IS IN HOUSE BANKING RIGHT FOR YOUR ORGANIZATION?

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IS IN-HOUSE BA NKING RIGHT FOR YOUR ORG A NIZ ATION? | © K Y RIBA CORP. 2017 | 6
FX AND THE IN-HOUSE BANK
An in-house bank structure will provide many
benefits to your FX program, including:
• Greater visibility of corporate-wide FX
exposures
• More effective hedging, better currency
protection
• Reduced number of hedging transactions (and
costs)
The process typically flows as shown below:
Realized gains:
• Reduced cost of trade spreads due to lower
trading value and less exposure to banks
• Monitoring of natural balance sheet hedging
to reduce currency exposures
• Fewer administration requirements
• Enhanced controls
Non-functional
currency cashflow
forecasts are
submitted to the
in-house bank
1
The in-house
bank compares
forecasted
exposures and
determines the
required internal
trades
2
The TMS
calculates the
in-house bank
exposure by
netting the
exposures
3
External trades
are booked
between the
in-house bank
and the external
banks covering the
in-house bank’s
net exposure
4
Subsidiary’s
in-house bank
balance is
updated in the
TMS to reflect
the activity
5