Funds Transfer Pricing - Simple Can Work

Posted on May 12, 2017 at 2:00 PM by Jeff Dwornicki

bigstock--161370074.jpgTraditional sources utilize the institution’s individual loan account interest rates compared to an overall cost of funds; while the institution’s individual deposit account interest rates compared to the overall yield.  In this methodology, deposits are evaluated as a single source of funds and loans/leases are evaluated as a single use of funds.  Each pool is assessed relative to one another on an account-by-account basis, where the specific rate on a given deposit account is assessed relative to the overall yield of the institution, and the specific rate on a given loan/lease account is assessed relative to the overall cost of funds of the institution.

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