Recently, a study was conducted by the capital financial technology giant, C2FO, regarding European treasures. Herein, it was found that 75% of these treasurers are supposedly focussing on investing in trade finance technology, in the following year of 2017.
Colin Sharp, who holds the position of senior vice-president, EMEA at C2FO, is of the opinion that the shifts within the microeconomic environment, are resulting in the pressuring of corporates, in order to refocus their efforts to trade finance. He further goes ahead to say, “Treasurers are facing a lot of uncertainty, both from the United States of America and as result of the on goings around Brexit. This is putting immense pressure over the supply chain, and with the demand increasing and decreasing. Treasurers want the ability to use their assets to make returns and give some certainty.”
There have been more and more efforts, which are offering insight into, finding out how blockchain can supposedly be used, in order to benefit small as well as medium size ventures. Any said digital trade chain, supposedly wants to achieve a perfect balance, between identification of opportunities and connecting them with each other and their banking partners. This would be made even simpler, when banks would bring in their own client bases herein, thus eliminating rigorous on-boarding.
Anne Claire Gorge, who holds the position of the head of the product management department, trade services, and finance of Societe Generale, is of the opinion that, treasurers believe that more control over trade finances, can help them greatly in the other areas of business. She says, “Better use of trade finance helps theses treasurers, to have a greater overview of their working capital positions. Offering financial solutions to suppliers, for instance, in order to improve the terms of payments, helps greatly in guaranteeing cash flow.” She is of the firm thought that the deployment of latest technology will definitely end up simplifying the process. In her words, “Trade happens to be very heavy on letters of credit or invoicing solutions, making it complicated to finance receivables and payables. Doing all this, as a part of a digital solution, has great potential of making it easier”.
The experts believe that a little rocking, cannot cause any harm to the ship, in financial jargon, they are basically hinting at the climate of uncertainty. Especially when it comes to Banks, a little uncertainty does not seem to be a negative thing. This actually makes for a rather encouraging temperature for the requirement of trade finance tools, in order to offer stronger guarantees. The solution for the entire thing can finally come from block chain, is the combined belief of all the trade finance gurus. But for this concept to see the light of the day, there needs to be a rigorous industry wide effort, in the direction of implementation.
As many changes take place, in order to develop and strengthen the field of Trade Finance, the number of aspirants herein also multiplies. This is why professional training institutes like Imarticus Learning seem to be getting popular by the day.
Tag: investment banking institute
Industry Report: Investments and Developments Part – II
[Read Part 1]
This report analysis would be mainly dealing with all the key investments and developments in Indian banking sector.
Starting from the basic, central level, the RBL Bank Limited, a private sector bank in India, has reportedly raised about Rs. 330 crore as a result of their association with CDC Group Plc. This is a UK based financial development institution and will be helping the RBL bank, to strengthen their capital base, in order to meet their future needs.
The World Bank has reportedly signed an agreement with The State Bank of India, which is worth Rs. 4200 crore. This agreement basically deals with connecting all the solar rooftop projects in India, which are also known as GRPV, and will be receiving financing as a part of this agreement.
JP Morgan Chase, which is considered to be the largest bank in America, has been in talks of expanding their operations in India. They have gotten a head start on the same, with three new branches in, Delhi, Bangalore and Chennai which will be an addition to the current branch in Mumbai.
An investment management company, known as the Canada Pension Plan, has reportedly bought a large stake, which it bought away from a Japan based, banking corporation called Sumitro Mitsui. These said stakes were in Kotak Mahindra Bank Ltd.
India’s very first small finance bank, began its operations by launching about ten branches in the state of Punjab. The Capital Small Finance Bank as it is officially known aims at increasing the number of its branches to about twenty nine, in the current financial year of 2016-17.
Taking a step towards making India, as cashless economy, an e-wallet company, Freecharge, has partnered with Yes Bank and Mastercard. This partnership is in order to launch a new concept of Freecharge Go. This would be a virtual card, with the help of which consumers can pay for goods and services, at online shops as well as offline retailers.
This year, the economy of India would be majorly targeting at being self-sufficient and in the lieu of the same, te government of Andhra Pradesh has signed a Memorandum of Understanding (MoU) with Exim Bank of India, in order to promote exports within this state.
