treasury

Ensures the business has the money it needs to manage its day-to-day business obligations

Develops its long-term financial strategy and policies to manage money and obligations

Involves the management of money and financial risks in a business.

Includes management of an enterprise's holdings

Manage the firm's liquidity and mitigating its operational, financial and reputational risk

Highly specialized and designed to meet the unique investment and risk coverage needs of institutional and corporate customers.

Responsible for balancing and managing the daily cash flow and liquidity of funds within the bank

Handles the bank's investments in securities foreign exchange, asset and/or liability management and cash instruments.

Occupies a central role in the finances of the modern corporation.

Takes responsibility for the company's liquidity:

Ensures that a company always has enough cash available to meet the needs of its primary business operations.

in order to make the best possible use of the funds, maintain firm's liquidity, reduce the overall cost of funds, and mitigate operational and financial risk.

Aims to ensure that adequate cash is available with the organization, during the outflow of funds.

Contributes to the optimum utilization of funds

Ensures that there are no unutilized funds kept in the firm for a very long term.

The accounting staff generally handles into receipt and disbursement of cash, but the treasury staff needs to compile this information from all subsidiaries into short range and long-range cash forecasts.

Determine when more cash is needed, so that it can plan to acquire funds either using debt or equity

Forecasts are needed for investment purposes, so the treasury staff can plan to use investment vehicles that are of the correct duration to match scheduled cash outflows

A key component of cash forecasting and cash availability is working capital, which involves changes in the levels of current assets and current liabilities in response to a company's general level of sales and various Internal policies,

The treasurer should be aware of working capital levels and trends and advise management on the impact of proposed policy changes on working capital levels.

The treasury staff uses the information it obtained from its cash forecasting and working capital management activities to ensure that sufficient cash is available for operational needs.

The efficiency of this area is significantly improved using cash pooling systems

Ensures that there are an effective collection and payment system in the organization.

The treasury staff is responsible for the proper Investment of excess funds.

The maximum return on investment of these funds is rarely the primary goal.

It is much more important to not put funds at risk, and to match the maturity dates of investments with a company's projected cash needs

The interest rates that a company pays on its debt obligations may vary directly with market rates, which present a problem if market rates are rising.

A company's foreign exchange positions could also be at risk if exchange rates suddenly worsen.

In both cases, the treasury staff can create risk management strategies and implement hedging tactics to mitigate the company's risk.

A key function is for the treasurer is to maintain excellent relations with the investment community for fund raising purposes

Devises different ways on how to raise funds efficiently through different channels afforded by the institution.

The granting of credit to customers is useful for the treasury staff to manage, since it allows the treasurer some control over the amount of working capital locked up in accounts receivable.

May include the establishment of criteria for those availing of different credit-based product for personal, business, government entity use

tasked with the management of all financial affairs of the business such as raising funds for the business from various sources, currency management, cash flows and various strategies and procedures of corporate finance

The management of all financial affairs of the business such as raising funds for the business from various I sources, currency management, cash flows and various strategies and procedures of corporate finance.

Ensures that a company always has sufficient cash available to meet the needs of its primary business operations.

The dealer or trader who books the trades and executes it

Enforce and review risk limits and exceptions.

Responsible for settlement, processing and documentation, confirmation and accounting.

The Front Office

Ensure day-to-day cash requirements and long-term needs. Maximization of idle resources. Analyzing reason for inability to fund cash outflows from cash inflows.

Ensuring liquidity in foreign exchange funds without compromising profitability. Handling multi-currency exposures. Managing complicated dynamics fluctuating exchange/interest rates/tax position management.

Identification of risks faced by the firm and level of risk acceptable to maximize return and minimize cost at level acceptable to the firm. Formulate risk management strategies

Receives a reward (capital gain/Interest) for contributing funds to the pool.

funds infused by stockholders

funds received from depositors (bank) via Deposit/Placement

Charged a penalty (pay interest to investors) from withdrawing funds from the pool

refer to the funds that banks owe to their customers who have deposited money into their accounts.

It is the process of establishing an internal price of funds among users and providers of funds within the bank.

Pool of funds are established and managed by Treasury.

Basis of the Transfer Pool Rate (TPR

Maximum interest rate permitted in a particular transaction.
Interest rate ceiling.

An agreed-upon rate in the lower range of rates associated with a floating rate loan product.
Interest rate floor.
Utilized in derivative contracts and loan agreements.

A financial agreement between two parties whose value is derived from the performance of an underlying asset, index, rate, or event.

Used for hedging, speculation, or investment purposes. Derivatives can take various forms, including futures contracts, options, swaps, and forwards

Derivative Contract Types

Similar to futures contracts, but TRADED OVER-THE-COUNTER (OTC) and customized between two parties.

These involve the exchange of cash flows or other financial instruments between two parties often to manage interest rate or currency risks

These obligate the buyer to purchase, or the seller to sell on asset at a predetermined future date and price TRADED ONLY IN THE STOCK MARKET

These give the buyer the right (but not the obligation) to buy or sell an asset of a specific price before or at the expiration date

Summarizes Assets (USER) and Liabilities/Capital (SOURCE) generated by the business segments and Treasury, Corporate Banking, Business Banking and Executive Office.

Reflects the net profit and loss derived from: • Difference between the asset and income less TPR expense Liability expense less the TPR income.

Issues policy guidelines relative to management and reporting of all trading risks. Reviews organizational issues and clears designated authorities

Acts as a bridge between the client-focused activities of the front office and the operational and administrative functions of the back office within a financial institution.

Ensuring that the activities of the front office comply with regulations, managing risks associated with trading and investments, and providing support services to facilitate smooth operations

The Middle Office

Responsible for settlement, processing and documentation, confirmation and accounting.

Performs the processing and risk monitoring functions that are carried out independently from the trading function.

Ensures that control points are in place for all aspects of the day-to-day process in order to control the Market, Credit, and Operational risks arising from Front Office transactions.

The Back Ofiice