What’s on International Treasurer’s radar screen this week. 

This week’s editorial meeting brought forth a few topics that we’ll be fleshing out over the coming weeks.

Banks want more operational deposits.
Regulations such as Basel III are incentivizing banks to grow their base of “operational deposits” (trust, custody and cash management services deposits). This is because, according to Ernst & Young, Basel III regs have loosened the rules somewhat. One of the final framework provisions of Basel III applies a lower run-off factor to “unsecured wholesale deposits where the bank has an operational relationship with the depositor than would apply if the bank did not have an operational relationship.” This has an impact on a bank’s liquidity coverage ratio, the level of unencumbered, high-quality assets that bank must have that can be converted into cash to meet its liquidity needs for 30 days (in the event of an “acute liquidity stress scenario”).

Policies and procedures.
At the NeuGroup’s recent Global Cash and Banking Group (GCBG) meeting, members weighed the pros and cons of having broad, general policies and procedures vs. very detailed ones. The main point is that the more detailed your policy, the greater the risk of being in violation.

Global treasury structure.
Also from the GCBG, a discussion covering shared service centers, treasury centers, and the strategic thinking around them. A notable point was that one member has hired a treasury compliance officer as well as a tax compliance officer to focus on their respective policies and regulatory requirements; clearly an additional expense in response to increasing regulatory burdens.