1.Longer-term funding provides more stable funding, but costs more than short-term term funding.
2. Market rates can change, deposits became more expensive than wholesale funding due to short-term high demand.
1. A greater focus on funding stability, rather than asset growth was required.
2. Funding incredibly hard to secure in a downturn, Bank’s now focus on issuing bonds globally rather than in home markets.
3. Banks ensure ongoing presence in foreign markets in case of another downturn. (Roadshows)
1. Deposit Mix: Deposits can be a very stable source of funding (brand matters)
2. WSF Amount: Issue smaller amounts spread over many years to reduce refinancing risk. No lumpy repayments due.
3. WSF Duration:
Longer = more stable but expensive
Shorter = less stable but cheaper
Try to match against asset duration
1. Brand always matters – not just in times of stress.
2. A bank can not operate in silos. Treasury relies heavily on business insights to fund the bank safely.
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