The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Time to redefine bank treasury

The role of treasurer must be confined to prudent funding, investment and risk management, not making a profit.

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. Here was an operation that, during the good times, was one of the best at utilizing the capital markets. It played in all the leading currencies and debt sectors. In 2003, HBOS even invented a new asset class – the structured covered bond – ostensibly because it wanted to diversify its investor base. The reality was that investors were running out of credit lines for the HBOS name – a new issuer entity and investor base was a means of getting more funding.

The tale is instructive. A bank’s treasury team should be able to sound the alarm that the balance sheet’s rate of growth is inappropriate – which it clearly was for HBOS.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree