Funds transfer pricing: Difference between revisions

From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson
(Expand.)
imported>Doug Williamson
(Expand.)
Line 9: Line 9:




For example, if a bank's FTP leads to a lending unit's funding costs being underestimated, the lending unit may offer cheaper loans to customers - and expand lending volumes - in the mistaken belief that this lending is profitable.
For example, if a bank's FTP leads to a lending unit's funding costs being underestimated, the lending unit may offer cheaper loans to external customers - and expand lending volumes - in the mistaken belief that this lending is profitable.





Revision as of 14:02, 31 August 2016

Banking - internal transfer pricing.

(FTP).

Funds transfer pricing deals with the internal transfer prices for funding, within a bank.


FTP methodologies are important because they affect a bank’s internal profit allocation, and thereby influence business lines’ activities and appetite for risk.


For example, if a bank's FTP leads to a lending unit's funding costs being underestimated, the lending unit may offer cheaper loans to external customers - and expand lending volumes - in the mistaken belief that this lending is profitable.


See also