Moody’s, a Global Rating Agency, seems to have upgraded its outlook towards the Indian Banking System. This move is to stabilize its negative based on the assessments of about five drivers, which include improvement in operating environment, stable asset risk and capital scenario.
Rockefeller Foundation, a non-profit organization based out of America, has backed a private Equity Investor known as Lok Capital. This investor has a plan of investing up to USD 15 million in a couple of proposed small finance banks in India, over the period of next year.
The RBI, has reportedly given in principal approval, to about 11 applications, which were in favour of establishing payment banks. These banks may accept deposits, but they are to refrain from extending any loans.
With the chances of the economy and the cash inflow looking bright, the banking and investment industry shows great promise for aspirants.
The Most Bizarre Questions That Investment Banks Asked This Year
We are all aware about the road to a great career in Investment Banking isn’t complete without the biggest roadblock, which is the interviews. For any freshly minted candidate, there always is a string of common run of the mill questions revolving mainly around their weaknesses, the 5 year plans that they intend to work on and so on. But, what usually catches the candidate off guard, is the list of weird questions. While these questions may be weird and a tad bit scary, they are the absolute crucial determinants, of whether you get that coveted position, or not.
Here’s a list of freakishly weird questions, which some of the top-notch banks asked in the year of 2016:
1. “How would you value a cow using a discounted cash flow (DCF) analysis?”
The above question, as out of the blue as they come, was asked to a potential candidate in an interview round, in London Based Firm last year. While any DCF question, is extremely inevitable in corporate finance interviews, there are those Bovine DCF questions, which are not.
2. “How many pairs of shoes do you expect to wear over your lifetime?”
An interview is absolutely incomplete, without any brain teaser questions, which ensure that your analytical skills undergo a rigorous jog. This was most expectantly one of them. While the internet service engine, Google, might deem such questions as a tad bit irrelevant, all the to banks out there just cannot get enough of these. The above question was reportedly asked in an interview for risk management at Nomura.
3. “What would you do if we gave you 10,000 Euros now?”
If you are a finance aspirant looking to get into the field of investment banking, you would surely be expected to know all there is about Investments. Any bank, regardless of its position, expects the candidates to have some very solid investment ideas in response to questions like these. The above question was asked during an interview wit ICAP.
4. “Who is your best friend?”
This question was asked during the final round of an interview, conducted by Credit Suisse. In their attempt to go beyond the technicalities and mundane aspects, many HR managers try to ask unconventional questions. The above question was asked in a similar vein, in order to know about the candidate, through the eyes of someone, who is close to them.
5. “How would you manage the portfolio of an astronaut that will be isolated from earth for the next 10 years?”
This is another question, in the line of most out-of-the-context yet, relevant questions. This one in particular was asked during an interview about securities at Goldman Sachs and the student who was asked all of these questions said it was the best interview of all times.
As the popularity of Investment Banking, as a field grows, the number of professionals wanting to be a part of this field also multiplies. In order to look for the perfect candidates, these top banks usually end up asking very out of the box questions. To become thoroughly industry endorsed, professionals usually pursue certification training programs, Join Imarticus Learning, here we offer proper training to crack such interviews.
Industry Report: Banking Sector in India Part – I
This article will be principally dealing with the basic understanding about the banking sector, specifically in India and all the aspects and components of the size of the market. According to the Reserve Bank of India, the banking sector in India is believed to be sufficiently capitalized and well regulated. Recent reports state that the financial and economic conditions in our country, are way better in comparison to the other countries, in the present times. This basically puts the Indian economy, which is considerably stable, against the other alarmingly unstable and equally dysfunctional economies, all over the globe. Studies conducted in various fields like Credit, market and liquidity risk conclude that the banks in India have shown a general tendency, of being resilient and have been able to withstand the global economic turmoil really well.
This may have been a result of the various innovative banking models, for instance, the payments and small finance banks, which have had a positive impact on the Indian banking industry in the recent times. In the financial year of 2015-2016, about 10 small finance banks and around 11 payment banks, have received the principle approval from the central bank. This is a part of the new measures put in place by the Reserve Bank of India, which show great signs of going a long way, in terms of helping in the restructuring of the domestic banking industry. Let’s talk facts and numbers now, in keeping with the same we need to focus on the numeric aspects of the banking units across the country.
