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Treasury: Bank ALCO Governance and Process Best-Practice


Bank ALCO Governance and Process Best-Practice

Presenter: Professor Moorad Choudhry

Video Lectures:

Part 1 (Running Time: 59:47)

Part 2 (Running Time: 17:05)

Part 3 (Running Time: 14:30)

Part 4 (Running Time: 15:23)

Part 5 (Running Time: 15:21)

WORKSHOP EXERCISE: Drafting the ALCO Agenda and MI Pack

  • Balance sheet review: assessing items for the ALCO agenda
  • Datasets for inclusion in MI pack
  • Most effective way to communicate risk exposure data and MI
  • Forward planning: the year’s schedule, agenda of standing items + schedule

Bank ALCO Governance and Process Best-Practice

The “Dear CEO” letter issued by the UK FSA in January 2011 demonstrated the importance of a bank’s asset-liability committee (ALCO) process in bank risk management and the regard in which it is held by the regulatory authorities. The ALCO is an essential part of effective bank governance infrastructure and capability.

This one-day course and workshop has been designed to raise awareness and understanding of recommended best-practice principles for ALCO governance and procedure. Aimed at senior managers, executives and non-executive directors in all types of banking institutions, as well as all staff involved in the ALCO process, the course presents essential tools and techniques of value in inculcating the right governance culture, as well as a range of templates that can be applied at any bank.

At the end of the course delegates will have an understanding of ALCO terms of reference formulation, a clearer understanding of how to formulate and drive the governance process in the most effective way and possession of a tool-kit of best-practice ALCO templates.

Key Features:

The Role of the Asset-Liability Committee in Bank Governance and Risk Management

  • Bank risk management operating framework
  • Board and ExCo interaction

ALCO Organisation and Operating Framework

  • Membership, responsibilities
  • The ALCO Terms of Reference: best-practice framework
  • Reporting line and Board-delegated authority
  • Confirming the timetable and “standing items” diary
  • Sub-committee organisation and reporting
    • Balance sheet management committee
    • Products pricing committee

ALM Policy Framework

  • Policy approval process
  • Appropriate policy-setting procedure: fitting policy in line with the bank operating model
  • Hedging policy
  • Risk appetite framework

Working as Part of the Balance Sheet Risk Triumvirate

  • Effective interaction with CRO and CFO offices and committees
  • Managing and driving balance sheet risk culture

Effective Governance of the ILAA and ICAAP Process

  • What to ensure is in place during ILAA / ICAAP preparation and submission
  • What to look for in the ILAA  / ICAAP summary to ensure regulator sign-off

The ALCO MI Pack

  • Guidelines for constructing a fit-for-purpose MI deck
  • Recommended ALCO MI pack template structure

Working with the Board

  • ALCO pack and the Board paper summary  / briefing note
  • Deciphering the ALCO pack
    • What to look for
    • Does it answer the Board’s questions?
    • Is there anything missing?
  • Reviewing ALCO, Exco and Board interaction and effectiveness

Who Should Attend?

  • All ALCO members
  • Treasury, Risk and Finance senior management
  • Board NEDs
  • Regulators
  • Regulatory reporting department
  • Compliance and Internal audit



Published date

13 March 2015



Presenter Bio

Moorad Choudhry

Professor Moorad Choudhry is at the Department of Mathematical Sciences, Brunel University. He is also Honorary Professor at Kent University Business School and Visiting Teaching Fellow at the Department of Management, Birkbeck, University of London. Moorad has over 25 years experience in banking in the City of London and was latterly Treasurer at Williams & Glyn plc, Royal Bank of Scotland. Prior to that he was Head of Treasury at RBS Corporate Banking, Head of Treasury at Europe Arab Bank, Head of Treasury at KBC Financial Products and vice-president in structured finance services at JPMorgan Chase Bank. Moorad is a Fellow of the Chartered Institute for Securities & Investment and a member of the Board of Governors of IFS-University College. He is Editor of Review of Financial Markets, and on the Editorial Boards of the Journal of Structured Finance, Qualitative Research in Financial Markets and American Securitization. He is author of The Principles of Banking (John Wiley & Sons 2012).