Funds Transfer Pricing

Net Interest Income is the main performance metric for most financial institutions. Is the bank earning enough income to justify the capital allocated by shareholders? How much will NII be impacted by changes to interest rates and liquidity premiums? These are questions an institution must be able to answer in order to effectively manage NII across the various lines of business and through different rate cycles. This is done most effectively through introducing a funds transfer pricing process that is both robust and effective in immunizing the business units from interest rate and liquidity risks while transferring them to the mis-match center, where ALCO can effectively manage it.

Consistency across all disciplines

As an extension of the ALM model, Empyrean’s FTP calculations will leverage the same data, behavioral settings, interest rates, other assumptions and calculation engines as all the other balance sheet management functions.

Comprehensive list of methodologies

Empyrean supports virtually every methodology for calculating the base funding rate for every instrument on the balance sheet as well as any addon charges or credits required by the institution (ie. liquidity premium, OAS, etc…).

Foundation for sound performance measurement

Let Empyrean form the foundation for your performance measurement efforts as the solution simulates and can export FTP rates at the instrument level for all current position instruments and for all forecast periods in every scenario.