The history of recent banking collapses is littered with tales of inadequate risk management and poor lending decisions. What is frequently forgotten is that the treasury operation plays a crucial role in any financial institution and the wrong incentives and strategy can hasten a bank’s decline.
When Northern Rock ran out of money, just weeks into the credit crunch, warning bells should have been set ringing throughout the UK banking industry. It didn’t happen. The next treasury to have been caught short was HBOS.
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