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Strategic Balance Sheet Management
One of the truest signs of top management’s commitment to continuous improvement in their organization is that they not only support strategic training initiatives but that they actively participate in such initiatives. Too often, members of the C-suite seem to fear that they will be “shown up” for not being the demigods that they are perceived to be, should they have to work in teams with their more junior colleagues. The Riskworx Academy was delighted that this was not the case in the Strategic Balance Sheet Management workshop we recently facilitated for one of Uganda’s leading indigenous retail and corporate banks. Team members included the CEO, CFO, Chief Commercial Officer, and Head of Treasury.
The workshop was focused on the practical application of the knowledge gained during short theoretical topics presented over 6 half-day sessions. 24 members of the bank’s senior management divided into 4 teams in an attempt to outdo one another by running their banks in a highly competitive environment, using a world-renowned banking simulator. The simulator was configured to contain the bank’s current balance sheet structure and current positions as a point of departure. The teams were then encouraged to grow their banks under strict enforcement of Basel capital and liquidity requirements, as well as the requirements of their local Regulator.
The software ensured that local Ugandan economic conditions such as rising levels of unemployment and a worrying increase in non-performing loans could be simulated. Uganda has a very specific definition of High-Quality Liquid Assets and using the simulator, teams had the opportunity to seek increased ROI whilst maintaining prescribed HQLA portfolios and liquidity ratios.
The cost of training was supported by the bank’s largest shareholder, whose team experienced the simulations first hand before giving their stamp of approval and acknowledging that the Riskworx Academy’s workshop is of a strategic – rather than tactical – nature and that it would assist the bank’s decision-makers in protecting and enhancing their balance sheet. This meant that teams had to focus not just on chasing short-term profits, but also on structuring their balance sheet in a way that ensures long-term sustainability using metrics such as RAROC and other risk-adjusted performance metrics.