Funds Transfer Pricing Analysis and Framework Design

European multilateral development bank | Data, digital & technology | Supranational

The challenge: A European multilateral development bank required an analysis of its first line of defence Funds Transfer Pricing practices across its Capital Markets, Treasury, Front Office and Risk Management functions. The main entities impacted were the Capital Markets function responsible for the bank's capital raising, the Treasury function performing asset and liability management, liquidity management, portfolio management and financial engineering, the Front Office lending functions covering loans and guarantees, and the Risk Management function responsible for developing and maintaining the bank's Funds Transfer Pricing system and monitoring Treasury portfolio performance. The bank needed to identify gaps against industry standards and best banking practices, and develop a framework to address them.

What New Link Consulting did: New Link Consulting reviewed the current state of all in-scope Funds Transfer Pricing practices and documented the status, identifying potential gaps against industry standards and best banking practices. New Link Consulting then drafted a new Funds Transfer Pricing framework and operational action plan to address those gaps. The analysis covered the Funds Transfer Pricing methodology, documentation including policies and procedures, performance and controls reporting, supporting infrastructure, and the organisation and governance of the Funds Transfer Pricing practices.

The outcome: A new Funds Transfer Pricing framework and operational action plan that brought the client's practices in line with industry standards, with clear recommendations covering methodology, documentation, reporting and governance across all in-scope functions.