The task for this year’s FICC Nordic Case Competition was to to help the Swedish company “International Transportation AB” and its subsidiaries in Finland and Germany with their risk management. The company is exposed to Foreign Exchange risk due to their international customer base in all of Europe, Interest Rate Risk due to their large debt arising from real estate owning and acquisitions, and finally the company has a lot of excess cash that needed to be placed in bonds or equities to yield International Transportation AB some extra money. The tricky part was that the reporting currency for the company was SEK but the income was in EUR, DKK and SEK. The long term debt in the company was issued in both SEK and DKK. Since the income came from three different currencies, the students needed to take that into account when making the investment proposal for the excess cash as well as when looking at the FX and interest risks.
The participants were divided into four cross-nordic teams and a part of the whole case task was to make the work work while not being able to sit next to each other. Using LYNC, phones, video conference rooms, Facetime and other creative solutions, the teams managed to cooperate beautifully. One of the participants, Yang Zhou who is a student worker at Macro Research Sweden, explains the challenge of working across borders: “At first it was really difficult to coordinate the work as apart from the case competition, we all had our daily tasks as well. But with the help of Lync and online meetings we could leave messages to each other and have group discussion when everyone was available. In the end I think we managed to come up with a great solution together and learned a lot about financial risks in the process. ”
A team of experienced sales managers within Nordea Markets were supporting the teams and guiding them through the world of currencies, rates and investments. Helping the participants is of course essential, one of the goals of the case is to widen the toolbox within fixed income and currencies and to do that, experienced help is needed. Working with interest rate risk here at Nordea Markets in Stockholm, I helped the students by sharing what I’ve learned over the past 14 months since I started working here at the trading floor. It was a fun and good experience for me to share my knowledge, requiring me to explain hedging strategies and interest rate derivatives in a very thorough way.
The competition lasted for a week and on Friday afternoon the deadline came. Four great sales pitches were presented and the work of finding a winner is in full progress. It is really a tough race to the finish line, all teams have made great presentations and truly amazed us with their hedging solutions and well prepared arguments.