
2.1 An appreciation of what security (if any) would be appropriate and setting the terms and conditions for a loan facility: pricing, repayment provisions, collateral security and other conditions or covenants. SME Funding Schemes by the Hong Kong Government Collateral risk and valuation An understanding of the requirements of different types 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 Enterprises Provide appropriate type of credits and in suitable size depending on the field of business, mode of operation and the available security. Appropriateness of banking facilities re their amount, purpose, tenor and structure 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. Identify symptoms of overtrading and misappropriation of credit limits. - Identifying early warning signs, remedial action and implications of winding up a business - Risk Management Managing market risks and credit risks
Terms for a Loan Facility
2.2 2.3 3 Understanding Business Needs 3.1
3.2 3.3 4 Credit Administration and Dealing with Problem Loans 4.1
Essential Readings
Bank Lending study pack (Wiley), 2012
Reference Readings
Standard and Poors Fundamentals of Corporate Credit Analysis Blaise Ganguin and John Bilardello, McGraw-Hill, Dec 2004 ISBN: 9780071441636 Corporate Lending Lyons, Peter Institute of Financial Services, c2004 ISBN: 9781845160661
48
Syllabus
Specialist
Credit Risk Management
Prerequisites
Objective
This subject contributes to the achievement of the knowledge and skills embedded in the 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 of the 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).
Learning Outcomes

evaluate critically the organization of credit risk management; undertake critical evaluation and communicate the current global capital requirements on credit 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.
Highlight
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
Assessment Method
Examination: FIVE essay questions out of SEVEN Passing mark for this subject is 50%. Time allowed: Three hours.
49
Syllabus
Specialist
A. Organization of Credit Risk Management in Banks

1 Credit Risk Management in Banks 1.1 1.2 1.3 Principles of Risk Management and Internal Controls Capital Adequacy Framework Credit 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 2 Standardized Approach Internal-ratings-based (IRB) Approach 1.1 2.1 2.2 2.3 2.4 2.5 Risk weights on different asset types PD, LGD and EAD requirements ratings design and risk factors Validation of IRB models Use tests of an IRB System Measurement on power of risk differentiation Validation on accuracy of PD calibration
C. Credit Risk and Portfolio Models

1 Credit Risk Models 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 Regression models on default Binomial probability model of default Beta distribution for LGD and EAD PD inference from corporate bond yields PD inference from equity prices Rating migration and credit VaR Expected loss versus unexpected loss EAD for counterparty risk Simulation Analysis Correlation of defaults Rating migration and credit portfolio risk Portfolio theory and credit risk diversification Actuarial models on default risk Single-factor model on default correlation Stress credit loss and capital charge equations Stress testing credit risk portfolios
Credit Portfolio Models
D. Credit Derivatives and Structured Credit Products

1 Types of Products 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 Credit default swaps Total return swaps Credit spreads forwards and options Credit-linked notes First-to-default baskets and nth-to default baskets Pricing of credit derivatives Collateral Debt Obligations Capital charge requirements on securitized credit products Limitations on CDS/CDOs as risk management tools
50
Syllabus
Specialist
Essential Readings
Credit Risk Management study pack (Wiley), 2012
Reference Readings
Active Credit Portfolio Management in Practice Jeffery R. Bohn & Roger M. Stein (Wiley) 2009 ISBN: 9780470080184 The Basel II Risk Parameters 2nd edition Engelmann, Bernd and Robert Rauhmeier (Springer) ISBN: 9783642161131 Measuring and Managing Credit Risk Servigny, Arnaud de and Olivier Renault (McGraw-Hill) ISBN: 9780071417556
51
Syllabus
Specialist
Bank Asset and Liability Management
Prerequisites
Objective
This subject contributes to the achievement of the knowledge and skills embedded in the 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 thorough application of their accounting and professional knowledge (Program Outcome 6), participants are expected to demonstrate the ability to consider external factors and risks when strategizing over a range of internal problem areas (Program Outcome 5).
Learning Outcomes

undertake critical evaluation of how real-life factors affect banks profitability; compare and select different approaches of bank asset and liability management, and from ALCOs perspectives, evaluate the appropriateness of particular strategies to resolve related issues; demonstrate leadership attributes to give strategic considerations on how market risks and liquidity risks overlap to exert pressure on banks planning for capital; formulate research to investigate how interest rate risks threaten banks financial stability, and what technical strategies help achieve effective immunization against such risks.
Highlight
Banks take risks to generate returns and accumulate net worth, on condition that risks are properly managed. However, instrument risks mingle and interact with external market factors to post multi-dimensional threats to banks balance sheet as a whole. Bank asset-liability management is a cornerstone of financial market risk management and it involves using sophisticated instruments and strategies in the management process. The subject will have a remit to oversee the aspects of Asset-Liability Management Committee, which would bring insights on the techniques and solutions for overseeing liquidity, interest rate and market risks.
Assessment Method

