Certification Program: Advanced Credit Skills for Private Bankers

Module 1: Navigating Credit Realities – Clients, Self-Interest, and Stakeholder Dynamics
Duration: 15 hours (3 hours/day over 5 days)
Objective: Equip bankers to manage credit risks in leveraged solutions by understanding the often irrational motivations of clients, colleagues, and institutions.

Lesson Plan

Day 1: Credit Fundamentals & Stakeholder Incentives

Learning Objective: Diagnose hidden incentives driving credit decisions.

1. Session 1: Credit Risk in Private Banking (1h)

• Key Concepts: LTV ratios, collateral volatility, moral hazard.
• Tool: Credit Risk Heat Map (visualizes risk exposure across client types).
• Case Study: A banker approves a 75% LTV loan against volatile tech stock to meet quarterly targets.

1. Session 2: Stakeholder Psychology (2h)

• Activity: Role-play a client insisting on higher LTV for art collateral (self-interest: tax deferral).
• Tool: Stakeholder Motivator Matrix (maps client/banker/bank priorities).
• Real-World Example: UBS’s 2008 subprime crisis – bankers prioritized fees over due diligence.

Day 2: Collateral Realism – Clients Overestimate, Banks Underestimate

Learning Objective: Challenge inflated collateral valuations.

1. Session 1: The Illusion of “Safe” Collateral (1.5h)

• Case Study: A client pledges “stable” private equity shares that drop 60% post-lockup.
• Tool: Collateral Haircut Calculator (applies sector-specific discounts).

1. Session 2: Negotiating with Overconfident Clients (1.5h)

• Activity: Convince a founder their startup equity isn’t worth “Facebook’s IPO value.”
• Tool: Valuation Reality Check Script (phrases to reset expectations without losing rapport).

Day 3: Moral Hazard – When Clients Shift Risk to the Bank

Learning Objective: Identify and mitigate hidden client risks.

1. Session 1: Moral Hazard Patterns (1h)

• Case Study: A trust borrows against illiquid assets, defaults, and sues the bank for “misadvice.”
• Tool: Moral Hazard Checklist (10 red flags, e.g., “client refuses backup collateral”).

1. Session 2: Self-Interest in Action (2h)

• Activity: Teams debate approving a promoter’s loan with locked-in shares – banker wants commission, risk team says no.
• Tool: Conflict Resolution Playbook (aligning sales vs. risk teams).

Day 4: Compliance Traps – Clients vs. Bank Policies

Learning Objective: Enforce policies without losing clients.

1. Session 1: Regulatory Arbitrage (1h)

• Case Study: Client demands a loan structured through a tax haven to avoid reporting.
• Tool: Cross-Border Compliance Navigator (quick-reference guide for FATCA/CRS).

1. Session 2: Saying “No” Strategically (2h)

• Role-Play: Client threatens to leave unless LTV is increased; banker uses soft refusals.
• Tool: Alternative Solution Builder (pivot client to non-leveraged options).

Day 5: Crisis Simulation – When Everything Goes Wrong

Learning Objective: Manage defaults, blame games, and reputational fallout.

1. Session 1: Default Scenarios (1h)

• Case Study: Margin call on concentrated stock; client refuses to pay, blames the bank.
• Tool: Default Mitigation Protocol (steps for legal/communication teams).

1. Session 2: Stakeholder Blame Game (2h)

• Activity: Simulate a post-default meeting: client, banker, risk officer, and CEO.
• Tool: Post-Mortem Analysis Template (assign accountability without finger-pointing).

Tools & Resources

1. Collateral Health Scorecard: Rates assets on liquidity, volatility, and market depth.
2. Dynamic LTV Adjuster: Automatically recalibrates LTV based on real-time volatility.
3. Stakeholder Motivator Matrix:
   Stakeholder Primary Motive Hidden Agenda
   Client Maximize liquidity Avoid taxes, shift risk to bank
   Banker Hit sales targets Earn commission, retain client
   Risk Team Minimize NPLs Avoid blame for defaults PPT Deck Outline
   1. Slide 1: Program Title + Tagline (“Master Credit Realities: Ambition Meets Accountability”).Slide 2: Why Credit Skills Matter – 2023 Private Banking Default Statistics.Slide 3: Stakeholder Motivator Matrix (interactive click-to-reveal agendas).Slide 4: Case Study – Art Financing Gone Wrong (video clip of client confrontation).Slide 5: Tool Demo – Collateral Haircut Calculator (live Excel walkthrough).Slide 6: Role-Play Guide – “The Overconfident Founder” (script + timer).Slide 7: Compliance War Stories – Fines for Non-Compliance (Credit Suisse example).Slide 8: Crisis Simulation Rules – Team Assignments + Timer.
   Assessment
   1. Written Exam (25%):Q: “A client insists on 80% LTV against volatile collateral. How do you respond?”Practical Simulation (75%):Scenario: Approve/reject a promoter’s loan with conflicting stakeholder inputs.Graded on: Credit rigor, client rapport, policy adherence.
   Why It Works
   • Realism Over Theory: Focuses on messy, self-interested behaviors bankers face daily.Actionable Tools: Calculators, scripts, and checklists for immediate use.Sales-Friendly: Teaches how to say “no” while preserving relationships.
   Let me know if you’d like the full PPT deck or tool templates!