Learnership in Bank Credit and Risk Assessment (NQF Level 5)

Company Information

Company/Provider: Culhane Consulting

Email: Send Enquiry / Make A Booking

Telephone: 0217851863

28 Northshore Drive
Lakemichelle, Noordhoek
Cape Town
Western Cape
South Africa

R 19500.00

Course Description

Unlike many credit programmes that tend to be rather superficial and therefore have little effect on productivity in the workplace, this credit development programme has been designed to provide learners with a much deeper understanding of credit principles and business risk assessment.

While no prior knowledge is required, we believe that learners who have some understanding of accounting and have also had experience in a credit environment will get the maximum benefit from this programme.

Programme Content

It is not always possible to obtain a full understanding of the course content from an outline, and we have tried to expand it as much as possible without unnecessary detail. We would be happy to explain and motivate any element of the outline should this be required.


Having a solid understanding of collateral and under what circumstances banks take collateral from clients is essential to all bankers working in a credit environment.

This programme will deal with the LEGAL ISSUES relating to bank security, and thus combines an academic understanding with a practical application. However, it is not essential that all learners have a background to law, as the necessary academic references will be explained.



By the end of this programme, the delegates will be able to :

 Understand their role and responsibilities when taking security
 Understand the contractual capacities of individual and business entities
 Understand the legal implications related to security documents
 Understand the security documents and supporting documents required for individuals
 Understand the security documents and supporting documents required for business entities
 Have acquired practical experience after completing the case studies

Part 1 : GENERAL

After completion of the learning process the delegate will be able to :

 Define the meaning of Security
 Define the role of security in a banking context
 Explain the functions of security
 List the characteristics of good security versus unacceptable security
 Understand the problems associated with the realisation of securities
 Distinguish between basic types of security
 Describe the different types of security documents : Cessions, pledges, suretyships, mortgage bonds and notarial bonds
 Explain the requirements with regard to the completion of security documents including the dating and signing of the documents.
 Understand and explain the importance of the correct witnessing of security and related documents.
 Explain the requirements for the signing of securities under general and special power of attorney.
 Describe the security management process
 Explain how the bank calculates the value of security
 Discuss the factors that affect the legality of securities in general
 Understand their vital role in ensuring the correctness of security documents
 Understand the Impeachable Transactions in the Insolvency Act and the effect they have on security documentation


After completion of this learning process the delegate will be able to :

 Understand and describe how and when the following documents are used :
o Suretyships
o Cessions
o Pledges
o Mortgage Bond
o Notarial bonds – General and Special notarial bonds


 Define the concept of contractual capacity for individuals
 Identify how to establish the contractual capacity of various types of individual borrowers with regard to amongst others:

o Minors
o Insolvents
o Rehabilitated insolvents
o Under judicial management
o Mentally incapacitated
o Illiterate
o Under debt counselling

 Explain the legalities around the different types of marriages
 Explain the contractual capacity of married persons with regard to all the many different types of marriages in South Africa including :

o Married in Community of property
o Married by ante nuptial contract
o Married by Muslim and Hindu rites
o Married in a country outside of SA
o Married by tribal custom

 Describe the characteristics of different types of security that can be obtained from individuals
 Explain how to collect the required supporting documents
 Discuss the factors that affect the legality of the security
 Apply the principles learnt to the workplace by use of case studies


 Describe the concept of a legal entity
 Explain the following in detail around the different business entities :

o Nature of the entity
o Contractual/ legal capacity
o Who is it owned by/ who is it managed by ?
o Advantages and disadvantages of such an entity
o Country laws around the business entity
o Accounting requirements and Tax laws
o Characteristics of the specific type of security that can be taken from entity concerned
o Who signs the security and how do they sign it
o All supporting documents required to be taken with the security

 The business entities are as follows :
o Sole proprietors
o Partnerships
o Informal bodies
o Trusts
o Private Companies
o Public companies
o Body corporates

