Why is Bank Treasury Department Important

The treasury division of a bank is engaged with cash management, liquidity planning and liquidity protection. It is also conscious to protect all the bank’s assets and profits against loss due to domestic as well as global financial realities, particularly interest and exchange rate fluctuations. The treasury department is also regarded as a profit center, which generates income by trading instruments in the financial market. The treasury is constituted with well setup front office, mid office and back office. To manage treasury unit as profit center, along with guidance from regulatory authorities, the bank equipped itself with clear policies, fit organization structure, deployment of trained staff, modern infrastructural facilities and technological initiatives. Banks has a dedicated treasury team, which is capable of providing all treasury solutions through wide range of treasury products. Treasury has many different helping desks, which are specialized in their own area to provide best services with respect to pricing, best possible solution for customer requirement and market information.

Major Activities of Treasury Division of a Bank

• Foreign Exchange: Forex desk is one of the leading market maker in spot, swaps, and forward transactions in inter-bank market. The bank has good sources of foreign currency through its own export customers, non-residence remittances and local & multinational corporate houses remittances.

• Money Market: Money market dealers arrange short and medium term funds at most economical terms, which are required by the bank aside from customer deposit mobilization efforts. Money market desk ensures that the bank remains sufficiently liquid, meeting all its financial commitments and obligations to its customers besides meeting the statutory liquidity reserve and cash reserve ratio requirement at minimum risk and cost to the bank.

• Investment: Investment desk in treasury front office operates within the policy frame approved by the board of directors of the bank. Fund invested in different securities both for maintenance of statutory liquidity reserve and income generating activities. The philosophy is to manage and maximize income within certain parameters and limits.

• Asset Liability Management: Asset liability management is one of the major functions of a bank’s treasury. Objectives of the asset liability management desk are to ensure efficient allocation of fund within an acceptable, measurable and defined risk structure.