A cover for the Non-maturity deposit modeling

NMD Workshops, Q4, 2018: Bogota & New York


Announcing the following NMD Workshops for Q4 2018:

  • Bogota, November 8-9
  • New York, November 28-29

As we move from a period of excess liquidity to an environment where depository institutions are competing aggressively for funds, many firms are finding that their historically-based assumptions and third-party deposit studies have misled them about the value and price-sensitivity of their deposits. IRR and LR models which rely upon these assumptions have correspondingly understated the risk to rising interest rates. This trend will only be further exacerbated as banks attempt to expand their balance sheets faster than the growth rate of the available deposit base.

Please join me for an exciting 2-day session where we explore the challenge of modeling NMDs. Following a detailed review of risk and profitability management contexts, I will give an extensive presentation of my stand-alone NMD Model.  In addition to the standard re-pricing and liquidity cash flow schedules required for IRR and LR management (which are derived from my dynamic methodology for computing stable and non-stable balances), the model has its own FTP engine to ensure that the treatment of NMDs is consistent across all risk AND profitability management exercises; it produces FTP rates for the entire data time series, including any forecast horizon. The economic logic and transparency of the calculations facilitates the understanding of the absolute and relative value of different deposit products. Most importantly, the FTP methodology within the NMD Model has been specifically designed to produce FTP spread stability when deposit providers actually deliver deposits with the behavioral characteristics that have been agreed upon.  (If you can’t say this about your approach to modeling NMDs, I am curious as to how you speak to the relative pros and cons of various product and performance strategies?)  Imagine the beauty and benefits of accountability and incentive compatibility; risk and profitability management exercises take on a whole new meaning when rewards and punishments are not arbitrary, especially when interest rates are moving up!  I will also demonstrate the monitoring and back-testing capabilities of the NMD Model which are an essential component of an effective governance process.

I will share numerous lessons I have learned in almost 25 years of working with banks, credit unions and their regulators from around the globe. Don’t miss this opportunity to see a very compelling approach to deposit modeling!

For more information about the workshop, see Non-Maturity Deposit Modeling: Balance Sheet Management Considerations. Also check out several supporting white papers I have published on the subject.

Delegate testimonials can be found here and if you have any questions, please feel free to send me a message.  If you have attended one of my workshops in the past, your comments and testimonials are always appreciated.

I hope to see you soon.


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