 Apply the principles with regard to contractual capacity of business entities
 Discuss the factors that affect the legality of the security
 Apply the principles learnt to the workplace by use of case studies



This programme has been carefully designed to focus on elements of accounting which apply specifically to bank credit. While a number of the learners may have studied accounting at University, these courses tend to be totally theoretical. In this programme, accounting principles are examined with specific regard to lending money. There is a reason why students have a serious problem in understanding accounting. It is because they are taught HOW to do things instead of WHY it should be done. As a result, financial statements are analysed in a mechanical fashion with very little value being added to the information provided by the customer. In many cases, credit managers know exactly WHERE to look for information, but they do not always know WHAT they are looking for. For example, in business, the past is not a good indication of the future, and therefore financial statements need to be examined in a way that focuses on the future, even though they are historical documents. This entails looking at the numbers with a totally different mindset! It requires one to consider qualitative and quantitative information and understand how to use historical trends to determine future performance. This cannot be done without a strong grasp of the principles discussed on this programme.


On completion of this programme, delegates will understand the following :

 The Ten Commandments of Credit and why they cannot be broken

o Do not lend to security
o Always find two ways out of every deal
o Lend to the future and not the past
o Own your decision
o Understand the business
o Do not become fair-weather bankers
o Do not treat the customer as king
o Do not bow to pressure for a quick answer
o Do not make subjective decisions without all the facts
o Ensure security is perfected before disbursing funds

 The importance of taking security for the right reasons
 How to lend to the future using historical information
 Their role as a decision maker rather than an information gatherer
 Understanding the contents of the Statement of Comprehensive Income for risk analysis
 How to understand PROFITABILITY rather than PROFIT
 Understand the difference between profit and cash flow
 The objectives of business
o Concept of sustainable growth vs maximising profit

 Understanding the world of finance
o Understand the players of the game
o Note the important distinction between accounting rules, tax rules and legal entity rules
o Understand their role in the “game of finance “

 Fundamental accounting concepts
o How the Going Concern Concept explains the nature of the Statement of Financial Position and the importance for credit officials
o How the Matching Concept explains the nature of the Statement of Comprehensive Income and the importance for credit officials
o Using the Fundamental Accounting Concepts to draw up the financial statements
o The importance of financial information in Annual Financial Statements

 Understanding the Accounting Process
o Following the process from transaction to Statement of Financial Position in relation to a better understanding of credit risk assessment



The objective of this programme is to assist learners who have already gained a little experience in credit, to fully understand the financial risks related to the granting of credit to business entities.

A marked difference in the quality of proposals, the relationship between credit and branch managers, bad debts, and customer relations should become apparent immediately after the programme.

Please note that this programme is like no other credit course offered in South Africa at present in that highly experienced facilitators focus on the job as opposed to pure theory. Financial Statements will be analysed in a practical way to ensure retention of skills in the future. Terminology will be explained in relation to bank credit rather than a basic understanding of what the terms mean. For example, we examine reserves not in terms of mere terminology, but how distributable and non-distributable reserves should be treated when granting credit. Shareholders loan accounts will be examined in accordance with the risks they place on a banker and the need to eliminate those risks through cession or subordination.

The objective of this programme is, therefore, to take the basic understanding of credit analysis and take it to a much higher level, looking a best practice in terms of analysing gaps and trends in the ratios. Delegates will also be exposed to the concept of sustainable growth in relation to assessing the future survival of the business, as well as an in depth understanding of cash flows.

Focussing on key risks in a business when doing a financial and non-financial analysis is critical, and this programme will assist delegates in assessing risk in a far more focussed manner, relating everything to the core objectives of the business, being sustainable growth and survival. Delegates will learn to ignore numbers with regard to ratios, as this can be extremely misguiding, and rather concentrate on the trends in and gaps of ratios when doing their analysis.