52
Syllabus
Specialist
A. Asset and Liability Management

1 Managing Bank Profitability 1.1 Current banking structure and regulation; Understanding of banks financial statements, income and profit, off balance sheet items, non financial information Evaluation of banks profit Measuring Bank Profitability - Interest and non-interest revenues - Cost of funds, , return on equity, return on assets and net interest margin - Different approaches in balance sheet management The importance and functions of asset and liability management, liquidity and funding risk, ALM committee Managing Bank Assets - The loan portfolio - The securities portfolio - Liquidity management-assets Managing Bank Liabilities - Sources of funds - Structured deposits - Impact of interest rate changes on net interest spread - Liquidity management-liabilities
1.2 1.3
Managing Bank Assets and Liabilities
2.1 2.2
2.3
B. Managing Liquidity Risk and Interest Rate Risk

1 Capital and Liquidity Management 1.1 Definition and functions of capital; capital adequacy, measurement of capital adequacy, capital planning, choosing hybrid instrument for supplemental capital; new stock issue and capital management. Determining the Banks funding need, meeting liquidity requirements, formulating liquidity management policies under normal and abnormal circumstances; operational cashflow projections Stress Testing Types of interest rate risk Gap analysis Duration analysis Basis Point Value (BPV) Hedging interest rate risk Net Interest Income sensitivity analysis
1.2
1.3 2 Managing Interest Rate Risk 2.1 2.2 2.3 2.4 2.5 2.6
53
Syllabus
Specialist
Essential Readings
Bank Management 7 edition, MacDonald, S. Scott Cengage Learning ISBN: 9780324655780
Reference Readings
Financial Institutions Management: A Risk Management Approach Saunders and Cornett, 7th edition McGraw-Hill (SC) ISBN: 9780071289559 Bank Asset and Liability Management Strategy, Trading, Analysis Moorad Choudhry, Wiley 2007 ISBN: 9780470821350
54
Syllabus
Specialist
Treasury Markets and Operations
Prerequisites
Objective
This subject contributes to the achievement of the knowledge and skills embedded in the Program Learning Outcomes by providing participants an essential blend of professional and practical learning opportunity on the technical treasury operations. Participants would consolidate the previous knowledge (Program Outcome 1) and extend critical applications of accounting and financial knowledge in the sophisticated areas of treasury functions (Program Outcome 6). Through participations and discussions, participants would manifest tactic skills and exercise careful considerations on how and when to use what tools available for which markets (Program Outcome 5).
Learning Outcomes

undertake critical review over the roles and functions of treasury operations in banks, and how the operations are checked and balanced with internal controls; manage a wide range of functions over different treasury activities by market segments to ensure achievement of banks objectives; anticipate the types and level of risks, and decide the deployment of resources and tools from different sources to undertake effective risk measures and control against those risks; formulate research to evaluate market practices and procedures.
Highlight
Banks nowadays are engaged in complex activities outside traditional lending and deposit-taking. They are the cornerstone of the global economy, and treasury operations are the heart of this core. The subject is a primer on the specialist area of treasury operations for beginners but would manage give insights to practitioners by reflection on practice and experience. It places focus on the aspects of treasury operations from the following perspectives: types of internal controls, its general operations in the money markets, foreign exchange and capital markets, derivatives market, and a critical review of the modal code and market practices.
Assessment Method
Examination: Part I Practical Operation: TWO essay questions out of THREE (60%); Part II Calculations and Knowledge: TWO essay question out of THREE (40%) Passing mark for this subject is 50%. Time allowed: Three hours.
55
Syllabus
Specialist
A. Treasury Management
1 Treasury Management of Financial Institutions 1.1 Balance sheet management (asset/liability management), liquidity risk management, management of settlement/pre-settlement credit risk, interest rate risk and foreign exchange exposure. Internal control as a protection against overexposures, errors and frauds: Position limits and VaR limits for dealers, monitoring and control of the dealing operation, managing conflicts of interest, audit and compliance issues, code of ethics and ethical conduct, Code of Practice.
1.2
B. Foreign Exchange, Money Market & Derivatives