Primarily, the Indian banking system is made up of around 26 public sector banks, 25 private sector banks, 43 foreign banks, 56 regional rural banks, 1589 urban cooperative banks and around 93550 rural cooperative banks, in addition to the existing cooperative credit institutions. 80% of the entire market, is supposedly controlled by the public sector banks, thereby evidently a very small share of the market is left in control of the private counterparts. While on the other hand, every bank out there has begun to encourage their customers, in order to manage all of their finances using mobiles phones.
While there have been a number of predictions and assumptions in terms of credit growth, especially with the current banking situation, as well as the Union Budget almost being right around the corner. There are various estimates made, among which the Standard and Poor, have gone on to make the estimates, that the credit growth in the Indian banking sector, is likely to improve to 11-13 per cent in this financial year, that is 2017. This is a great news in terms of growth and progress, from the past three years, when the second half of the year, 2014, showed less than 10 per cent credit growth. As the future prospects of the Indian banking sector seem extremely bright and by extension, so do the job prospects in terms of Corporate Finance, Investment Banking and so on. This is why many finance enthusiasts have begun to turn to professional training institutes like, Imarticus Learning, that help them achieve the perfect career roles.
Working in a Boutique vs a Bulge Bracket Investment Banking Firm
There has been a lot of news in the media recently about how investment banking fees are at an all-time low and how those multi-million dollar bonuses are about to take a beating. But recently the Financial Times noted how boutique banks like Evercore and Moelis are doing well, and are attracting a great deal of interest.
Firms like Centerview and Moelis have even broken into the top 20 fee earners. But what are boutiques? What is it like working for one and where can you possibly go?
What are boutiques?
Boutiques are independent investment banks that have often been created by senior investment bankers. Houlihan Lokey, the largest boutique in the world, was created by ex-banker Scott Adelson. They often play on the founder’s strength, industry vertical specialization or regional focus, and focus primarily on deal advisory – M&A, Capital raising both in the public and private markets, restructuring and corporate finance.
Boutique banks call themselves independent and without conflict. Essentially this means because they focus only on advisory, there are no conflicts with regard to public trading. So they will never be in a position where they might be advising company A on sale while another department trades that stock.
Boutique structure
They are often top heavy, filled with rainmakers and senior bankers and feature a flat organizational structure. What does that mean? That means as an analyst you are going to work very hard but also gain more exposure while you put in the hours.
Analysts and associates are treated like resources, which are farmed out to deals. In a bulge bracket, it’s quite likely you will spend all your time creating pitches. In a boutique however, because of the flat structure, you might even be asked to come into meetings, be part of the execution and learn something.
An investment banking deal is made up of four parts- Origination, Execution (Marketing) and Execution (Negotiation) and Closing. A bulge bracket is often divided by Origination and Execution, which means you are either going to be making pitches or information memorandums.
At a boutique, industry specialists often divide teams and so if you belong to one team, you will find yourself doing work across the deal process, which means you learn more. Pay is also a little different. Boutiques pay less at the entry level but your potential to earn gets higher closer to the top because bonuses become a large part of your pay structure.
Close a deal and you earn a significant portion of the bonus pool, which is of course spread across a smaller base than at a bulge bracket. You might earn more at a bulge bracket but you will learn less.
How about career progression?
Since they are flat structures with fewer options in terms of departments, there’s much less bureaucracy and more transparency with regards to promotions. But because there are fewer departments and not that many levels, there’s not that far you can go. But that doesn’t matter.
Associates and VP’s in boutiques can often be seen heading to bulge brackets if they don’t find proper career progression at their old firm. Because of their intensive deal experience, they are quickly absorbed into both Private Equity and Bulge Bracket investment banking teams both in the Equity Capital Market and Corporate Advisory.
What are India’s top boutique banks?
Avendus Capital, MAPE, Veda Corporate Advisors, O3 Capital, Spark Capital, Dinodia. You also have global boutiques like Lazard, Moelis and Co and Houghlin Lokey.
Understanding Financial Leverage the Physics Way!
We have often heard of Leverage in various Financial contexts such as a Leveraged Buyout, Leverage ratio of a Hedge fund etc. What does it mean?
Lets get to Physics first, for it is more common-sensical and straightforward
We define Torque as the radios vector multiplied by the force vector.
