In September and October 2014, IE Finance Professor Rafael Martins de Lima Ferreira traveled to different countries around the world to give Finance Master Classes. During his trip to CIS countries, Anna Jueterbock from IE Russia Office (also  IE alumnus of the Master in Corporate Communication) had the chance of interviewing Professor Rafael despite his busy schedule.

During this interview, Professor Rafael, a finance expert with 20 years of experience on three continents talks about his master classes in Azerbaijan, Kazakhstan, Russia and Ukraine, shares his views on the future of the economy and discusses what it takes to be a banker.

Professor Ferreira, you were travelling extensively lately, conducting eight master classes on Basel III and business financing in Azerbaijan, Kazakhstan, Russia and Ukraine. What makes the topics of your master classes so relevant for these markets?

All these markets are either enjoying impressive growth or have big potential. Every time I visit their capitals, I am amazed by the transformation that they are going through and their continuous development. So I think that the topics of Basel III and business financing are very relevant for such dynamic and high-potential markets.

Basel III rules are interesting for a more senior audience, for banking experts who want to understand the new requirements and their consequences for the economy. What I am telling during this master class is that Basel III rules appeared as a natural response to the crisis. And although the roots of the crisis are in the USA and Western Europe, banks are becoming increasingly global, money is interconnected and the crisis is affecting the CIS markets. I am confident that Basel III rules will have a profound impact on the economy. They introduce significant increases in minimum required levels of capital and liquidity, which means that banks need to go to global capital markets, and that in turn, is making money scarce and more expensive. In the long run, however, I believe it will lead to a much healthier economy. During these master classes, I speak about capital ratio and liquidity according to Basel III and discuss the Rules’ implementation and consequences.

And the second topic?

The second topic – business financing – targets the audience that is interested in starting or growing their own business. We all know that traditional ways of getting money for the business, that is, going to banks, is getting more difficult. So we need creative ways of finding the money. I argue that the new approach to Business Financing became much leaner and allows the money to go when and where it is needed most. Funding sources are becoming more diversified and we differentiate among three types of business financing: corporate finance, project finance and asset finance. The first type – corporate finance – typically includes M&A, IPOs, Debt issues and other transactions in order to get money to raise funds avoiding standard bank loans. The second type, as the name already implies, is used to fund capital-intensive projects, where amortization and interest payments are generated exclusively from the project itself. And the third way of business financing – asset financing – is normally used to fund ships, airplanes, real estate, etc. According to this model, asset becomes the main payment guarantee.

Depending on business needs and the given situation, we can choose the model that suits us best and thus, make new ventures possible. During master classes, I go in depth on each of the models so that participants get as much value as possible and can apply the knowledge they gained to real-life situations.

What was the audience especially interested in during your master classes?

I was happy to see that people were very interested in both topics. The audience was especially interested in the practical side of the question and was eager to get as many practical tips as possible. I was also impressed by the participation! In some master classes we had more than 60 attendees! It made me believe that we chose the right topics, and I truly enjoyed conducting the master classes.

What are three most important take-aways for the audience from your master classes?

First of all, I want the participants of my master classes to understand that finance is not bad at all. It’s an important function, a key for the economy development.

Secondly, finance can become a beautiful profession if exercised in a transparent and fair way. As a finance expert you get a chance to decide where the money is going, fund important projects and support good causes.

And lastly, it’s not easy to be a banker. Not only do you need extensive knowledge and, thus, need to study continuously, but you also have to possess superb interpersonal skills. It’s a key for this profession.

 

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