For us advice in interest and liquidity control means: Using our expertise to present you with bespoke solutions.

A functioning bank treasury is indispensable for long-term success.

Refinancing, liquidity control and asset-liability management have come into focus at many financial institutions.  This also applies consequently for the bank treasury. The drivers of this development may be sought, firstly, in the implications of the low interest environment and in the increased regulatory requirements.  Secondly, a decisive role is played by general developments such as the increasing function of collateral management.  Generally, these factors result in a re-assessment of the treasury role and optimization of the interfaces with other areas of the bank.

Treasury controls the allocation of liquidity within the bank via Funds Transfer Pricing and is therefore an integral part of management. This makes appropriate and efficient offsetting even more significant.  This important control cycle must be sustained by efficient processes and be based on suitable methods.  Only in this way can the Treasury exercise its central task efficiently and effectively.

Current questions that arise relate to the methodical and strategic handling of negative interest rates.  There is also more focus on options in loan contracts.  Here questions arise as to the appropriate pricing of the options and as to possible hedging strategies.  One subject that continues to be topical is the present-value measurement and control of the interest-rate risk in the banking book – not least on account of the new rules on the Interest Rate Risk in the Banking Book (IRRBB). But it is not only IRRBB that is casting its shadow ahead. Even changes in the equity backing of market price risks which are implemented through the Fundamental Review of the Trading Book (FRTB) relate indirectly to the treasury, for example via internal risk transfer.  Many financial institutions are therefore currently examining whether to move from the internal value creation chain between treasury and capital markets to a direct market access by the treasury.

Ultimately, the current market environment combined with the regulatory requirements results in a re-appraisal of the opportunity-risk ratio of the contribution to results from term transformation that is so important for many financial institutions.

We do not leave you alone with the classical questions of bank management.  LPA is an experienced and committed business partner for banks seeking supportive advice and pragmatic solutions for their interest and liquidity management.

Overview of the selected subjects:

  • Strategic direction and role in the bank
  • Optimal positioning in the context of regulations, market and internal requirements
  • Optimization of the interfaces to other bank areas (loan, capital markets, risk, finance)
  • Funds Transfer Pricing (FTP), risk and capital budgets, limits
  • Implementation of the regulatory agenda: IRRBB, FRTB, NSFR, LCR
  • Interest book control and terms transformation in the new normality