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Treasury Profitability
The Executive of this bank sought an independent assessment of the Treasury P&L. In particular the relative proportions attributable to customer business, internal transfer pricing and risk taking.
This involved examining deals at a trade level in order to determine trade profitability, identifying both intra and inter day risk positions. This quantitative assessment was supported with a qualitative assessment of how dealers managed their trading positions.
The report demonstrated that both foreign exchange and money market income was dependent on customer business. Transfer pricing and risk taking accounted for a smaller proportion of revenue.
The strategic implications were important. Although not surprised the bank's management had not hitherto been able to independently assess the Treasury's activity.
Customers provided the income. Requests to increase trading risk limits would not improve the consistency and quality of earnings.
Displaying 1 to 6 of 6 results in total.
10th June 2010
This retail bank used its treasury to manage interest rate and liquidity risk. The bank's management requested a detailed assessment of the structure, risk and strategy of the treasury together with recommendations for improvements.
Learn about the following: What a treasury does. How a treasury is organised. The main jobs. Delegation and segregation. Departments that support treasury. The risks in treasury.
15th September 2009
Treasury bills are short term debt instruments issued by governments to meet their financing requirements or drain liquidity from the financial system. The credit risk is that of the sovereign issuer. The maturities are short dated typically 3, 6, 9 or 12 months.