This finds application in as mundane a thing as opening a door.
The force we apply is of course the FORCE =F and the distance between the knob and the axis about which the door rotates is the RADIUS =R.
Imagine for a moment if the knob were to be fixed or engineered to be operated from the middle of the door instead of the end as we conventionally have it. This would mean that we would require more force for the same output. The output here being the door being opened. Say 45 degrees.
In the Financial scheme of things, the force that we apply is the monetary effort coming from ownership.i.e, say equity. The inherent radius is analogous to the inherent effortlessness involved of not having to ‘own’ or in other words, not having to raise equity but debt. The torque here could be considered as the revenue/profit/return
This situation of having more debt than equity is akin to having more radius and the knob of the door hence being attached to the end of the door. This makes the door opening rather relatively effortless.Or gaining profit effortlessly or by leverage.
So does that mean that a high leverage or debt is always the go-to choice of investment? I am afraid NOT necessarily.
Imagine the flip side of the door story. If someone were to have kept the hand at the edge of the door, while it is being closed .A given amount of force (equity) will definitely do more harm to the innocent hand when the radius is more (debt) than it would if the radius were less due to the door knob located unconventionally in the middle.
Needless to say financially it could go as far as saying “He burnt his fingers venturing into the business”!
Imarticus Learning offers short term courses in finance that not only train students to become investment bankers, or learn to manage their own finances via wealth management courses. Imarticus Learning is a leading industry expert trainer in financial services.
Author Bio :
Kumar Simha is an NIT Graduate with an MBA, Finance from HULT, Boston, USA, Kumar has more than 8 years of experience across Financial services, Business management and Training.
Banking Domain Primer
By Zenobia Sethna
The Banking, Financial Services and Insurance (BFSI) sector is the backbone of the Indian economy employing approximately 4.5 million professionals. If you are looking for a career in Finance, you will see vacancies listing “Banking Domain Knowledge” as a requisite. But what does it mean? Banking itself can be of multiple types based on products and services on offer and the type of customers serviced.
For simplicity, one may define banking domain knowledge as the body of knowledge dealing with how different banking segments operate – across customers, sales & distribution, products & services, people, process and technology. This definition basically covers the end to end functioning of any bank.
Let’s take a closer look at the operating model of a bank.
• Banking Segments – Broadly we have four types of banks: retail banks, corporate banks, investment banks and private banks. These are known as Banking segments.
• Clients – These are the customers who buy the bank’s products or services. These may be individuals looking to open a bank account or Institutions or other Banks looking for more corporate solutions or ways to invest their funds.
• Sales and Distribution Channels – This includes how the bank reaches out to its customers to make sales. This could be through emails, phone calls, on the Internet, TV ads etc.
• Products and Services – Products and services are the things the bank sells to customers for a fee. These would vary according to the banking segment. In retail banks, we would have products like deposit accounts and loans.
• People, process and technology – Finally we have the three components that underpin all of the above. These are people, processes and technology. People includes job roles and responsibilities, organization structures; processes define how customer transactions are fulfilled and what procedures to follow, while technology defines the IT infrastructure and systems that support the business.
Imarticus Learning offers many courses on Investment Banking and Retail Banking covering the multi-faceted functioning of these banks and their products and services. Contact us to know more.
Top 6 Reasons To Smile At Work
A smile costs nothing, but creates much. It enriches those who receive, without impoverishing those who give. – Dale Carnegie
Psychology states that you can uplift your mood just by one simple trick, smiling. It is believed that the left cortex of our brain is the part which triggers happiness and by smiling, we stimulate it. Thus, leading to the release of endorphins, better known as the happy hormones that calm us. A lot of health experts recommend this technique to reduce anxiety and keep hypertension at bay. Smiling in general can boost your health and make you look and feel younger, it can also be your best tool at work.
Here’s a list of 6 reasons why you must smile at work
1. Smile, because you never know who’s watching you. A lot of managers believe in observing their employees, when they are off guard. A professional who is always grouchy, grumbles a lot and comes across as a possible liability to their co-workers and the environment. If your manager sees you sporting a smile and in an upbeat mood, the chances of it reflecting positively on your records are higher.
