Msc Banking and Finance

MBF12- Part Time - Year 1

Examinations for 2012-13 / Semester 1

MODULE: Consumer and Corporate Banking

MODULE CODE: ACCF5302 Duration: 3 Hours

Instructions to Candidates:
1. Paper is divided into TWO sections. 2. Section 1 is compulsory and carries 40 marks. 3. Two out of three questions have to be answered from Section 2. 4. Each Question in Section 2 carries 30 marks each.

This question paper contains 4 questions and 5 pages.

Page 1 of 4

SECTION A: COMPULSORY QUESTION 1: (40 MARKS)

After studying the annual report of Air Mauritius Ltd for the financial year ending 2011 (submitted to students one week before examination in soft copy or downloaded from Air Mauritius Website), you are requested to answer the questions set below from a corporate bankers perspective. Questions: 1. Summarize the key risk factors facing Air Mauritius and propose any mitigants for these risks; (15 marks) 2. The company intends to renovate its existing building that will cost Euro 10M and a request for a term loan over 5 years to finance this expenditure has been addressed to you. You are requested to assess this request and propose your recommendation to the Credit Committee of your Bank with your terms and conditions (if any). (15 marks) 3. As the CEO of a small commercial bank with 5% market share, explain the strategy you would adopt to increase (10 marks)

Page 2 of 4

SECTION B: ANSWER ANY 2 QUESTIONS QUESTION 2: (30 MARKS)

(a) Explain the following terms used in trade finance: i. ii. iii. iv. v. (b) Confirmed LC Charter party bill of lading Dirty bill of lading Red clause in LC Avalised bill of exchange (3x5 = 15 marks)

A transferable letter of credit is less risky for a middlemans bank than a back-to-back letter of credit. Referring to specific Articles under UCP 600, comment on the above quotation in relation to the risks taken by the middlemans bank dealing with two banks. (15 marks)

Page 3 of 4

QUESTION 3: (30 MARKS)

(a) Give brief descriptions of the following terms used in relation to risk management in Banking: i. ii. iii. (b) Counter-cyclical Stress testing Securitization (3x4= 12 marks) Explain the importance of setting the right covenants and simple rules to be followed when providing banking facilities to corporate customers. (18 marks)

QUESTION 4: (30 MARKS)

(i) Assess the different phases of a new product development for a commercial bank (15 marks) Assess the importance of using a CRM system in retail banking. (15 marks)

(ii)

***END OF QUESTION PAPER***

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