CHAPTER 10The Bank Treasury Operating Model and ALCO Governance Process Best‐Practice

Gene Kranz is a leader. He is a man who gives others the feeling that they are about to go through the door together into the stadium where they are each going to play the game of their life.”

—Norman Mailer, A Fire on the Moon, Boston: Little, Brown & Company, 1970

There are certain functions in a bank that are understood universally and which require very little effort in their definition. For example, it will be clear to every banker in every country in the world what the “corporate lending” department does. And while some departments in banks are relatively recent in their historical origins (think of the “correlation trading” desk), some departments will be as old as banks themselves.

The “Treasury” function is just such an ancient department. Whatever they may have been called at the time, the very first banks would have had an individual or team of individuals responsible for collecting all the deposits and for transmitting all the loans, and for dealing with the surplus or shortage of cash at the end of the day. However, mention “Treasury” to a banker (or University economics department professor) and it will not be entirely clear to them quite exactly what the Treasury department does in any one specific bank. There is considerable variety observable. This is not an uncommon thing in finance, which as a practical discipline is almost as much art as science, and while there is no ...

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