The document discusses the organizational setup of a bank treasury. It is typically divided into three sections: the front office which handles dealing and risk taking; the mid-office which focuses on risk management and reporting; and the back office which handles confirmations, settlements, accounting and reconciliations. While set ups may vary between banks, this three-part structure separates the primary functions and facilitates smooth workflow from dealing to accounting.

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2.  Objectives of the treasury.
 Organizational Setup.
 Front Office
 Mid-Office
 Back Office
Conclusions
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3.  The organization of a treasury depends on the
volume of activities handled.
 To have Internal control on various operation
of a treasury
 To manage risk
 To facilitate handling of all market operations
from dealing to accounting in a smooth flow.
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4.  Organizational setup is basically divided as per
the major functions needed in the treasury
which are segregated as under.
 Front Office : Dealing – risk taking
 Mid-office: Risk management and management
information.
 Back – office: confirmations, settlement, accounting
and reconciliation.
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5. Front Office
Investment
Banking
Industry
coverage group
Product
coverage group
Markets
Research group
Sales & Trading
group
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6.  Investment banking involves helping
customers raise funds in capital markets and
giving advice on mergers and acquisitions
(M&A)
 This may involve subscribing investors to a
security issuance, co-coordinating with
bidders, or negotiating with a merger target.
 Investment banking divided into 2 sub-
divisions
1. Industry coverage.
2. Product coverage groups.
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7.  Industry coverage groups focus on a
specific industry – such as healthcare,
public finance (governments), FIG
(financial institutions group), industrials,
TMT (technology, media, and
telecommunication) – and maintains
relationships with corporations within
the industry to bring in business for the
bank.
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8.  Product coverage groups focus on
financial products – such as mergers and
acquisitions, leveraged finance, public
finance, asset finance and leasing,
structured finance, restructuring, equity,
and high-grade debt – and generally
work and collaborate with industry
groups on the more intricate and
specialized needs of a client.
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9.  Buying and selling of products on behalf of
banks and clients.
 Primary job is to call on institutional and high-
net-worth investors to suggest trading ideas
and take orders.
 Structure new products according to the clients
views or ideas and sell them.
 Forming strategies for client on the basis of
market conditions and client views.
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10.  Research division has mainly following
functions.
 Reviews companies
 Writes reports about their prospects
 Give “Buy” or “Sell” Ratings.
 Give outside clients with investment advice
and create business with the client.
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11.  This area of the bank includes treasury
management, internal controls, and internal
corporate strategy
 Mid-office is responsible for onsite risk
measurement, monitoring and management
reporting.
 Risk Management and Management
Information.
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12.  The other Functions of Mid-Office are:
 Limit setting and monitoring exposures in relation to
limits.
 Assessing likely market movements based on
internal assessments and external/internal research;
 Evolving hedging strategies for assets and liabilities;
 Interacting with the bank’s Risk management
department on liquidity and market risk;
 Monitoring open currency positions;
 Calculating and reporting VAR;
 Stress testing and back testing of investment and
trading portfolios;
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13.  This involves data-checking trades that have
been conducted, ensuring that they are not
wrong, and transacting the required transfers
 The back office is comprised of the areas that
don’t directly generate revenue for the
business, but provide vital support and
administration.
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14.  Deal Slip verification;
 Generation and dispatch of interbank confirmations;
 Monitoring receipt of confirmations of forward
contracts;
 Effecting/ receiving payments;
 Settlement through CCIL or direct through nostro as
applicable;
 Monitoring receipt of forex funds in interbank
contracts;
 Statutory reports to the RBI;
 Reconciliation of nostro/other accounts;
 Monitoring approved exposure and position limits;
 Accounting;
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15.  There is no perfect answer for a optimal
structure for a bank treasury, although
improvement at the global level is on.
 Bank organizational set-up explained above is
globally followed organizational structure
which can be different for each banks.
 A more strategic role for treasures is becoming
more responsible for collaborating with other
terms and finding new ways to add value to
the banking business.
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