2. If you are a manager, then you definitely know how stressful team meetings can be. A lot of employees complain of not being able to be productive as they are always worried about the response from their managers. Smiling during these meetings and keeping a positive attitude can not only motivate you, but also your team mates.
3. Mondays are the official terrible days of the week. This week starter is labeled to be a day full of blues. But have you noticed that, if you turn up at you job on a Monday, in a sour mood then, your whole week follows similarly? Mondays, should definitely be the days you smile the most, so as to ensure that your whole week goes in the same upbeat manner. Remember this every Monday.
4. In lieu of enhancing employee relations, a lot of offices organize mixers or networking events. It’s surprising that most of the employees either skip these events, or turn up and spend the whole night looking into their drink. Smiles at these events lead to lighthearted conversations, which later on lead to great contacts in the industry. Who would have thought, that all you needed was a smile to be a pro at networking?
5. Every employee is given a pressure test every once in a while, the results of which may lead to a promotion or perks. The best way to ace these tests? Smile, because that way you come across as a hands-on employee, who’s never daunted by a challenging task.
6. Presentations are when everyone gets the jitter bugs. If this is a presentation that is for a great contract, which your company has been vying for lately, it can be a great pressure on you. This is the perfect time to smile and come across as someone who knows their stuff as well as is very approachable.
Imarticus Learning is an education institute, which has many comprehensive short term programs in the fields of Business Analytics, Finance and Data Science. But the thing that sets them apart from others, is the valuable career guidance and industry assistance provided to each candidate. Students have walked out of Imarticus with a smile, and walked into their new organisation with an uplifting and optimistic outlook.
Introduction to Investment Management
What is Investment Management? What does the investment management industry constitute?
The world of finance can be complicated. To simplify for the sake of understanding, let us consider the financial world as broadly constituting of banks – (retail, commercial, and investment), insurance companies, and investment managers.
Banking: Retail and commercial banks are the ones most people are familiar with and are mostly straightforward. They take in money through deposits from customers, other banks, and shareholders. They then distribute this money through credit cards and loans to individuals, companies, and other banks.
Retail and commercial banks make money on the interest charged on these loans. Investment banks on the other hand are more complicated. They allow their clients, which include investment managers, to trade on the financial markets. They also deal with IPO, mergers, and acquisitions.
Insurance: Insurance companies take in money by charging for private and corporate insurance policies, in return for against the unexpected. They in turn are protected from being unable to payout on policy claims by moving money to a reinsurance company and therefore reducing exposure.
Investment Management: Investment managers also known as fund or asset managers do as the name suggests – they manage investments of private investors, corporates, banks, or insurance companies. Investment managers make their clients’ money grow by using investment banks to buy and sell investments.
Let us consider the funds managed by an investment manager as raw material whether in shares, bonds, commodities, or derivatives, and an investment manager as a machine that converts this raw material into a product by using a series of processes. The product is a fund. The goal of the fund is to make money for the investors. Thus, an investment manager uses an investor’s money to make money.
These processes vary greatly and depend on the investment strategy used. E.g.: passive vs. active investment. However, the principle remains the same. The fund aims to make a return by balancing risk and rewards and thus, in a process-driven manner ensures effective mobilization/channeling of its resource i.e. money from investors.
Thus, the players in the investment management industry can be classified into just two broad categories – the investment managers and the investors. Investment occurs directly i.e. investment contracts or more commonly via collective investment schemes. A mutual fund is a type of collective investment scheme. They provide an efficient way of pooling funds for investment purposes.
The Flow of funds in the asset management industry:
*PMS – Portfolio Management Services, AMC – Asset Management Services, WM – Wealth Managers.
What is the Investment Process? What role does the investment manager play? What is the role of portfolio performance measurement in the investment process?
Like any process, the investment process can be broadly classified based on four phases – Plan, Do, Check and Act. Similarly, it is pertinent to note that the investment management process, forming a part of the investment process cannot be improved without performance measurement. The following is an overview of the Investment Process.
From the above, it is clear that for the investment process to be complete it needs to be measured. This measuring of the portfolio performance should preferably be a part of the investment management process itself. In this case, it will contribute to improving the portfolio management process internally and thus contribute to process improvement. On the other hand, performance measurement can be undertaken by the investor as a part of the larger investment process. In this case, the same measures behave as a stricter audit function rather than a must-suited process improvement role.