An Assessment on Ab Bank Treasury

An Assessment on AB Bank Treasury

And

Strategic Recommendations

An Assessment on AB Bank Treasury

And

Strategic Recommendations

Prepared for:

Mr. Mohammad Saif Noman Khan

Assistant Professor

Institute of Business Administration

University of Dhaka

Prepared by:

Mohammad Mahfuz-ul-Islam (Group Leader)

EMBA 6th batch, Roll 26

May 7, 2010

Mr. Mohammad Saif Noman Khan

Assistant Professor

Institute of Business Administration

University of Dhaka

Dear Sir:

Here is the report on the comparative performance analysis of Treasury Operation of AB Bank Limited with the market leader that you asked us to conduct on March 16, 2010.

Our observational study between AB Bank and the market leader revealed significant differences in four areas: structure of treasury, product line, risk management efficiency and profitability. Based on the study we made some recommendations for AB Bank that will help it to tackle the shortcoming and lead it to be the market leader both in terms of risk management and profitability.

We appreciate you for choosing us for such an important assignment. If you need further clarification about the report, please contact us at muibd@yahoo.com or 01191040688.

Sincerely yours,

Mohammad. Mahfuz-ul-Islam

(Group Leader)

EMBA Rpt 6th, 17, 25, 26, 28, 31

Table of Contents:

Executive Summary vi

1.0. Introduction 1

1.1. Objective of the study 1

1.2. Methodology 1

1.3. Definitions, Initialisms, and Acronyms 2

1.4. A preview of the Presentation 2

2.0. Role of Treasury Operations in Banks 3

2.1. Structure of Treasury 3

2.1.1. AB Bank Scenario

2.1.2. Market Leader Scenario

2.2. Treasury Functions 5

2.2.1. ALM Desk

2.2.1.1. MM Desk

2.2.1.2. Fixed Income Desk

2.2.2. FX Desk

2.2.2.1. Corporate desk

2.2.2.2. Interbank Desk

2.3. Role of Treasury as Market Risk Manager 7

2.3.1. Interest rate Risk Management

2.3.2. FX Risk Management

2.4. Role of Treasury as Profit contributor 10

2.4.1. Interest Earning

2.4.2. Exchange Earning

3.0. Recommendation 14

3.1. Implementation of Proper accounting system

3.2. Improvement in product line

3.2.1. Money Market Products

3.2.2. FX Products

3.3. Growth in balance sheet and business volume

3.4. Human Resources Development

Bibliography 15

Appendix 1 16

Appendix 2 17

List of Figures

Figure 1: Profit Contribution by AB Treasury '08 11

Figure 2: Profit Contribution by AB Treasury '09 11

Figure 3: Profit Contribution by Market Leader '08 11

Figure 4: Profit Contribution by Market Leader '09 11

Figure 5: Interest Income Comparison (in crore taka) 12

Figure 6: Exchange Income Comparison (in crore taka) 12

Figure 7: AB Treasury Income Distribution '08 13

Figure 8: AB Treasury Income Distribution '09 13

Figure 9: Market Leader Treasury Income Distribution '08 13

Figure 10: Market Leader Treasury Income Distribution '09 13

Glossary 18

Executive summary

To enhance the performance of AB Bank Treasury and to be the market leader in terms of risk management and profitability, this report recommends following measures to be taken by AB Bank treasury division:

 Implementation of proper accounting system

 Improvement in product line

 MM desk should run a trading book

 Security trading in secondary market

 FX desk should introduce derivative products

 Corporate sales desk should be introduced

 Growth in balance sheet and business volume

 Human Resources Development

These recommendations are on the bases of the comparative analysis of the structure, functions (product line), risk management efficiency and profitability between