30173 - CORPORATE BANKING

Students are expected to master topics covered in basic Accounting courses.

The crisis of 2007-2008 highlighted the role of non deposit taking institutions in providing funding to the economy and the lack of an adequate regulation of their operations. From the 1990s Investment banks and other financial firms had been able to structure an alternative credit system – i.e. the “shadow banking” system - allowing those in need to obtain financial resources and savers to access profitable investments. At the same time, as the above institutions did not take deposits, they had been able to avoid the legal constraints that banks had to face in order to protect depositors. The absence of a proper regulatory framework fostered the making of the crisis. The crisis made clear that understanding in detail the shadow banking systems institutions' operations and the risks that they entail in order to address them properly is crucial in order to avoid future financial mayhem. This understanding is also the mission of the course. At the heart of the shadow banking system there are investment banks (IBs). Besides their traditional role as advisors in M&A transactions, IBs provide sponsorship, services and funding. On top of that, they supply liquidity to financial markets through trading and asset management activities. Hedge funds and private equity funds compete with IB for business but also operate thanks to IB's services. The course will explain the above institutions' operations and organizational features also using cases discussion.

The course describes the ways in which financial intermediaries such as investment banks create value through their advisory and capital deployment activities. The first (and main) section is specifically devoted to investment banks, depicting their organizational structure and the services they offer in the security issuance, M&A, sales and trading, research and wealth management businesses. The second part deals with hedge funds, private equity funds and focuses on LBO deals valuation. Cases discussion will be used to have the students undestand the complexities of the intermediaries' operations.

• Describe Investment banks, hedge funds and private equity funds operations;
• Explain how the above intermediaries offer and price their services;
• Identify the synergies between different businesses and the advantages in offering them separately or as part of a package,
• Illustrate the functioning of the tools they apply when performing their activities;
• Identify the methoological limitations of the above tools and the implications on the relationships with the clients.  

• Analyze the tools that investment banks and private equity funds employ when they advise their clients/define their acquiring strategy and choose the appropriate ones
• Plan an acquisition and an LBO by drawing up the various steps it encompasses
• Apply the techniques depicted in the course to evaluate the most appropriate behaviour
• Simulate the possible results under various scenarios hypothesis

• Face-to-face lectures
• Guest speaker's talks (in class or in distance)
• Exercises (exercises, database, software etc.)
• Case studies /Incidents (traditional, online)
• Group assignments

Cases are included in the course materials. Their content and the main concepts they help uncover will be part of the exam questions.

In order to foster class participation in their discussion, before the relevant lecture I provide the students with  a guideline so that they focus their reading towards the main points and do not waste time on details.

To create an incentive for preparing to the discussion,  each case will be part of an group assignment.

Depending on the situation in December, one additional case might be part of the lecture by an invited speaker.

Exercises will be illustrated in class and additional examples will be given through the course Blackboard. 

The general exam allow students to obtain a maximum grade of 28. One group assignment will allow them to obtain up to four additional points in order to increase their final grade. I do not require that students attend the lectures but if anyone enrolls in a group she/he needs to be up to date with the contents of the course in order to effectively contribute to the group work and she/he must show up when the group is presenting its work taking part to the oral presentation.

Up to one extra point will be awarded to those students who will evaluate the group presentations. The evaluation activity will take place during class time so students who are not attending those lectures cannot obtain the extra points.  

If students choose not to participate to the group assignment/presentation evaluation activity because they decide not to attend any of the relevant lectures (see the attending students warning) their maximum grade at the general exam will be 28 out of 30.

“Investment Banking, Hedge Funds and Private Equity”, by David P. Stowell, 3rd edition, 2017, Academic Press, Elsevier Inc. is the reference book. Lectures slides will be provided as well.