BTRM Bank Balance Sheets - This time IS different (Part 2) - Thomas Abraham and Ethan Heisler

Session #2 assesses the actions that banks might take to improve balance sheets and NIM, while managing liquidity and interest rate risks. Uncertainty implies many plausible market scenarios. Banks vary materially in liquidity and interest rate exposures, as well as capital positions.
The same threesome will debate the range of strategies banks might pursue.
1. Banks with strong capital and liquidity positions could be more aggressive, if their expectations for market conditions are favorable. Weaker banks could opt to wait until market conditions become clearer.
2. Targets for deposit and/or loan growth should be consistent. Imbalances will impair NIM and potentially capital levels. Levels of bank reserves likely increase.
3. ALCO should have a prominent role. It can be a central forum for evaluating interest rate and liquidity risks and the impact on NIM and capital for alternative strategies.
4. New tactics for managing the balance sheet and attendant risks could be adopted. Hedging tools have improved but many are complex and expensive. Wholesale funding sources may shift and rates remain high as banks compete.
5. Stronger balance sheets will enable robust M&A activity. Equity capital will remain expensive for many banks. Investors could be easily spooked by a shock event affecting banks.
Both sessions will be recorded and available afterwards for replay. In addition, written synopses will be posted.
Tom Abraham has worked for Citibank, Deutsche Bank, Accenture and DST Global, including 17 years in Tokyo and London. He currently serves as an advisor, mentor, occasional author and strategist through Shadwell Advisory LLC in Denver, CO.
Ethan Heisler is editor of the Bank Treasury Newsletter. Prior to this he had a stellar career spanning over thirty years at Dillon Read, Federal Reserve Bank of New York and Citigroup.
For more events or to find out about taking the Bank Treasury Risk Management Certificate please visit btrm.org