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Treasury Consulting > Treasury profitability

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Client:   UK Bank

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.

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