Treasury Management for Building Societies

  

Treasury Management for Building Societies, (Two Days)

This workshop is about building society treasury management. It explains the key terms, the role of treasury, the products used, the regulatory climate (including PS09/16, Strengthening Liquidity and PS10/5, the new sourcebook), the risks, risk management and governance.

You do not need prior knowledge, the explanations are straight forward and include practical exercises. The course is suitable for anyone who needs to know more about treasury. This includes NEDs, senior managers, those in operations, finance and audit and those who are new to dealing and risk.

Below is a summary of the workshop content. Each day has been placed in a logical sequence and addresses the things you need to know.

Day One

Key issues in financial markets today

• Regulation/Risk/Governance
• The affect on building societies

Key terms that are used in treasury: An explanation of essential terminology and definitions.

The role of treasury: What the Treasury does & the regulatory framework of PS 10/5 (the new sourcebook).

• The role of treasury
• The regulatory restrictions & "approaches"
• Reporting structures and segregation
• The main roles & responsibilities

Money markets products: How these markets work, how societies use them and the risks involved.

• Loans and deposits & certificates of deposit
• Treasury bills
• Reserve account
• Money market funds

Repurchase agreements

• How repo transactions work, the documentation and the risks involved.

Liquidity risk: How liquidity risk is identified, measured, mitigated and managed.

• The regulatory framework of PS 09/16 (Strengthening liquidity)
• Responsibility of the board
• Simplified/standard approaches
• The "drivers" of liquidity risk
• Wholesale and retail funding
• Contractual/behavioural risks
• The impact of stresses
• The buffer requirement
• How liquidity is reported
• Turnover requirements
• Contingency funding plans

The affect on Societies of the new framework

• Identifying vulnerability
• Cost of liquidity
• Funds transfer pricing & retail product pricing

Derivative products

• How swaps are used to hedge interest rate risk
• How hedging works
• Swap pricing & valuation
• Documentation
• Credit exposures
• Collateral management
• Contingent liquidity calls

Interest rate options

• An explanation of caps, floors and swaptions
• Where and how option risk occurs in society balance sheets, (mortgage and savings products)

Day Two

Fixed rate bonds & floating rate notes

• What they are and how they work
• How they are used by societies as assets and liabilities
• The main risks involved (interest rate risk, credit risk and liquidity risk)

Market risk/structural risk - How this arises

• Balance sheet mismatches
• Changes in the level and shape of the yield curve
• The affect on earnings and valuations

Market risk/structural risk - Reporting

• Typical risk reports, how they work & their strengths and weaknesses
• Static and dynamic gap reporting
• Basis point value
• Earning at risk
• Classification of reserves

Market risk/structural risk - Basis risk

• What it is and how it arises
• The measurement of basis risk
• Managing basis risk

Treasury & credit risk

• Credit decisions and committees
• How it is measured and monitored
• The importance of ratings and the risk they can pose

Treasury operations (back office)

• What happens when a transaction is completed
• Where the trade goes/what happens to it
• The key controls that take place
• The operational risks that can arise

Governance & risk limits

• The board's responsibility
• Improving board reporting packs
• How you establish risk appetite
• How this translates into risk limits in treasury and examples of limits
• The role of ALCO
• The role of audit

End of workshop and review