Principles of Finance and Financial Markets Training for Banco Central de Cuba

Corporate Banking Products & Markets, Credit Risk, Funding Solutions & Capital Markets, GBRW Consulting, GBRW Group, GBRW Learning, Risk Management, Treasury

The overall aim of the project, funded by the UK Government’s Prosperity Fund, was to help build the capacity of the Cuban financial sector as it seeks to re-enter international markets, by updating Cuban bankers on best practice in finance and financial markets.

Along with partners, the London Institute of Banking and Finance (LIBF), GBRW developed and delivered a four-week programme for Cuban central and commercial bankers. Topics included:

- Week 1: Fundamental Principles of Finance - the impact of the Global Financial Crisis (GFC) on financial markets and other market events were used to illustrate fundamental concepts and theories and to highlight the limitations (and at times failings) of financial markets.

- Week 2: Risk, Return and Efficient Markets - theoretical presentations were interspersed with practical examples from crises and other market events from the last twenty years or so. For example, the Asian Currency Crisis of 1997 – 1998 was explored as an example of the psychology of markets known as Behavioural Finance.

- Week 3: Risk Management and Derivatives - exposure to the topics of bond markets and how banks fund themselves in the global markets. The practical examples included discussions of some of the big fiascos from recent financial history (such as the collapse of Lehman Brothers, the bankruptcy of Orange County, etc.). The week culminated in group computer assignments that included valuing FX forwards, determining the payoff profile of option portfolios, and valuing bonds using spot rates.

- Week 4: Regulation and Asset & Liability Management - the final week of the course focused on two main areas; international regulation (in particular Basel 3 regulations) and best practice in asset and liability management. The key principles and elements of the Basel 3 (B3) regulations were examined in depth (notably capital adequacy, liquidity and leverage ratio). The asset and liability management training focused on the tools and strategies used by international and domestic banks to manage liquidity and capital adequacy in accordance with B3.

Deliverables included:

- Overall programme design

- Development of 6 tutorial modules

- Development of case studies

- Delivery of two 5-day training courses

- Post-course evaluation