Wholesale Banking/Treasury - transforming the Treasury function

The creation of a new operation, which may be characterised by being big, complex and misunderstood, was the challenge faced by our Banking client as they set about merging and creating a new effective integrated and compliant Treasury function against the backdrop of the worst financial crisis the world has seen since the 1930s.

Our entry point to this major change was to provide support in bringing more order to a programme already mid flight and help organise and structure the multiple initiatives which had emerged and which were running ahead in parallel with little to link them together.

It was clear that the intent was to create something new. This was not just a merger. But it was clear also that there was little in the way of a design, a picture or articulation of the desired end state so as to be able to pin down all the initiatives and test that they were complete, mutually exclusive and necessary. Our client needed a design. They needed a ‘Target Business Model’ for a treasury function – one that could provide a clear and unambiguous representation of how it worked, how it linked with other functions and where all the initiatives were positioned.

We completed the development of this in a 4 week assignment to 3 levels of definition and in doing so were able to demonstrate how the function would work so ensure that it could: transfer of market and interest rate risk to points in the organisation best able to meet them; Optimise the use of assets and liabilities and minimise charges for liquidity; allocate and account for the real cost of interest rate risk free liquidity; manage the liquidity flows and buffers ; ensure recovery through proper pricing ; Ensure optimal use of capital and maintenance of capital buffers and work in tandem with the Business and Finance.

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