The UAE Banks Federation organised a lecture by Professor Edward Altman, Professor of Financial Sciences at New York University and a global expert in the field of risk management and developer of the ZScore/ZValue theory, at the Mashreq Bank Theatre on 17 March 2023, which was attended by a large number of executives and staff from UBF member banks and financial institutions.
Professor Edward Altman spoke about the so-called ghost companies that manage to continue operating for a relatively long time despite their inability to make profits or meet their obligations and defined the factors that favour these companies and the ways to apply credit risk management models to counter them. He also gave an overview of the applications of the ZValue model, which was used by banks in more than 20 countries from 1990 to 2021.
Professor Altman also gave an overview of the evolution of resilient capabilities by companies and economic institutions in the current credit cycle, the factors that contribute to determining the phases of the credit cycle, the particular expectations associated with high-interest rates on bonds, the non-performing loan rate in Europe, the US and China; debt yields, and the positive and negative factors in each credit cycle.
Professor Edward Altman explained the Z-Score models for credit risk management and bankruptcy hedging models, which he has developed over five decades, highlighting the comparison of the models between 2019 and 2022. Since their introduction in the late 1960s, the Z-Score models have been applied in many sectors of the economy in both developed and emerging markets, where financial professionals are adopting many new risk management methods.
Mr. Jamal Saleh, Director General of UBF, said, “Organising a lecture by Professor Edward Altman, a world-renowned expert whose research we have studied in universities, is part of UBF’s efforts to spread awareness among UBF member banks and their employees and provide appropriate platforms for the exchange of ideas and opinions that contribute to the development of banking and the country’s economic development of the country, in general, all under the direct supervision of the Central Bank of the UAE.”
The director general added: “The sector is facing many challenges today due to the geopolitical situations, in addition to difficulties faced by American and European financial institutions, some of which have faced worse ending in bankruptcy, especially those involved in the crypto business. These developments have prompted the Federation to examine the reasons behind these failures and find ways to strengthen our risk management frameworks.”
“Undoubtedly, hosting a global figure like Professor Edward Altman is an appropriate choice. He is considered an international reference on risk management and corporate bankruptcy and advises many international institutions. His ideas and research are of great value, especially in today’s environment, which has led us in the Federation to discuss the necessary improvements to enhance our strategies as part of our ongoing initiatives to keep pace with developments in governance, transparency and risk management to continue the strength of our national banks and the adequacy of their solvency as we know it,” he said.
Professor Edward Altman’s research and study include bankruptcy analysis, credit and lending policies, risk management, banking laws, institutional finance and capital markets.
Professor Edward Altman has served as a Professor of Bankruptcy, Restructuring and Credit Risk Management in the Executive Education Risk Management Programme at the Stern School of Business at the prestigious New York University and the Global Executive Master of Business Program. He was Director of Debt and Credit Market Research at the Solomon Center for the Study of Financial Institutions at New York University.
He also served as Chair of the MBA programme at Stern University for 12 years and has been a consultant to several US government agencies, major financial institutions and accounting firms. Professor Altman has given countless presentations in North America, South America, Europe, Australia, New Zealand, Asia and Africa.