1 Foreign Exchange Market 1.1 1.2 Spot market: spot rate, value date, direct and indirect quotations, reciprocal rate. One-way and two-way quotations, and cross rate. Forward market: forward rate, swap and swap rates, interest rate differentials and exchange rate differentials, timing options and historical rate rollovers. Hedging foreign exchange exposures and hedging techniques. Trend Forecasting: fundamental and technical analysis. Interest parity, interest rate and inflation, international investment and capital flows, balance of trade and payments, exchange rate determination. The Hong Kong dollar market: structure, instruments and players, loans and deposits, certificates of deposits. International market: - Bonds, floating rate note, medium term note, government securities, role of credit rating agencies, credit rating. Credit - Managing credit spread risk and default risk. Bond market and the yield curve interpretation - Managing interest rate risk Interest rate swap and currency swap, forward rate agreement, warrant, options, non-delivered forward (NDF), financial futures, credit derivatives, other aspects: risk consideration, options pricing, modeling, dealing convention, accounting and evaluation, hedging techniques.
1.3 1.4 1.5
Money and Capital Markets
2.1
2.2
2.3 3 4 Bond Market Derivatives 3.1 4.1
56
Syllabus
Specialist
C. Treasury Operation
1 2 Treasury Operations Market Risk Measures 1.1 2.1 Operations in the front, middle and back office; principle of accounting and revaluation. Risk consideration and control: country risk, legal risk, credit risk, counter-party risk, market risk, operation risk and settlement risk. Mark to market, calculation of VaR (Value at Risk) and BPV (Basis Point Value), tools to manage financial risk, monitoring and compliance.
2.2
Essential Readings
Bank Asset and Liability Management Strategy, Trading , Analysis Moorad Choudhry Wiley 2007 ISBN: 9780470821350
Reference Readings
Managing Risk in Foreign Exchange, Money and Derivative Markets Heinz Rieh , McGraw Hill, 1999 ISBN: 9780070526730 Financial Modeling Simon Benninga MIT Press 2008 ISBN: 9780262026284
57
Syllabus
Specialist
Banking Law and Practice
Prerequisites
Suggested Advanced Subject
Objective
This subject contributes to the achievement of acquiring an advanced level of knowledge and skills embedded in the Program Learning Outcomes by helping participants develop a multi-perspective evaluation over bankers rights and duties not only in banker-customer relationship (Program Outcome 1), but also in internal areas of banking operations that support bankers external functions (Program Outcome 5). By discussing account conducts and the respective strategies of management, participants are expected to enhance their cognitive skills of evaluation over the internal and external problems. Such competence and attribute would be strengthened by a thorough application of legal knowledge to different levels of banking operations (Program Outcome 6).
Learning Outcomes

critically review and evaluate the implications of bankers roles behind certain specific banker-customer relationship; evaluate critically the law related to securities which commonly accepted by the banks; analyze the significance of different types of accounts and account conduct; and to strategize against the respective conduct.
Highlight
The subject is divided into 4 sections: the kick-off section of different types of Banker-Customer contractual relationship, would be first followed by the corresponding roles and functions of certain banking operations, before participants would be given an opportunity to further discuss the kinds of actions to be taken over some specific account conduct. It must be noted that these sections bear significance in understanding and knowledge by their inter-linkage in internal banking operations that back up bankers relationship externally with customers.
Assessment Method

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.
58
Syllabus
Specialist
A. Banker-Customer Relationship and Account Opening

