Capital Management, Liquidity & Treasury Risk
Capital management liquidity and treasury risks are at the heart of the agendas of CFOs and CROs in financial institutions. These are key subjects for financial institutions that seek (emerging) market growth while addressing external challenges imposed by current volatile markets. As the external environment continues to change, the demands on ALM/Treasury, risk and finance functions have never been greater. Deloitte proactively assists organisations coping with these challenges.
Financial institutions deal with numerous complex and diverse challenges, e.g. (i) regulatory regimes globally, (ii) low/negative interest rates and (iii) innovation induced change.
- Peak regulation may have been reached. For example, consider regulation around Interest Rate Risk in the Banking Book (IRRBB), Fundamental Review of the Trading Book (FRTB), Internal Liquidity Adequacy Assessment Processes (ILAAP) from the Bank for Internal Settlements and the European Banking Authority. However, the main impact of regulation on banks (and its treasury activities) still has to materialise within the coming years.
- The low interest rate is another concern. The global financial crisis has ushered in an era of low interest rates. More than eight years on from the onset of the crisis, growth remains subpar and interest rates have drifted lower still, sometimes into negative interest. In their search for new ways of boosting growth, some central banks have set interest rates below zero.
Negative rates put yet more pressure on banks. They may have to pay – rather than receive – interest on their deposits with a central bank and face lower, or negative returns on their holdings of government debt. When banks try to pass on negative rates, savers may respond by holding on to their cash rather than paying a penalty to keep it in the bank. Negative interest rates squeeze bank profits and challenge traditional models of banking.
The low and negative interest rates have a big impact on the profitability of financial institutions and on how they manage the risks that result from those rates. Deloitte supported several organisations in managing the low-interest rate regime.
- And then there is the innovation induced change; this can help improve performance and establish a basis for continued profitable growth.
How do financial institutions manage to keep track of all these challenges? How do they respond and how quickly?
We contribute by providing a proactive measure to assess, process, model and report, related to capital, liquidity and treasury risk management. We see your challenges but we will make them opportunities.
We have global and in-depth knowledge on the services listed below, thorugh our experience in the field of marketing.
- Treasury and Balance Sheet Management Strategy
- Treasure Governance and Transformation
- Treasury Systems and Transformation
- Interest Rate and Liquidity (including concepts like multi-curve, FVA, DVA)
- Model Validation
- Hedging Strategies including Hedge Accounting
Our multidisciplinary teams have distinct experience in some of the biggest financial institutions in the world. With our knowledge, experience and technology-enabled methodologies we can help turn insight into foresight. We rely on innovation and our global network of ALM treasury experts to deliver results with more quality and value to our clients.
Risk Powers Performance
Today’s business climate is characterised by disruption and volatility. At Deloitte, we help businesses gain a new view of risk—seeing risk management as a vital performance lever, revealing untapped opportunities to create competitive advantage.