This lesson covers the strategic management of banking relationships, a core responsibility of the treasury function . Managing bank relationships effectively is important for securing reliable services, optimising fees, and ensuring access to credit .
7.1 The Importance of BRM
Banks are the primary counterparties for treasury’s cash management, funding, and risk management activities. A strong relationship ensures access to credit, reliable service delivery, and potentially better pricing. The CTP curriculum covers “Bank Relationship Management” and “FSP (Financial Service Provider) Selection” as distinct chapters .
7.2 Managing the Bank Relationship
Effective BRM involves:
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Service Provider Selection (RFP): A formal process for selecting the right banks for the organisation’s needs .
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Relationship Review: Regularly reviewing service and fees with banking partners .
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Performance Metrics: Monitoring and evaluating the performance of bank partners .
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Assessing the Risks of FSPs: Managing the risk associated with counterparties .
7.3 Reviewing and Selecting Financial Service Providers
The selection process, often managed through a formal Request for Proposal (RFP), involves evaluating:
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Financial Stability:Â The bank’s credit rating and financial health.
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Service Capabilities:Â The range and quality of products and services offered.
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Geographic Reach:Â The bank’s presence in countries where the organisation operates.
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Technology: The robustness and functionality of the bank’s digital platforms .