1 Contractual Relationship under Code of Banking Practice 1.1 Special relationship involved in - Mandates - Powers of Attorney (including Enduring Power of Attorney) - Limitation of actions - Appropriation of payments - Set-off - Bankers lien Bankers Duty of Secrecy (including bankers opinions/trade enquiries) Code of Banking Practice Code of Practice on Consumer Credit Data and Personal Data Privacy Ordinance Statement of account or passbook Wrongful dishonour of cheques Exemption Clauses The opening and the conduct of accounts in credit and debit for various customers: - Personal customers - Joint customers - Minors - Executors, administrators and trustees - Proprietors and partnerships - Unincorporated clubs, societies and solicitors - Incorporated companies (including overseas companies, nominee holding companies) Anti-money laundering and terrorist financing
1.2 1.3 1.4 1.5 1.6 1.7 2 The Opening and the Conduct of Accounts 2.1
2.2
B. Banking Operations
1 Bills of Exchange and Other Banking Operations 1.1 1.2 Types of negotiable and quasi negotiable instruments Bills of Exchange - Definition of a bill of exchange - Parties, elements in a bill of exchange - Dating, acceptance, negotiation of a bill - Indorsement, holder for value, holder in due course, forged or unauthorized Signature - Delivery, duties of holder, discharge of a bill - Bills of Exchange relating to collecting bankers and paying bankers Promissory Notes - Definition of a promissory note - Differences between promissory notes and bills of exchange - Liabilities of parties Other Banking Operations - Credit cards - Direct debits (e.g. ATM, EPS, Standing orders) - Investment advice - Safe custody - Ancillary financial services (e.g. Hirepurchase, Factoring, Leasing) - Internet and phone banking
1.3
1.4
59
Syllabus
Specialist
C. Law related to Securities

1 Guarantee 1.1 1.2 1.3 1.4 2 Mortgage of Land 2.1 2.2 2.3 2.4 3.1 Guarantees and indemnities distinguished Types of guarantee and formal requirements Liability of guarantor, guarantors rights against the creditor and guarantors rights against the debtor Rights of co-guarantors among themselves and discharge of the guarantor Definition and creation of mortgage Legal and equitable mortgage Mortgagees powers and remedies Mortgagors rights Company Charges: Definition and creation of charge, fixed and floating charges, chargees powers and remedies, chargors rights. Pledge: Definition and creation of pledge, pledgees powers and remedies, ledgors rights. Hypothecation: Hypothecation and pledge. Company Shares: Mortgages of company shares, powers and remedies of mortgagees. Insurance Policies: Creation of security interest in different types of insurance policies
Other Security Interests
3.2 3.3 3.4 3.5
D. Insolvency
1 Bankruptcy 1.1 1.2 1.3 1.4 Main functions of bankruptcy proceedings. Who may be made bankrupt. Who may present a bankruptcy petition. Grounds for commencement of a bankruptcy proceeding. The statutory demand. New concepts in bankruptcy: transactions at an undervalue, unfair preferences, extortionate credit transactions. Bankruptcy proceedings. Consequences of bankruptcy. Proof of debts. Setting off before proof. Property available for payment of debts. Trustees in bankruptcy. Discharge from bankruptcy. Voluntary arrangements. Modes of winding up. Winding up by the court: jurisdiction, cases in which a company may be wound up by court, petition for winding up and effects thereof; commencement of winding up, consequences of a winding-up order, official receiver in winding up, liquidators, committee of inspection, general powers of court in case of winding up by court. Winding up by court by way of summary procedure. Winding up with a regulating order. Winding up of unregistered companies. Assets of the company available for distribution: contributories, collection of the companys assets, onerous property.
1.5 1.6 1.7 1.8 2 Winding-up 2.1
2.2 2.3 2.4 2.5
60
Syllabus
Specialist
2.6
2.7
Voluntary winding up: resolutions for and commencement of voluntary winding up, consequences of voluntary winding up, declaration of solvency, members voluntary winding up, creditors voluntary winding up, powers and duties of the liquidator in a voluntary winding up, special procedure for voluntary winding up. Proof and ranking of claims, effects of winding upon antecedent and other transactions, dissolution of a company, offences before and in the course of winding up.
Essential Readings
Hong Kong Banking Law and Practice Chan Bo-ching Simon Vol. 1 & 2 (HKIB)
Reference Readings
Law and Practice of Banking Services in Hong Kong Ko Sai Hong City University of Hong Kong Press 2000 ISBN: 9789629370367
61
Syllabus
Specialist
Operational Risks & Quality Management
Prerequisites
Objective
This subject contributes to the achievement of the knowledge and skills embedded in the Program Learning Outcomes by integrating theory and real-life experience on a wide range of topics related to operational risk and quality management (Program Outcome 1). By utilizing tools and resources available, participants would have an opportunity to develop research skills to map the latest market standard with internal operation (Program Outcome 3). Such skills are crucial for shaping up the internal operations of an organization to meet external challenges (Program Outcome 5), and they would enhance participants competence to develop investigative strategies which are vital for both individual and organizational development (Program Outcome 6).
Learning Outcomes

