Balance Sheet Management
Business Challenge
The Client, a Global Capital Markets and Wealth Management Firm, asked LP Squared to produce a best practice training manual explaining balance sheet dynamics as these relate to funding balances and costs.
Assignment - Delivered
LP Squared identified and engaged a number of SMEs with recent and relevant experience.
The final product delivered to the Client consisted of:
Industry practices white paper, created using SME’s knowledge and experience in the industry
Case Study combining industry best practices in light of revised regulatory guidelines and reporting requirements
The Case Study was built in sequential blocks:
Starting with the drivers of financing costs i.e. Trading Inventory
Looking at the liquidity profile of inventory and applying a benchmark cost to each position
Applying netting to realise both balance sheet and financing cost reductions
Comparing benchmark costs to actual costs achieved by the Firm
Creating analysis showing the size of the franchise benefits realised via:
Trade and Client netting
Optimal funding executed
Result – Value added
On-time, under-budget delivery of the full case study
Firm-wide communication of balance sheet and funding dynamics improved employees’ knowledge and led to better informed trade pricing
The Case Study was used as the design foundation for a renovated balance sheet reporting platform with full funding allocation for Secured, Unsecured and Contingent Funding
