Funds transfer pricing: Difference between revisions
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imported>Doug Williamson (Create the page. Source: Bank of England Quarterly Bulletin 2015 Q2. http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2015/q204.pdf) |
imported>Doug Williamson (Update.) |
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For example, if a bank's FTP leads to funding costs being underestimated, the | 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. | ||
Revision as of 13:58, 31 August 2016
Banking.
(FTP).
Funds transfer pricing deals with the internal 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.