evaluate critically the performance of a wide range of functional issues in the perspectives of management formulate framework related to risk management and quality control of internal operations; manage unfamiliar problems, operational problems, and exercise appropriate judgment to complex operational functions related to services, product and process management; propose justified solutions and recommendations on operational or quality enhancement based on analysis and synthesis of relevant information.
Highlight
The content areas of the subject are designed to include a relevant update of the most practical knowledge required for a specialist on operational risk and quality management. Through discussions and case studies, participants will be encouraged to consider the theories and principles behind an issue so as to raise participants analytical dimension. On the whole, sections of the subject bring together an extensive coverage on management issues with the perspectives to examine how banks work in practice
Assessment Method

Examination: Essay Questions Passing mark for this subject is 50%. Time allowed: Three hours.
62
Syllabus
Specialist
A. Operational Risk Management

1 2 Operational risk framework Operational risk measurement under Basel II 1.1 2.1 2.2 Differences between operational risk and other types of risk Sound practices for management and supervision of operational risk Basic Indicator Approach, Standardized Approach, Alternative Standardized Approach, Advanced Measurement Approach. Practical cases on management and supervision of operational risk Identification Assessment Measurement Mitigation and control Monitoring and reporting Oversight of risk management Responsibilities for managing risk Formal governance structure for risk management Risk officers responsibilities Cases study on implementation
3 4
Cases on operational risk Operational risk management activities
3.1 4.1 4.2 4.3 4.4 4.5 5.1 5.2 5.3 5.4 6.1
Governance structure for Risk Management
Organization for an operational risk management function
B. Quality Management
1 Introduction of quality, management systems and standards 1.1 1.2 1.3 1.4 1.5 1.6 2 Quality Management Strategy 2.1 2.2 2.3 2.4 3.1 3.2 3.3 3.4 4.1 4.2 4.3 4.4 4.5 5 Service quality and complaints handling 5.1 5.2 5.3 5.4 5.5 What is quality What is management systems Why we need to have quality Brief introduction of quality management systems standard Quality journey Total quality management Eight principles of quality management What is ISO 9000 Brief overview of ISO 9001:2008 requirements How to implement ISO 9001:2008 Certification process Brief introduction of six sigma Introduction of DMAIC Voice of customer Tools for six sigma improvement What is culture How to handle change Automation vs Rationalism vs Reengineering vs Paradigm shift People attribute on quality Staff Engagement What is service quality Service pledge Dashboard View on complaints Complaint handling process
Six Sigma and other quality tools
Quality management in organization and human resources
63
Syllabus
Specialist
Essential Readings
Operational Risk: Regulation, Analysis and Management Carol Alexander, Prentice Hall, 2003 ISBN: 9780273659662 Quality Management Summers, Prentice Hall, 2008 ISBN: 9780136087427
Reference Readings
Operational Risk Management: A Case Study Approach to Effective Planning and Response Abkowitz, Mark David. John Wiley & Sons 2008 ISBN: 9780470256985
64
Syllabus
Specialist
Business Strategy in Wealth Management
Prerequisites
Objective
With updated trends and developments on the global and China market, the specialist subject of Business Strategy in Wealth Management aims to help participants position themselves at the growing fronts of the market with an understanding of the opportunities and challenges in the global and China environment. With an augmented view and awareness in the above perspectives, this subject contributes to the achievement of skills embedded in the Program Learning Outcomes by enabling participants develop the strategies necessary for the current global financial market which nurtures the wealth management needs of clients (Program Outcome 1), and some unique types of financing and investment avenues in this specialized area in a specific market (Program Outcome 3). Such competence is critical to be ready for riding on the high-growth front on the mentioned sector of banking services (Program Outcome 7).
Learning Outcomes
Differentiate the local wealth management market from the global scene, in respect of the factors affecting the market environment and the needs of the different types of high net worth clients. Evaluate critically how wealth management service can fit into Islamic banking and finance areas and design corresponding strategies. Conduct research on factors of growth and challenges for the wealth management sector in China, given the updates on products, regulations and market trends.
Highlight
The subject is divided into 2 sections: the first section starts off on the global environment for wealth management that offers an integrate view on how micro product and business strategy into the macro-economic outlook and market. To enrich those participants without knowledge of China market development, the second section would benefit them with a balanced view of the opportunities and challenges involved in the China market.
Assessment Method

