The Study Of Commercial Bank Funds Transfer Pricing

Internal funds transfer pricing concept originated in the manufacturing enterprise. Bank of America was first to apply this concept to the management of commercial banks in1980. After decades of improvement and development, funds transfer pricing gradually accepted and applied by foreign commercial banks.With the gradual relaxation of interest rate controls, market-based interest rate is accelerating, China’s commercial banks to compete more and more intense, more and more challenges, and traditional internal fund management system inherent drawbacks also continue to hamper further development of commercial banks. Thus, some of China’s commercial banks began to learn from foreign advanced management experience in banking, established internal funds transfer pricing system. However, because this approach is not long into China, its research is still in a preliminary stage, the theoretical research system is not perfect. And China’s interest rate market has not fully realized, directly apply foreign mature internal funds transfer pricing methodology for China’s commercial banks is not fully applicable. The X bank is one of the earliest implementation of the bank’s funds transfer pricing, and it has established a relatively complete funds transfer pricing system. Therefore, this article taking X Bank for example is very important for other commercial banks.This study mainly uses two kinds of methods including theoretical analysis and empirical analysis. In the aspect of theoretical analysis: Firstly, this paper introduces the concept of defining the funds transfer pricing and describes four methods of funds transfer pricing. Secondly, it describes the construction funds transfer pricing including the market yield curve and the inside of the yield curve. Finally, it introduces the process of funds transfer pricing. In the empirical analysis: Firstly, it introduces X bank why implement funds transfer pricing and implementation steps. Secondly, it introduces the process of X bank implement funds transfer pricing including RMB yield curve, foreign currency yield curve and currency selection key interest rates three aspects. Finally, X bank funds transfer pricing to customer, industry, product, carry out specific analysis on the influence of three dimensions.By means of X bank funds transfer pricing process analysis, there are some questions as follows: a reasonable benchmark rate selection is questionable, lack of some data in the aspect of implementation of transfer pricing, lack of supporting interest rate risk mitigation mechanisms and lack of understanding of transfer pricing in Bank internal. There are puts forward some suggestions in view of the above problems: finding suitable funds transfer pricing benchmark interest rate curve, perfecting the funds transfer pricing system data, improving the mechanism of interest rate risk, strengthening staff training.