By the end of the programme, delegates will have a clear understanding of :
 Understand Income Statement as regards lending to the future
 Statement of Financial Position terminology in small to medium business
o Fully understand the concept of Reserves and how they should be analysed for credit purposes
o Director’s Loan Accounts and the risks to banks
o Cession or Subordination?
o Capital structure (Overview)
 Basic understanding of cash flows
o Operating Activities
o Investing Activities
o Financing Activities
 Understanding the business using Business Flow Analysis
o Preparing a Business Flow Analysis
o Importance of understanding the business
o Inputs, processes and outputs
o 5 reasons to use Business Flow to understand the business
 Learn how to use liquidity ratios to understand cash flows
 Use gap analysis as well as trend analysis in interpreting ratios
 Understand the importance of sustainable growth
 Know the potential benefits of gearing and how to lend to a highly geared business
 Determine profitability rather than focusing on historical profit
 Fully understand the concept of Sustainable Growth and how to calculate the Sustainable Growth Rate of a business
 Analyse the Sustainable Growth Rate and compare to projected growth to predict potential problems in the future
 Use sustainable growth ratios to manage cash flow forecasts
 Focus on the critical success factors of business survival and thus vastly improve their business risk analysis
 Analysing financial risk in business through comprehensive ratio analysis
o Liquidity and Cash Flow
o Gearing
o Profitability
o Activity



Most risk managers have never run a business. Consequently, they never have had the opportunity to understand a business from the owner’s point of view. For example, it is often easy to sit in the office assessing a customer’s business and deduce from the financial statements that the debtors days need to be shortened or the creditors days lengthened. They are not aware of what difficulties businessmen experience in trying to achieve these goals. Working in the bank, it is often difficult to be empathetic to the day to day problems experienced by businessmen. Having a better understanding of these problems will not only provide a better perspective to the credit risks, but will also improve the relationship between the bank manager and the client.

The objective of this programme is to expose the credit managers to the day to day issues that cause business owners to stay awake at night, as well as the ways in which a business owner can distort information provided to the bank. It attempts to move away from financial accounting issues to management accounting issues in order to provide an insight to the challenges facing their customers and the resultant risks to the bank in financing the business.

The programme will focus on business issues rather than bank issues, although in doing so, a clearer understanding of business risks will be acquired. These issues will be linked to the reporting required by Credit Division on the ongoing risk management of the accounts, so that managers will see the importance of providing these reports as and when required.


 Be able to analyse the cash flows of the business and fully understand each element of the cash flow statement
o Looking at Cash Flows in more detail
o Direct and Indirect method of preparing cash flows
o Cash receipts from customers
o Cash Payments to Suppliers and Employees
 Perform a non-financial risk analysis focusing on all the internal and external risks of the business
 The objectives of business and why sustainable growth, and not profitability, should be the focus of attention
 Why do companies borrow money and what factors should businessmen consider when deciding on different methods of financing their business
 The cost of financing and why equity financing is so much more expensive than debt financing
 How should a business determine the viability of long term projects and why is the weighted average cost of capital a critical determinant. This will include an understanding of the different methods of discounting future cash flows to present values in order to assess the feasibility on longer term lendings
 How a business develops a budget and the link between budgets and cash flow forecasts. How should a banker manage forecasts provided by clients.
 Assisting a business to determine correct pricing policies for their products, based on their cost structures. Use of break-even analysis and marginal costing mechanisms will explain the link between projected volumes, costs and desired profit. For example, if a company requires a certain profit margin, given a cost structure, how should they determine the selling price of their product.
 Looking at the problems facing businesses in trying to reach an ideal level of working capital will be considered. This module will focus on the trade-off between profit and cash flow, daily working capital management decisions, the problems of symptoms and causes, and the link between liquidity and cash flow. This will relate back to the financial ratios the bank uses to understand the liquidity of a business for risk purposes.
 Consider the motives as to why companies window dress financial information. Dressing can take place upwards and downwards, making the information either better or worse than the true situation. Consider the different methods of window dressing and understand how to deal with the problem and motivate a lending proposal when assessing financial risk.
 Linking all above to financial risk analysis
 Understand pricing from the customer’s viewpoint. If a customer has been offered a facility from another bank (say a Bankers Acceptance or Preference Share issue) where the interest is payable quarterly or half yearly, how does one equate the rate to an overdraft, where interest is compounded monthly? An understanding of how to convert nominal rates to effective rates and vice versa is important in order to communicate effectively with clients on the subject of pricing.
 Use the information provided on the programme in preparing motivations for lending to Credit Division, ensuring maximum approvals with minimum re-works



