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The Bank Treasury Function - Resources, Tools and Procedures

Duration: 2 days
  • Introduction to the Bank Treasury Function
  • Treasury Organisation and Procedures
  • Building Core Treasury Skills
  • Accounting, Reporting and Controls
  • Structuring Products to Meet Clients Needs
  • Derivatives Applications in Bank Treasury
The objective of this seminar is to give you a good and practical understanding of the objectives, tasks and tools of a bank treasury department.

We start with a general discussion of the role of the treasury function in banks. The importance of funding choices and sound risk management will be explained, and we present an asset-liability framework for treasury management.

We then take a closer look at the organization of a “typical” treasury function. We define the scope, level and content of the function, and we suggest appropriate policies and procedures the day-to-day treasury operations, and we review how the various parts of treasury interacts with other parts of the organization. We also look at how the Asset-Liability Management Committee is organized in a typical bank.

Further, we explain how to build core treasury skills, including the practical handling of tasks such as cash management, liquidity management, foreign exchange management, interest rate management and the use of financial instruments (dealing, clearing, settlement etc.).

On day two, we first explain practical issues related to accounting and reporting. Accounting issues include “fair value” accounting for financial instruments under IFRS and US GAAP. We then discuss how the treasury can coordinate its activities with other departments to create banking products that maximize the bank’s spread (and fee) income, or products that can be used for indirect risk transfer. We give examples of “optimal” cash management services and of deposits and loans that are structured to meet the clients’ as well as the bank’s needs.

Finally, we give a number of practical examples of how derivate instruments can be used in treasury management. Applications include interest management, spread management, yield enhancement and asset-liability management.

Day One

09.00 - 09.15 Welcome and Introduction

09.15 - 12.00 The Treasury Function

  • What Is “Treasury”?
  • Treasury Objectives and Responsibilities
  • An ALM Framework for Treasury Management
  • How Treasury Management Can Create Shareholder Value

Treasury Organisation and Procedures

  • Establishing the Framework for Treasury Management
    • Defining the scope, level and content of Treasury Management
    • Defining risk attitude and risk tolerance
    • Formulating a treasury policy
    • Organisation
    • Responsibilities
  • Case Study:
    • The Treasury Function at “NoHope Bank”

12.00 - 13.00 Lunch

13.00 - 16.30 Building Core Treasury Skills

  • Understanding the Sources of a Bank's Assets, Liabilities and Profits
  • Understanding the Practicalities of Treasury Tasks
    • Cash management and liquidity management
    • Foreign exchange and interest rate management
  • Understanding the Practicalities of Financial Markets and Instruments
    • Money and capital markets
    • FX markets
    • Derivatives markets
    • Dealing methods
    • Market conventions
    • Settlement techniques and systems
    • Regulatory issues
  • Exercises

Day Two

09.00 - 09.15 Brief Recap

09.15 - 12.00 Accounting, Reporting and Controls

  • Treasury Reporting
    • Internal (management) and external reporting
  • Accounting issues related to use of financial instruments
    • FAS133 and IAS139
  • Treasury IT Systems
  • Benchmarking and Performance Measurement

Structuring Products to Meet Clients Needs

  • Coordination of Treasury Objectives with the Design of Client Solutions
    • Maximizing spread income
    • Transferring risk through client solutions
  • Creating Optimal Cash Management Solutions – for the Client and for the Bank
  • Structuring Deposits and Loans
  • Small Exercise

12.00 - 13.00 Lunch

13.00 - 16.00 Derivatives Applications in Bank Treasury

  • Derivatives and their Characteristics
  • How Derivatives Can be Used to Add Value in Treasury
  • Hedging of rate risks
  • Asset-Liability Management with Derivatives
  • Case Studies:
    • Using FRAs and deposit futures for short-term interest management
    • Using FX derivatives to hedge FX risks
    • Using swaps to manage rate risk and create “overlays”
    • Using FRAs, futures and swap to maximize spread income and risk-adjusted return on capital
  • Small Exercise

Summary, Evaluation and Termination of the Seminar