August 2024

Welcome to our latest edition of the monthly newsletter, your trusted resource for cutting-edge insights and updates in banking. In this issue, you'll find expert perspectives, details on upcoming workshops, a special highlight on our Slovak language sessions, and an engaging quiz designed to challenge your industry expertise.

1. Insightful Reads from the Banking World

Dive into the latest trends and developments in Asset & Liability Management, banking regulations, risk management, and more. In this section, we bring you a curated selection of recent articles, blogs, and podcasts from the banking world.

• We published a nice blog on Navigating Financial Market Turbulence. The volatility experienced in early August, triggered by unexpected economic data, has had significant implications for bank ALM and balance sheet management. With central banks potentially adjusting interest rates sooner than anticipated, there’s a possibility of a return to a normal yield curve. This shift necessitates a reassessment of interest rate risk, adjustments to liquidity strategies, and a reevaluation of investment decisions. Proactive scenario analysis and stress testing are crucial to navigating these changes effectively. Read the full blog here ?? https://www.dhirubhai.net/posts/martin-macko-bearning_financial-markets-volatility-activity-7226485677167681

• We also published a nice blog on The Rising Cost of Government Debt and its Implications for Investors and Banks. As global interest rates rise, the increasing cost of government debt is reshaping the financial landscape. This trend is making investors more cautious, compelling them to reassess the risk-reward balance when purchasing state bonds. For banks, especially in Asset and Liability Management (ALM), this shift heightens the importance of addressing credit-spread risks (CSR) in their bond portfolio strategies. To delve deeper into this critical issue, check out the insightful infographic in the article "The Rising Cost of Government Debt" by Visual Capitalist . Read our full blog here ?? https://www.dhirubhai.net/posts/martin-macko-bearning_visualizing-the-rising-cost-of-government-activity-7231214307848396800-gh4g

• We also came across an insightful article from the Richmond Fed that delves into what happened with the failed U.S. banks last year. It provides a clear explanation of why these banks didn't utilize the discount window, an available standing facility by the Fed, and discusses the logical steps regulators might take in response. Anyone interested in a deeper understanding of these events and the Federal Reserve's potential regulatory strategies, check it out here ??: https://www.dhirubhai.net/feed/update/urn:li:share:7229218867120668673/

2. Workshops and E-Learning Updates

Explore Upcoming Bearning Sessions, Recaps of Recent Workshops, and E-Learning Offerings

• Great News from Bearning! Our Bearning learning portal now offers a wide range of FREE e-learning courses for bankers ??! Now is the perfect time to improve your expertise and become a true banker. Dive into topics like bank strategy, financial management, controlling, and profit calculation, quantitative planning, funds transfer pricing (FTP), asset and liability management (ALM), risk management, bank regulation, and much more. ?? Explore now and start free learning at ?? Bearning.

• Enhance Your Banking Expertise with Bearning's Inhouse Masterclass Programs: At Bearning, we offer exceptional inhouse masterclass programs tailored for bankers. One standout offering is our Simulated Bank (SimBa) Masterclass. Through this interactive program, participants gain a deep understanding of how a bank operates from financial point of view, learn to make business decisions that satisfy both shareholder and regulatory requirements, and develop the skills to balance risks and returns. This masterclass equips you with the tools to excel in today's complex banking environment. Bearning Excel Model SimBa (Simulated Bank) is included.

Join Live Public Courses This Autumn 2024 with Bearning: Don’t Miss Out!

• ??? Bank Management Live Online Course (October 15, 2024, 9:00 AM - 4:00 PM CET): You can master financial bank management, learn banking, financial markets, key ratios, strategic planning, and risk management during live using of our SimBa (simulated bank) Excel model with professional lecturer. Sign up and enjoy e-learning chapters, a certificate opportunity, and a 1-day live online session!

• ?? Digital Money Live Online Course (October 16, 2024, 9:00 AM - 4:00 PM CET): Learn more about digital finance through our Digital Money course, comparing fiat money, cryptocurrencies, stablecoins, CBDCs, and covering blockchain technology and related global regulations. This course is catered to bank and product managers.

3. Spotlight: Live Workshops in Slovak or Czech Language

Online Bearning kurzy na?ivo v slovenskom a ?eskom jazyku

Bearning kalendár ?? verejnych online kurzov na jeseň je pre vás u? pripraveny. Na?e workshopy pokryvajú ?iroké spektrum finan?nych tém vrátane riadenia aktív a pasív (ALM), finan?nych trhov, regulácie a riadenia rizík, privátneho bankovníctva a investovania. Okrem toho poskytujeme ?kolenia na témy fintech a digitalizácia, kyberkriminalita, AML a dodr?iavanie regulácie (compliance). V?etky kurzy sú dostupné ako verejné online kurzy alebo inhouse pre in?túcie. Obsah kurzov a prihlásenie nájdete tu ?? bearning.sk.

4. Banking Industry Quiz

Test Your Knowledge with Bearning Monthly Bearning Banking Quiz ?????

As we gear up for our first Autumn Course on EU MiFID regulation, taking place already on September 3rd, we invite you to test your knowledge with a quiz question from this area of financial regulation. See how well you know the latest updates in MiFID II.

? What new update is currently being prepared in the EU's MiFID regulation to align with U.S. standards on publishing fair prices for financial market instruments?

A) Market Data Aggregator (MDA)

B) Unified Trade Reporting System (UTRS)

C) Consolidated Tape Provider (CTP)

D) Financial Instrument Price Registry (FIPR)

???? We are pleased to publish the correct answer and explanation for the quiz question in our next newsletter issue.

5. Quiz Solution Corner

Review and Learn from Last Month's Quiz

? How do banks typically determine the maturity assigned to non-maturing deposits (NMDs), such as current accounts?

A) By using the contractual maturity date

B) By applying a fixed industry standard maturity period (typically O/N, i.e. 1 day)

C) By analyzing historical customer behavior and deposit stability

D) By matching the maturity with the bank's longest-term loan

CORRECT ANSWER: C) By analyzing historical customer behavior and deposit stability.

Explanation:

Non-maturing deposits (NMDs), such as current accounts, do not have a fixed contractual maturity date, which makes them unique in asset and liability management (ALM). To assign a maturity to these deposits, banks typically do not rely on fixed industry standards or match them with specific loan maturities. Instead, they analyze historical data on customer behavior, including patterns of deposit inflows and outflows, as well as the stability of these deposits over time.

This analysis allows banks to estimate the effective maturity of NMDs, which is critical for managing interest rate risk and liquidity risk. By understanding how long these deposits are likely to remain in the bank, ALM managers can more accurately forecast cash flows, manage the bank's balance sheet, and ensure that both liquidity and profitability targets are met.

Interested in Learning More about NMD modeling?

If you're curious about how NMD modeling is performed and would like to dive deeper into the methodology, feel free to contact me. We offer a comprehensive Excel-based ALM model that allows you to calculate the replicated maturities of NMDs, helping you to optimize your bank's risk management and decision-making processes. The description incl. short vide about the model is here ?? ALM_IRLQ (bearning.com)

?? Do you want more banking quizzes and tests with detailed explanations? Sign up for our Bearning e-learning platform, where you'll find over 1000 questions ?? with explanations and the opportunity to earn a certificate. Many parts of our e-learning courses are free, including a variety of texts ??, quizzes, and insightful explanations.

For more information, visit our websites: bearning.com and bearning.sk. Follow us on LinkedIn and stay updated with the latest in banking education and workshops. Contact us at: [email protected]