Treasury

Treasury means either the Treasury of a country or - in relation to a company - the areas or departments that are concerned with the scheduling and applying existing or incoming funds. At the same time, these departments are entrusted with the security of financial risks that can far exceed the hedging of interest rate risk or foreign exchange risk today. The Treasury Department may also hedge commodity risks or deal with weather derivatives, it was to zoom out corporate risks or to speculate.

Origin

The term Treasury (. Engl of treasure: treasure ) has - initially in the Business Administration - naturalized from the legal status of American companies in Germany. The shareholders of U.S. capital companies determine the Board of Directors ( Board a local equivalent), which monitors the activity of the Officers ( a special position in a group management / the board ). One such officer is the Treasurer; its duties similar to those of a chief financial officer ( = " CFO " ) / Treasurer / Cashier.

Treasury banking

As part of the overall management Treasury is in addition to the management of market income ( transactions in the customer area ) is a very important element. It is perceived by the Treasury Management. The Board is represented in it yourself or give the Department the guidelines for asset-liability management of the balance sheet before. Treasury aims to improve asset allocation and on securing the continued existence of the credit institution.

Subject of the Treasury are

• Any liquidity and financial planning ( short, medium or long term )
• The interest rate and currency risks of its own investments
• Recognized changes in the risk area, particularly default risk among borrowers in order to avoid any financial disadvantages in time or to anticipate their occurrence
• Improvements in the bank's balance sheet structure.

The Treasury examined permanent cash flows, calculated their present value, seeking to identify optimizations that increase earnings over time or reduce the loss. This may include that the Treasurer makes off-balance sheet derivatives transactions.

Credit institutions are defined in § 25a of the German Banking Act ( KWG) imposes specific organizational duties which require the Treasury, the presence of verifiable documentation on structure and process organization. In the Minimum Requirements for Risk Management ( BA), abbreviated MaRisk (BA ), the provisions for the design of risk management in German banks by the Federal Financial Supervisory Authority ( BaFin) are specified.

Treasury in business

Treasury has a great significance outside of the banking industry. The larger and aligned global a company, the more likely this is a special treasury management encountered. In business enterprises, the Treasury is to complement the sales and purchasing activities meaningful by a fuse of financial risks. The tasks for which Treasury is responsible, are dependent on the particular organizational structure of a company. You can across all areas denote that have to do with the financial and the financial risk management. For very large companies, the term Treasury or Treasury department is used only on the so-called front office, complete the financial transactions. Separately, the agency responsible for transactions processing ( back office ) is to be seen and, where appropriate, the financial risk control. In small companies, the main business of the Treasury is on the cash management. These include

• Planning, optimization and management of incoming and outgoing payments
• Organizational designs ( bank details, account concentration, bank clearing, electronic banking )
• Control in the stress of credit lines
• Improvement in the interest positions ( by more income, less expenses)

The Treasury then provides information on the financial status of the company.

As with a bank here by the Treasurer interest rate and currency risks are examined and minimized when necessary by means of derivative financial instruments.