Banking · Framework · 4 min read
A framework for enterprise treasury policy
An enterprise treasury policy should define how the group manages FX exposure, funding needs, cash held abroad and transactional risk, with counterparty criteria that protect the business without blocking good decisions.
- Who this is for
- CFOs, group treasurers and board risk committees.
- Why it matters
- A policy written for a simpler group or a different market can restrict banking choices or leave exposures unmanaged.
Executive summary
- 1Cover FX, funding, cash abroad and operational exposures.
- 2Use a balanced set of counterparty criteria.
- 3Review the policy as the group and markets change.
What should a treasury policy cover?
| Pillar | Question it answers |
|---|---|
| FX exposure | Which currency exposures do we hedge, how and to what extent? |
| Funding needs | How do we forecast and meet funding needs across entities? |
| Cash abroad | How do we manage cash held in other jurisdictions and move it when needed? |
| Transactional and operational exposure | What level of risk is acceptable in day-to-day operations? |
Is your policy constraining you?
Counterparty criteria can rely too heavily on one measure. A balanced set considers several factors together:
- Market-based credit ratings
- Capital strength
- Market indicators of credit risk
- Systemic importance
- Liquidity
- Price, including deposit rates
Sources and methodology
- Bankhawk perspectives (2012, 2015), consolidated. Framework to be modernised by an expert reviewer.
Test your treasury policy
Tell us about your group structure and banks. We will outline what a policy review would examine.
Discuss your banking arrangements