Funds transfer pricing
From ACT Wiki
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 customers - and expand lending volumes - in the mistaken belief that this lending is profitable.
