Learning Objectives:

  • Define structured finance and understand its main areas.

  • Understand asset-backed securitisation and its applications.

  • Identify the key risks in structured finance transactions.

8.1 Defining Structured Finance

Structured finance is a complex area of finance that involves the creation of sophisticated financial products to meet specific client needs. The University of Bologna’s Structured Finance course notes that “issuance of structured finance products in Europe has reached 244bn euro, well above the average 5-year amount of 213bn euro” .

The course covers “the business of structured finance and the main areas of business that can be included in its perimeter” .

Main Areas:

  • Project and Infrastructure Finance: Financing large-scale capital projects.

  • Asset-Backed Securitisation: The process of pooling assets and issuing securities backed by those assets.

  • Credit Derivatives: Instruments used to transfer credit risk.

8.2 Asset-Backed Securitisation

The University of Bologna course dedicates a significant portion to “asset-backed securitization” .

Key Topics:

  • Cash Securitisation Deals: “Types and characteristics, main applications and focus on non-performing loans portfolios” .

  • Synthetic Securitisation: “Main aspects and risk analysis” .

  • Credit Derivatives: “Types and characteristics,” “Risk Analysis and Fundamentals of Pricing” .

8.3 Risk Analysis in Securitisation

The University of Bologna course covers “Risk Analysis and Fundament of Pricing” for securitisation transactions . Students learn to “Analyze a financial portfolio to be used as collateral for asset-backed bonds” and “Price a cash securitization or a synthetic securitization with the use of credit derivatives” .

Key Risks:

  • Credit Risk: The risk of default on the underlying assets.

  • Prepayment Risk: The risk of early repayment of the underlying assets.

  • Interest Rate Risk: The risk of changes in interest rates affecting the value of the securities.

  • Structural Risk: The risk of flaws in the transaction structure.

 Contemporary Issues – Capital Markets Access, ESG, and Technology

Learning Objectives:

  • Understand capital markets access for corporate clients.

  • Explain the role of ESG in corporate banking.

  • Identify technology trends in corporate banking.

8.1 Capital Markets Access for Corporate Clients

Corporate banks help clients access capital markets for funding and risk management. The Elevify Corporate Banking course covers “Rating Agency Engagement and Strategy” as a key topic, “Guiding clients through the credit rating process and ongoing agency relationship management. Ratings directly affect borrowing costs and market access” .

8.2 ESG and Sustainable Finance

Environmental, Social, and Governance factors are increasingly important in corporate banking. The Coursera Corporate Banking course includes “Environmental Social And Corporate Governance (ESG)” as a core skill . The NHH course covers “how green energy projects can be valued and financed” .

The University of Bologna’s Structured Finance course notes the growing importance of infrastructure and securitisation in institutional portfolios, reflecting the increasing focus on sustainable investments .

8.3 Technology and Corporate Banking

The NUS Transaction Banking course covers “E-Commerce and Transaction Banking” and “Fintech” as core topics, asking: “How Transaction Banking supports e-commerce businesses? What are the examples of Fintech being applied to Transaction Banking?” .

The course also covers “Treasury Management Systems (Liquidity Management),” asking “What information will treasurers need for their treasury management function? How does the industry provide information management services to treasurers?” .

8.4 Development and Trends

The NUS Transaction Banking course covers “Development and Trends in Transaction Banking” as a core topic . Key trends include:

  • Digital Treasury: The use of technology to automate and optimise treasury operations.

  • Real-Time Payments: The shift to instant payment systems.

  • Blockchain and DLT: The use of distributed ledger technology for trade finance and payments.

  • Open Banking: The use of APIs to connect banking systems with third-party providers.

  • Sustainable Finance: The integration of ESG factors into corporate banking products and services.

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