Chapter 7
ASSET AND LIABILITY MANAGEMENT III: THE ALCO
The third and final strand of our look at bank ALM considers the reporting process, often overseen by the asset–liability management committee (ALCO). The ALCO has a specific remit to oversee all aspects of asset–liability management, from the front-office money market function to back-office operations and middle-office reporting and risk management. In this chapter we consider the salient features of ALCO procedures.
ALCO policy
The ALM reporting process is often overseen by the bank’s ALCO. It is responsible for setting and implementing ALM policy. Its composition varies in different banks but usually includes heads of business lines as well as director-level staff such as the finance director. It also sets hedging policy.
Typical membership of the ALCO is as follows:
| Members | CFO (Chairman); Deputy (Head of Financial Accounting)CEO (Deputy Chairman)Head of Treasury; Deputy (Head of Money Markets)MD Commercial BankingMD Retail BankingChief Risk Officer |
| Guests | Head of Market & Liquidity RiskHead of Product ControlHead of ALM/Money MarketsHead of Financial Institutions |
| Secretary | PA to the Head of Treasury |
The ALM process may be undertaken by the Treasury desk, the ALM desk or other dedicated function within the bank. In traditional commercial banks it will be responsible for management reporting to the ALCO. The ALCO will consider the report in detail at regular meetings, usually monthly. The main points of interest ...
