Moneta●
RECENT PROJECTS
OPTIMISE DEPOSITS PORTFOLIOS
Optimise Deposits Portfolio, Align Coverage and Client Proposition
In 2017 Gareth Vance was engaged to help a bank create strategies and change behaviours to ensure their corporate and institutional deposits portfolio was not only maximised but ensure their client proposition and behaviour of coverage teams was fully aligned.
Requirement:
Once ring fencing went live, this non-ring fenced bank would no longer have access to the cheap and ‘sticky’ retail deposits generated by their ring fenced retail bank; far greater reliance would be placed on their corporate and institutional deposits portfolio.
In 2017 this bank engaged Moneta to support the optimisation of their corporate and institutional liabilities (deposits) portfolio and to professionalise their non-wholesale liquidity management function.
The objective was to meet regulatory requirements and margin ambitions via proactive portfolio management with an aligned product and proposition strategy.
Solution:
Following a review the following areas of focus/deliverables were agreed:
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Investigate current Operating Model (OM) and propose a Target Operating Model (TOM) which would incorporate portfolio product and pricing management to achieve/maintain all of the below.
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Investigate in tandem the current portfolio (size, construct and pricing) and current funding model (Transfer Pricing and Behavioural Mechanisms).
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Investigate current MI capabilities – in particular granularity available at client level on product, pricing and account/balance behaviours and propose enhancements to monitoring and governance
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Identify the ‘Good’ (LCR denominator friendly, fair priced, relationship), the Bad (could become good) and the Ugly (never will become good) of the portfolio and propose strategies to attract/retain good, transition bad and exit ugly
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Investigate current links between product and coverage (education, tools and incentivisation) and propose enhancements to better align behaviours
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Identify current STP/MTP balance/margin ambitions and propose key areas of focus for detuning
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Estimate future non ring-fenced funding levels and in parallel consider NIM impact if LCR were to be achieved on current funding by increasing HQLA (numerator lead). Propose pricing/retention strategies in combination with de-tune activities to mitigate
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Work with CFO’s office to understand, other than LCR, future liquidity regulatory Pillar I (NSFR) and Pillar 2 (ILAAP) requirements and articulate these to the business
Outcome:
Following a detailed review a proposed TOM along with suggested strategies to optimise where presented to EXCO.
These were accepted, adopted and the post ring-fencing institution has successfully continued to grow and optimise their corporate liabilities portfolio.