Treasury Today Country Profiles in association with Citi

Feb11Banks bearing gifts

Wooden Trojan horse

A new banking tongue-twister is doing the rounds – ‘behaviouralisation’. In an effort to reconcile the needs of banks, which are focusing on longer term, stable deposits for regulatory reasons, and treasurers, who want the flexibility to move money about as and when needed, banks are encouraging desirable corporate deposit behaviour by developing products which may provide enhanced yield or other rewards for the ‘right’ deposits. Should treasurers be monitoring their own behaviour to make the most of this – or should they be wary of banks bearing gifts?

Reader Comments 

Please login or register to submit your own comment
  1. Treasurers seem unduly sceptical of these kinds of products - but with credit constrained and banks more sensitive to internal corss-subsidies, we are going to have to get used to paying the right price for specific services. In FX people are even talking about minute by minute interest rates and we all know we are already being charged much more for intraday overdarfts already.

    Guest's Gravatar

    Guest 17/02/2011 14:31:39

  2. More than new deposit products, corporate treasury can begin to expect to see banks introduce intraday overdrafts or loans targeted towards intraday liquidity usage behavior, ergo net users of bank intraday liquidity will be priced (up) accordingly. At the moment, however, no bank can do this technically. This will inevitably change, especially as FSA liquidity reporting requirements take effect.

    For thos einterested, I would also suggest reading this white paper: "Treasury Risk Management in the New Era of Regulated Capital", by FinCAD. This speaks to what corporates will need to do in terms of risk and valuation transparency going forward to pass banks "behaviourilization" tests to obtain comitted lines.

    Matthew Fuellhart, Tieto

    tieto international's Gravatar

    tieto international 21/02/2011 08:12:47