Funds Transfer Pricing for Financial Institutions

Date: 3^rd & 4^th September 2026
Venue: DoubleTree by Hilton Kuala Lumpur

Classroom Training

COURSE INTRODUCTION

The Global Financial Crisis of 2007–09 provided a powerful reminder of the critical importance of Funds Transfer Pricing. Many banks entered the crisis with inadequate internal pricing of funding and liquidity, weak incentives at the business-unit level, and limited transparency over where interest rate and liquidity risks truly resided. Institutions that lacked robust FTP frameworks found it difficult to manage funding stress, assess true profitability, or align business decisions with balance-sheet constraints.

Today, FTP is recognised as a core internal discipline, not only for managing funding, liquidity, and interest rate risk, but also for accurate product pricing, performance measurement, capital allocation, and incentive alignment. Regulators increasingly expect banks to demonstrate that FTP frameworks are well-designed, consistently applied, and embedded in governance, risk appetite, and ALM decision-making.

For financial institutions operating in Malaysia, FTP must also be understood in the context of Bank Negara Malaysia’s supervisory expectations. This includes alignment with BNM’s prudential standards on liquidity risk, interest rate risk in the banking book, internal capital adequacy assessment processes, and broader balance-sheet governance. FTP is a key mechanism through which these regulatory objectives are translated into day-to-day business decisions.

This intensive 2-day course provides clear, practical, and implementation-focused instruction in FTP concepts, curve construction, and applications, aligned with current best practice. The programme makes extensive use of illustrations, worked examples, and case studies to connect theory with real-world banking practice. A highly interactive format encourages participants to engage directly with the material, clarify challenges specific to their institutions, and gain deeper insight into how FTP supports both regulatory compliance and commercial performance.

Key Learning Objectives & Takeaways

By the end of this course, participants will be able to:
- Understand what FTP is, why it matters, and how it supports funding, liquidity, and interest rate risk management
- Build and interpret FTP curves, including pooled and matched-maturity approaches
- Use FTP to price assets and liabilities competitively while fully reflecting funding and liquidity costs
- Apply FTP to performance management, balance-sheet optimisation, and capital allocation, ensuring incentives align with institutional objectives

AGENDA

Day One

Overview of Funds Transfer Pricing

What is FTP?
What is FTP used for?
What are the benefits of FTP?
Why centralize risk and how does FTP remove interest rate risk from business units?
How did the Global Financial Crisis, 2007-9 show the value of FTP?
What is the link between FTP and Asset Liability Management?
Can FTP help define the bank’s Risk Appetite Statement?
Should equity capital be included in FTP?
What is Liquidity Transfer Pricing (LTP), and how does it relate to FTP?
How do bank regulators view FTP?
What are the components of a transfer price?

Case Study: Northern Rock

FTP Curve Construction

Pooled Funds Transfer Pricing
- Single pool method
- Multiple pool method
Matched-Maturity
- Assignment of explicit transfer rates
- Specific funds characteristic and attributes
Matched-Maturity
- Assignment of explicit transfer rates
- Specific funds characteristic and attributes
- Advantages for capturing individual transactions
Comparison of FTP Approaches
- Strengths and weaknesses in FTP methods
- Why maturity-matching is considered best practice
Other curve construction methods
- Deriving the marginal cost of funds curve
- Applications of cross-currency swaps for foreign currency curves
- Deriving the match-maturity curve in developing markets

Case Study: Detailed FTP example

Day Two

Pricing with FTP

Risk-based product pricing
Should flow FTP rates or stock/flow blended rates be used?
Pricing assets and liabilities
- Fixed rate vs floating rate
- Short-dated vs long-dated
- Secured vs unsecured
Pricing equity investments
FTP and deposit pricing
Applying FTP to off balance sheet items and liquidity buffers

Balance Sheet Management and Capital Allocation with FTP

FTP as a tool for shaping the balance sheet
Centralized interest rate risk management
Managing structural interest rate mismatches
FTP as an internal allocation system
Liquidity management and term liquidity premiums
How does the Basel liquidity regime interact with FTP?

Case Study: Managing non-maturing liabilities in the matched-maturity framework

Performance Management with FTP

Net Interest Income decomposition: profit versus risk
Risk-adjusted return on capital generated by different business units
Improving the quality of decision-making
Achieving higher profitability
What does the BCBS’s fundamental review of the trading book mean for FTP?

Case Study: Calculating profitability and return on equity

Opportunities and Challenges in FTP

Dealing with embedded options
Dealing with non-maturity deposits
Adjusting for basis risk
Accounting for non-performing assets
Behavioral methodologies

Course Wrap-up

EXPERT COURSE DIRECTOR

Dr. Ken Baldwin has worked as a practitioner in banking and finance for over 25 years in senior positions spanning the front and middle offices. Having graduated from Oxford University with a first-class honors degree in Physics in 1989, he qualified as a Chartered Accountant with PWC, before joining UBS, and then later Credit Suisse, in derivatives risk and control functions based in London.

He gained a PhD in microeconomics and worked in the GCC for 15 years in retail and investment banks. Whilst at Abu Dhabi Islamic Bank, Dr. Ken built an ALM analytic technology platform capable of capturing liquidity and interest rate risks inherent in the many varied financing products used at retail and corporate levels. He then moved to take up the position of MENA Regional Head of Quantitative Analysis for Citigroup. At Citicorp, Dr. Ken worked on structuring complex derivatives products used by Gulf-regional corporations to hedge FX and interest rate risks. Still residing in Bahrain, Dr. Ken then joined Investcorp, where he worked on the risk due diligence of corporate private equity and real estate private equity transactions and portfolio management. After leaving Investcorp, he set up the risk management department for venture capital bank, providing Basel III compliance and deal analysis for the bank. He then operationalized a new Islamic investment bank as its Chief Operating Officer for 3 years, before his most recent industry role at the Islamic Development Bank, where he set up and ran a new department tasked with developing financial policies and risk-based pricing of the bank’s Islamic financing products. Dr. Ken is currently an Assistant Professor of Finance in the UK. He has published quantitative finance articles in peer-reviewed academic journals including the Journal of International Financial Markets Institutions and Money, the Journal of Risk, and Economics Letters, and during his earlier career, taught CFA and FRM professional certifications as a pastime for the Bahrain Institute of Banking and Finance.

WHO WILL MOST BENEFIT FROM THIS COURSE?

This programme is designed for senior management, risk professionals, and practitioners involved in pricing, balance-sheet management, and regulatory compliance, including:
- Chief executive officers
- Chief risk officers
- Chief financial officers
- Financial risk managers and risk analysts
- Treasury analysts and market risk managers
- Credit risk managers and analysts
- Credit managers
- Credit administrators
- Corporate bankers
- Retail bankers
- Internal auditors
- Compliance officers
- Supervisors, regulators and risk standard setters

REGISTRATION

*Please note there is a fee for attending this program. Please contact us for more details.

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FEE

Fee per participant: RM6,500/US$1,750

Please note that the Ringgit price is applicable to Malaysia-domiciled participants only. Discounts are available for group bookings. Please contact us for more details.

IN-HOUSE/GROUP TRAINING

If you are looking for an in-house training program or wish to send a group to an existing public program, kindly please contact Andrew Tebbutt at [email protected] or +603 2162 7802.
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