In the move from transactional to relationship banking, many managers have attempted to build relationships using marketing theories which relate to transactional circumstances. There is a great deal of new thought around relationship building that needs to be carefully considered if true relationships are required.

Consider the concept “Customer is King”. While this concept is still widely used in transactional marketing, it is certainly not appropriate in building relationships. Currently, many bank managers are being bullied by their clients into making (lending) decisions they would not normally approve, because they feel inferior to their client. Relationship building requires a deep mutual respect for each other, which CANNOT be achieved where the customer is king. This concept immediately infers superiority on the client. Negotiating power needs to be built up by the relationship manager to ensure that the relationship is respected by both banker and client.

This programme will assist all bankers involved in relationship building to reassess the way in which they interact with their clients and in so doing, convert prospects into customers, customers into clients, clients into supporters, and supporters into advocates. All theory will be directly related to the workplace so that delegates will be able to implement ideas with immediate effect.
The most important outcome of this programme is to guide bankers on how to close deals and win new business for the bank. Many bankers do not understand that selling financial services is THE MOST DIFFICULT of all goods and services to sell. The reason for this is that not only is the banker trying to close deals AND build a relationship at the same time, but it is a marketing fact that buyers respond to their FIVE SENSES i.e. they buy based on smell, taste, touch, sight or sound. The more senses you stimulate, the easier to sell. When selling a financial product, the ONLY sense that is stimulated is the sense of SOUND i.e. what comes out of the mouth of the banker. (You cannot touch, taste, smell or see a bank account!!!). Therefore WHAT is said, HOW it is said, and the BEHAVIOUR of the banker while saying it is critical to closing deals. This programme focuses on these issues to give your staff member an absolute advantage when closing deals and winning business for the bank.

• Understanding the need to move from transactional selling to relationship banking
• Basic differences between transactional and relationship selling
• Proactive vs reactive selling
• Concept of converting prospects to customers,customers to clients, clients to promoters and promoters to advocates
• Understanding customer behaviour
• Developing A1 behaviour in the relationship manager through attentiveness and assertiveness
• Developing a two dimensional model to deal with difficult clients
• Developing skills to improve relationship selling
• Linking product features to client's needs
• Managing objections
• Probing techniques
• Mastering the opening of a sales interview
• Understanding the need for a preliminary hook to show the client "what's in it for them"
• Mastering probing and influencing of client's needs to match the features of the product or service
• Getting the client to verbalise needs
• Mastering the art of presenting a product or service using need-feature links
• Closing the deal with confidence
• Using the sale to build on the relationship
• Managing behaviour
• Relationship marketing
• Customer retention
• Developing a practical Customer Retention Plan
• Linking customer service to relationship profitability
• The importance of Internal Marketing
• Delivering client satisfaction
• Determinants of service quality
• A conceptual model of service quality


This Learnership Programme runs over a period of one year and is broken down into 5 distinct modules of 5 days each.

The programme is run in-house for banks and dates are determined based on the needs of the client


One year programme based on FIVE 5 day modules appoximately 2 months apart from each other. This is to ensure that experience in gained while the programme is running.


The programme is registered with BankSeta and is accredited on an NQF Level 5 with 131 Credits. The underlying Unit Standard is 61589 : National Certificate in Banking


We are able to run these programmes throughout South Africa and the African Continent.


Programmes are run in-house and therefore on the premises of the client. This reduces the cost of the Learnership dramatically

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