Funds transfer pricing: Difference between revisions

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Funds transfer pricing deals with the internal transfer prices for funding, within a bank.
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.
FTP methodologies are important because they affect a bank’s internal profit allocation, and thereby influence business lines’ activities and appetite for risk.

Revision as of 13:59, 31 August 2016

Banking.

(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.


See also