Global Banking and Capital Markets

Professor Ian Giddy


Prof. Ian Giddy
Office: Stern 9-197. Tel 212-998-0332; Fax 212-995-4233
E-mail: ian.giddy@nyu.edu Web: http://giddy.org
Course Web site: http://www.stern.nyu.edu/~igiddy/gbcm.htm

Goals
This course is divided into two interrelated parts: markets and institutions.

The first part looks at the global financial markets. These include the market for foreign exchange, the Eurocurrency and related money markets, the international capital markets, notably the Eurobond and global equity markets, and the markets for forward contracts, swaps and other derivatives. The book seeks to explain how these markets work both in the context of basic principles of finance and by means of examples and applications.

The focus of the second part of this course is primarily on determinants of competitive performance in the global financial services industry. It covers the entire range of commercial and investment banking activities carried out internationally. This includes Eurobond and foreign bond new issues, competition in interest rate and currency swaps and synthetic securities, international equity finance, foreign direct investment and acquisitions transactions from the perspective of the seller of advisory services and financing. The discussion of competing in various international commercial and investment activities is interlinked to a geographic dimension, which includes discussion of conditions in the financial services sector in North America, Europe, Asia, and emerging markets.

Instructor
Prof. Ian Giddy is a graduate of the University of Michigan (MBA 1972, PhD 1974) and the University of the Witwatersrand (BSc 1970). He has taught finance at NYU, Columbia, Wharton, Chicago and abroad for the past twenty-five years. He was Director of International Fixed Income Research at Drexel Burnham Lambert from 1986 to 1989. He is the author or co-author of numerous articles and books, including The Handbook of International Finance, The International Money Market, Cases in International Finance, Global Financial Markets, Asset Securitization in Asia and The Hudson River Watertrail Guide.

Pedagogy
The course employs cases and problems as well as classroom lectures and discussions, and "live case studies" to offer a hands-on learning experience. We will make use of international as well as domestic examples. Each student will be expected to prepare thoroughly and to participate actively in class discussion. There will be a number of cases and assignments, a term-long group project and two exams.

The Course on the Internet
We will make use of the Internet--notably the World Wide Web--for resource material and communication. Indeed this course outline itself will evolve: the definitive version is the Web site at http://www.stern.nyu.edu/~igiddy/gbcm.htm. All students must have an email address and Web access with java-enabled browser. Your default address will be the one assigned by Stern. To redirect mail, go to http://simon.stern.nyu.edu/ and follow the instructions to forward your Stern email to your work or home email address.

Textbooks
Ian H. Giddy, Global Financial Markets, (Houghton Mifflin, 1994)
Roy C. Smith and Ingo Walter, Global Banking (New York: Oxford University Press, 1997).

Cases & Readings in Global Banking. Students should have read the assignments before coming to class. Material covered in the assigned textbook readings will generally not be repeated in class. Rather, class time will be devoted to lecture and case discussion, applying the material covered in the readings.

The Live Case Study
Each student will work in a group to investigate the international competitive aspects of an actual financial institution during the course. See the live case study website.

Grading
The course grade will be determined as follows: Midterm 30%, Final Examination 40%, Live Case Study 20%, Other 10%.

Additional Resources
The Wall Street Journal and the London Financial Times provide the most comprehensive daily coverage of financial and economic news. The most insightful economic commentary may be found in the weekly, The Economist.

Try the following Web sites:


Course Outline

Global Banking and Capital Markets

Date  Topics  Readings Assignment
Wed Sep 8 1 Introduction to the Global Financial Markets GFM Ch 1  
Mon Sep 13 2 The Foreign Exchange and Money Markets GFM Ch 2, 3 At the End of the Day
Wed Sep 15 3 The International Monetary System and European Monetary Union GFM Ch 4 The Baltics; One answer
IMF;  Euro; Other Links
Slides
Mon Sep 20 4 Currency Forwards and Futures GFM Ch 7 Kleinwort's Bulldog Hedge 
Slides
Wed Sep 22 5 The International Money Market GFM Ch 10 LaFarge Coppee
Mon Sep 27 6 International Bank Lending GFM Ch 9 The Saudi Loan 
BIS capital adequacy proposal
Wed Sep 29 7 The Global Debt Market GFM Ch 11 Ecuador's Bradies
Mon Oct 4 8 The International Bond Market GFM Ch 12 A Day in the Life
Wed Oct 6 9 The Currency Swap Market GFM Ch 13 The Auzzie Unswap
Mon Oct 11 10 Yin and Yang: A Swap Simulation    
Wed Oct 13 11 The Global Equity Market GFM Ch14  The ADR Question
Mon Oct 18 12 Pre-Midterm Review    Sample Midterm
(Solutions)
Wed Oct 20 13 Midterm Examination    Solutions and Statistics
Mon Oct 25 14 Structured Financing GFM Ch 17 The Bavaria Bank-Scottish Life deal (in Ch 17)
Wed Oct 27 15 Global Banking: Products and Markets GB Ch 1,7,14 NatWest Bank
Mon Nov 1 16 Trading and Positioning GB Ch 8 Mitsubishi Corporation Finance
Wed Nov 3 17 Fixed Income Underwriting GB Ch 9 FNMA
Mon Nov 8 18 Securitization GB Ch 3 Belenus
Wed Nov 10 19 Group project meetings (no class) Please schedule a meeting with me
Mon Nov 15 20 Project Financing GB Ch 3 Ras Laffan
Wed Nov 17 21 Equity Underwriting GB Ch 11 Deutsche Telekom
Mon Nov 22 22 Mergers & Acquisitions: Assessment GB Ch 12 Bank of Scotland-NatWest
Wed Nov 24 24 Mergers & Acquisitions: Negotiation GB Ch 12 Martell
Mon Nov 29 25 Asset Management GB Ch 13 Alliance
Wed Dec 1 26 Global Private Banking GB Ch 4 The Man Who Came To Breakfast
Mon Dec 6 27 Global Banking Strategy GB Ch 15 Citigroup
Review, Part 1
Wed Dec 8 28 Live Case Studies due; Course recap Live Case Study assignment
Review, Part 2
Dec 20 Final Exam (10:45 to 12:45) All 2/3 quant, 1/3 qual; 1 pg cribsheet
Sample exam



Go to Giddy's Web Portal Contact Ian Giddy at ian.giddy@nyu.edu