65
Syllabus
Specialist
Business Strategy in Wealth Management
A. Global Wealth Management Market

1 Global Financial Market 1.1 1.2 Outlook of the global economy and their impact on financial markets The role of monetary policy and exchange rate policy in managing interest rates, inflation and trade competitiveness Market dynamics and evolving trends Developments in the economic, technological and legal framework which shape the wealth management business Ethical issues Global financial market and products The needs of high net worth investors Diversification of risk management and portfolio performance measurement The vital importance of asset allocation The increasingly popular areas of financing infrastructure projects and private equity The history and current market position of popular Islamic financing products The rapid growth of the global funds management industry
1.3 2 Wealth Management Market Environment 2.1 2.2 2.3 3 Wealth Management Business 3.1 3.2 3.3 4 Business Strategy 4.1 4.2 4.3
B. Wealth Management Market in Mainland China

1 Market Environment 1.1 The various financial products available in China Overview on the exchanges, banking and insurance sectors The regulatory environment in which wealth management for high net-worth clients is conducted Risks involved in handling financial intermediary processes, trade liberalization (WTO regulation in regards to the financial sector) Repatriation of funds and investment processes in and out of China Ways to seize the market and the barriers to entry
1.2
2.
Market Challenges
2.1
2.2 2.3
Essential Readings
Global Private Banking and Wealth Management David Maude 2008, John Wiley ISBN: 9780470854211
Reference Readings
Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment David Swensen 2009, Free Press ISBN: 9781416544692
66
Syllabus
Specialist
Global Assets Portfolio Management
Prerequisites
Objective
Asset and portfolio management have been a particular investment management area that involves sophisticated skills backed by strong knowledge on portfolio construction and understanding of global market operations. This specific interesting area is brought into this subject in relation to the current practices in the field of wealth management. This subject aims to fulfill Program Learning Outcomes (1 and 3) with a focus on the current competitive landscape, such as by private bankers, for managing wealth for high net worth clients internationally. Updates on the necessary laws, rules and regulations applicable in the mentioned unique banking service areas, as well as the technical knowledge and soft management skills would benefit participants (Program Outcomes 6 and 8).
Learning Outcomes

Anticipate critical needs of high net worth clients in the global wealth management market; Evaluate critically the effectiveness of wealth management strategies by private bankers or wealth managers and decide on the most appropriate strategy; Integrate the wide range of specialized theories and practical aspects of knowledge related to asset and portfolio management on construction, management and evaluation.
Highlight
The subject is divided into 2 sections: the first section has an extensive coverage on most considerations of managing wealth for high net worth clientele in different countries and markets, ranging from law and regulations to aspects of client relationship management. The second section focuses on portfolio theory and management that covers most peripheral related concepts on investment vehicles, portfolio construction and evaluation.
Assessment Method

Part I THREE essay questions out of FOUR Part II THREE essay questions out of FOUR Passing mark for this subject is 50%. Time allowed: Three hours. Examination:
67
AHKIB Examinations Handbook Spring 2012 A. Global Wealth Management

1 Global Wealth Management 1.1 1.2 1.3
Syllabus
The current landscape of wealth management The trends and strategies of private banks in the competition for clients Major concepts and principles underlying international laws and regulations related to wealth planning Asset allocation from an integrated prospective, behavioral investing, risk appetite, lifestyle, life cycle, and estate planning. International wealth planning and financial planning and life cycle for high net worth individuals; trusts, foundations, and estate planning Tax laws, residence, and family office description and structure; Integrated asset allocation, risk tolerance, and behavioral investing. The major concepts of international laws and regulations concerning wealth planning, domestic and international estate and tax planning, and how to optimize a client's situation. Overview of integrated services for private clients and how to implement appropriate client segmentation. Customer behavior and client segmentation, private client behavior and total quality management Acquisition and retention of high net worth individuals, image creation, branding and communication strategies Pricing strategies and build up long term customer loyalty with private clients by adding value to private banking services.
Wealth Management for High Net Worth Customers
2.1 2.2
2.3
2.4
3.
Client Relationship Management
3.1 3.2 3.3
3.4
B. Global Asset Portfolio Management

