Home > Expertise

Asset-Liability Management and Liquidity Planning

In the wake of the financial crisis, financial institutions and regulators continue to focus on the role of sound liquidity risk and asset-liability management practices as a way to maintain balance sheet strength and financial flexibility.

Expectations of supervisors and market participants are high. Institutions of all types are required to design enhanced strategies for establishing and maintaining adequate levels of liquidity, diversified funding sources, and solid processes for measuring and managing asset-liability risk. These practices are also inextricably linked to the development of recovery and resolution plans.

Promontory has the experience and resources to help your institution assess ALM and liquidity risk practices, assist in Basel III preparedness, and develop practical balance sheet risk management programs consistent with regulatory expectations. Composed of former senior regulators and practitioners, our team of experts assists companies with a full range of asset-liability management and liquidity planning services, including development of enterprise-wide stress testing initiatives and development of plans to manage effectively through stressed conditions and volatile markets.

Representative Engagements

In response to a regulatory action, Promontory worked with a global financial institution’s board to evaluate the institution’s liquidity position and risk appetite. We analyzed on-and off-balance sheet funding sources and evaluated liquidity risk reporting tools and reports to ensure that management and the board have the necessary tools and oversight to effectively manage liquidity risk.

Promontory performed a comprehensive review for a large regional bank restructuring its approach to governance and oversight of balance-sheet-related risks. Based on interviews with directors and management, we developed a new committee charter, management and board-level reporting packages, and improved capital and liquidity risk management practices (e.g., Capital Plan and Contingency Funding Plan).

For a money-center bank wishing to enhance its liquidity risk management policies and procedures, Promontory reviewed and benchmarked current policies and procedures against industry best practice and regulatory expectations. We worked with the bank to remediate gaps in the Liquidity Policy and Contingency Funding Plan to reflect increased liquidity risk due to recent acquisition activity. We also developed new liquidity limit and operating guideline structure and created a board-level reporting package to ensure director involvement in setting and monitoring the bank’s liquidity risk appetite.

We worked with a regional bank to evaluate asset-liability measurement systems and management plans. This included benchmarking personnel, policies, and procedures against industry best practice and regulator expectations.

Asset-Liability Management and Liquidity Planning

Representative Engagements

Key Contacts

Experts

News & Insights