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Funds transfer pricing in banking

Author(s): Maria CARACOTA DIMITRIU | Sorina Cristina OACA

Journal: Economia : Seria Management
ISSN 1454-0320

Volume: 13;
Issue: 1;
Start page: 119;
Date: 2010;
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Keywords: funds transfer pricing | profit | bank | business units

Every bank needs to better understand the sources of its profitability. Whatever the size of the bank, funds transfer pricing (FTP) can be used to help managing the bank's profitability by analyzing earnings for the whole institution or for different profit centers. In today’s banking environment, it is essential to look at the earnings both as a whole and broken down into various components. Funds Transfer Pricing is an analysis tool that can be used to help a bank measure its profitability in a variety of different ways. It allows management to compare the profitability of different product lines within the company, and it can be drilled down even further to allow comparison between individual employees. It is also very useful for comparison between branches. This study will reveal the role of Fund Transfer Pricing (FTP) in banks.

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