Interest Rate Risk Management

It’s all about introducing certainty.

As your debt and/or investment portfolio grows, so does your exposure to interest rate fluctuations.
Risk management measures simply introduce more certainty around the interest you earn,
or the interest you pay.

Our strategy doesn’t rely upon forecasts. We focus on understanding your business risk tolerances and hedging your risk in the most effective way — which is often more about small adjustments than big calls. We stand by our advice and provide a monthly benchmark report of the tracking and trending of actual rates achieved against the market.

Who needs our services?

If you are an importer, exporter, multinational or you have international debt or investments, we can help. We act on both sides of the balance sheet and our approach is consistent whether you are a borrower, an investor or both. For businesses that want to achieve hedge accounting, we can also provide a full suite of valuation and testing services.

Our approach

At Bancorp, our point of difference is the attention we pay to the detail of your business. We take time to understand your priorities and objectives, your business environment and the market.

Establishing a treasury policy

We work with you to understand and confirm the types of risk in your business before establishing and documenting a treasury policy around how that risk is managed. This process involves identifying and agreeing a set of control parameters. It’s important to establish a common level of business risk tolerance across all stakeholders, setting up your treasury policy to reflect this tolerance. This enables regular, meaningful reporting on interest rate performance. When the policy is approved by Board or Council, the Bancorp team supports its implementation.

Our risk management team can help to :

  • Assess client debt forcasts
  • Devise interest rate hedging recommendations within the boundaries of treasury policy (subject to on-going review as forecasts change)
  • Benchmark interest rates and margins
  • Provide advice and help to negotiate new facilities and/or the introduction of new counterparties
  • Provide a monthly benchmark report of the tracking and trending of actual rates achieved against market.

It may seem old-school, but at Bancorp we believe in holding regular, face-to-face strategy meetings with our clients. This ensures that we gain the most relevant information on which to base interest rate decision-making, because we understand the value of leaving as little as possible to chance.

If you want more certainty around your business interest rate risk, contact our team today