Treasury Risk Management | Report

Running head: TREASURY RISK MANAGEMENT
Treasury risk management
Name of the student
Name of the university
Student ID
Author note

1TREASURY RISK MANAGEMENT
Table of Contents
Introduction......................................................................................................................................2
Key challenge facing by bank..........................................................................................................3
Constrain to the bank profitability...................................................................................................3
Opportunities to the Euro banking sector........................................................................................4
Implication of the renewal of the ECB’s Asset Purchase programme............................................5
The implementation of the Basel III................................................................................................8
Implementations of the CRD IV......................................................................................................9
Continuous performance of the Shadow Banking.........................................................................10
Scope and Significance of “Fintech”.............................................................................................10
Evaluation of the European Banking Sector..................................................................................11
Conclusion.....................................................................................................................................11
Reference.......................................................................................................................................13

2TREASURY RISK MANAGEMENT
Introduction
An in-depth overview by the statistical dossier reflects the current health of the European
banking sector as well as its wellness to meet the demands of the digital future. This report will
give attention on the condition of the European banking sector and its impacts on the various
factors. Starting with a brief mark on the European banking sector, it is going to reconcile the
liability lines that seemed at the eruption of the financial crisis globally. At the beginning of the
crisis the monetary condition of the Euro area banks has enhanced decidedly. It has been
recommended that aggregate core capital ratio of euro banks reflects at around 14 percent at the
end of the second quarter of 2018. There are at constant levels of regulatory liquidity ratios with
a collective liquidity coverage ratio 141 percent. Satisfying the minimum supplies for own funds
and eligible obligations European banks are also making development. The main indicator is that
the issuing of tire one and tire two bonds instruments by the “Euro area banks” and detained by
the depositors in the euro area. That is also increased by two-thirds between 2013 and 2017. In
repairing their balance sheet, finally banks are making progress. The aggregate non-performing
loan ratio is shared at around 8% to its current level of 4.4%. The recent result shows that after
stress, the Euro area banks’ core capital is at 9.9%, increased from 8.8% in the same
implementation two years before. Capital buffers is the resulting factor of the strong build-up of
the underlying assets in current years.
Considering the impacting factor that is hitting to the traditional banking business models
are addressed as follows:

3TREASURY RISK MANAGEMENT
Key challenge facing by bank
One of the essential key issue faced by the global interest rate changes being framed by
this research.
Constrain to the bank profitability
Low interest rate in environment created by the central banks around the world is to
kindle the progress during the financial crisis (Vazquez and Federico 2015). It will have a great
negative impact on the business of bank. “Low interest rates” will create coerce the net interest
margin of the banks and lowest line effectiveness for some while to come.
Closely the net interest margin, in most of the corner tapering significantly, over the last
few years. Low credit demand and high leverage is creating pressure the pre-provision of the
banks’ revenue stages. As in the “German Banking” market, “German Banks” earn their cost of
capital only 6% due to such business model which is interest dependent. Bundesbank and the
“German Federal Financial Supervisory Authority” (BaFin) (Drescher et al 2016) making a
recent survey on the profitability and pliability of German credit organizations, which refers that
the profit will likely to reduction significantly if the low interest rate setting perseveres. This is
largely because of constricting margins in borrowing and the deposit business for example in the
area of transferable deposit and savings.
Euro area banking sector, (Covi, Gorpe and Kok 2019) specifically in weak profitability
bank are continuously suffering due to anaemic loan request, low interest rate and high cost.
Below mentioned figures relates the asset biased net income of banks. Which is rated by
“Moody’s Investors Service” form dissimilar regions with euro area banks at lowest of the list
(Altavilla, Boucinha and Peydró 2018).