This lesson examines the strategic management of banking relationships, a core responsibility of the treasury function .

5.1 The Importance of Bank Relationship Management

Banks are critical counterparties for treasury operations, providing payment services, funding, risk management products, and trade finance. Effective bank relationship management ensures reliable service delivery, competitive pricing, and access to credit when needed. The CTP exam includes dedicated coverage of “Build, maintain, and review relationships with external financial service providers” .

5.2 Managing the Bank Relationship

Core bank relationship management (BRM) activities include:

• Service Provider Selection: Using a Request for Proposal (RFP) process to select banks based on financial stability, service capabilities, geographic reach, technology, and pricing .

• Performance Monitoring: Regularly reviewing service quality, fee structure, and responsiveness.

• Relationship Reviews: Conducting periodic reviews with key banking partners to discuss service levels and the evolving needs of the organisation.

• Bank Fee Analysis: Administering bank accounts and analysing bank fee structures to ensure they are competitive and cost-effective .

5.3 Evaluating and Implementing Treasury Products

Banks offer a range of treasury products and services. Treasury must “Evaluate and implement treasury products and services (including banking products, treasury workstations)” . This includes assessing new products, negotiating pricing, and integrating services into the treasury operations.

5.4 Counterparty Risk Management

Managing counterparty risk—the risk that a bank or other financial counterparty could default—is a critical component of bank relationship management . This involves setting and monitoring credit limits based on credit ratings and financial health, and diversifying banking relationships to avoid over-reliance on a single institution.