1 Asset Portfolio Management 1.1 1.2 1.3 Understanding investment, capital structure of companies, bond, equity trading and money market instruments. Derivative instruments. Concept of leverage and drivers of option values. Market investment product studies: Fixed income securities and equity linked products. Case studies of market products. Construction, management and evaluation of portfolio outcomes. Key principles of modern portfolio theory and asset pricing models. Risk and return analysis on investment vehicles Equity traded funds, mutual funds, hedge funds and securitization. Case study (Lehman mini-bond).
1.4
Investment Vehicles Analysis
2.1
2.2
86
Syllabus
Essential Readings
Modern Portfolio Theory and Investment Analysis Elton, Gruber, Brown and Goetzmann 8th Edition, 2011 ISBN: 9780470505847 Strategy for the Wealthy Family: Seven Principles to Assure Riches to Riches Across Generations Mark Haynes Daniell 2008, John Wiley ISBN: 9780470823101
Reference Readings
Global Private Banking and Wealth Management David Maude 2008, John Wiley ISBN: 9780470854211
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AHKIB Examinations Handbook Spring 2012

Diploma in Banking and Financial Services

The Hong Kong Institute of Bankers

AHKIB Examinations Handbook Spring 2012

Diploma in Banking and Financial Services

The Hong Kong Institute of Bankers

AHKIB Examinations Handbook Spring 2012

Banking Services and Professional Ethics

The Hong Kong Institute of Bankers

AHKIB Examinations Handbook Spring 2012

Banking Services and Professional Ethics

Part I - Banking Services & Operations (50%) A. An Overview of Banking Services

B. Risk Management in Banking Services

Sound Risk Management System

C. Retail and Corporate Banking Services

Retail Banking Services

The Hong Kong Institute of Bankers

AHKIB Examinations Handbook Spring 2012

Banking Services and Professional Ethics

Corporate and Commercial Banking Services

Corporate Advisory Services Corporate Risk Management Services

D. Treasury and Banking Operations

Part II - Professional Ethics (50%) E. Introduction to Ethics and Social Responsibilities

The Hong Kong Institute of Bankers

AHKIB Examinations Handbook Spring 2012

Banking Services and Professional Ethics

F. Ethics & the Corporation or Individuals

Ethics & the Individual

G. Ethical Dilemmas & Corporate Governance

H. Business Ethics & Internal Control

The Hong Kong Institute of Bankers

AHKIB Examinations Handbook Spring 2012

Financial Systems and Risk Management

The Hong Kong Institute of Bankers

AHKIB Examinations Handbook Spring 2012

Financial Systems and Risk Management

Part I - Financial Systems and Markets (50%) A. Financial Systems

Functions of Central Bank:

2.1 2.2 2.3 2.4 2.5 2.6

The Hong Kong Institute of Bankers

AHKIB Examinations Handbook Spring 2012

Financial Systems and Risk Management

B. Requirement and Structuring of Risk Management

Structuring Risk Management Functions in Banks

Management and controls-tools and skill

The Hong Kong Institute of Bankers

AHKIB Examinations Handbook Spring 2012

Fundamentals of Accounting and Law in Banking

The Hong Kong Institute of Bankers

AHKIB Examinations Handbook Spring 2012

Fundamentals of Accounting and Law in Banking

Part I - Law and Regulations in Banking (50%) A. Basic Law Principles

C. Regulatory Framework in Banking and Financial Markets

2.3 2.4 2.5 3 Banking Compliance 3.1 3.2 3.3

The Hong Kong Institute of Bankers

AHKIB Examinations Handbook Spring 2012

Fundamentals of Accounting and Law in Banking

Part II - Accounting Principles in Banking (50%) A. Financial Reporting

B. Interpretation of Financial Results

Disaggregating accounting ratios

D. Accounting for Planning & Budgeting

The Hong Kong Institute of Bankers

AHKIB Examinations Handbook Spring 2012