Treasury
The Anglicism Treasury includes either - in relation to a company - the organizational units that deal with the control of payment flows ( financial management ) or the treasury of a state .
etymology
The word Treasury (from English treasure , "treasure") comes from the English head of the treasury or state treasury, who was called Lord High Treasurer ( German Grand Treasurer ), first exercised by Richard Fitz Nigel before 1160 until shortly before his death (1198) . The English treasury ( English treasury ) dealt with the corresponding function . As a result, treasury - initially in business administration - has become naturalized in Germany from the organizational structure of US companies. The shareholders of US corporations determine the board of directors (see also monistic system ), which monitors the activities of the officers (a special position in a group management / board of directors). One of these officers is the treasurer ; his duties ( treasury ) are similar to those of a chief financial officer ( CFO ), who is responsible for all corporate finance .
Treasury at non-banks
Treasury plays a major role with non-banks . The larger and more global a large company is, the more likely a special treasury management system is to be found here. In commercial enterprises, the treasury should sensibly supplement sales and procurement activities by securing financial risks . The areas of responsibility for which a treasury is responsible depend on the respective process organization of a company. It can refer to all areas that have to do with finance and financial risk management . In large companies, the term treasury or treasury department is only used for the so-called front office , which concludes financial transactions. Separately, the body responsible for transactions processing ( english back office ) to see and where appropriate, the financial risk control . In small businesses , the main focus of treasury activities is on cash management . Which includes
- the planning, optimization and processing of incoming and outgoing payments ,
- organizational structures ( bank details , cash pooling , bank clearing , electronic banking ),
- Controlling the use of credit lines / facilities ,
- Optimization of liquidity ,
- Improvement of the interest positions (through more interest income and less interest expense ).
Treasury then also provides information on the company's financial status.
As with a bank, the treasurer examines interest rate and currency risks and, if necessary, minimizes them through hedging with the help of derivative financial instruments .
At the same time, treasury is entrusted with avoiding financial risks , which today can go far beyond hedging interest rate risks or exchange rate risks ( market risk ). The treasury department can also hedge commodity risks or handle weather derivatives , be it to mitigate corporate risks or to speculate .
Sometimes in companies, treasury is simply understood to mean liquidity management . Based on the credit institutions, this treasury has developed for non-banks as an organizational unit that contributes to liquidity security and stability and is intended to bring about a value contribution from the cash flows.
Treasury in banking
In credit institutions , treasury is a very important element in the overall bank management in addition to the management of the market result (transactions in the customer area). It is handled by treasury management . The board of directors is represented in it itself or gives the department the guidelines for asset - liability management of the bank balance sheet . Treasury aims to improve asset allocation and strives to ensure the continued existence of the credit institution.
The objects of treasury are:
- any liquidity and financial planning (short, medium or long term),
- the interest rate and currency risks associated with assets and debts ,
- recognized changes in the risk area, in particular default risks for borrowers , in order to prevent any financial disadvantages in good time or to anticipate their occurrence,
- Improvements through balance sheet structure management .
Treasury constantly examines the cash flows , calculates their present value and tries to track down optimizations that increase profit or decrease loss over time. This can include the treasurer also doing off-balance sheet transactions in derivatives .
In Section 25a of the German Banking Act (KWG), the banks are subject to special organizational obligations, which also require verifiable documentation on the organizational structure and process organization for the Treasury department . In the minimum requirements for risk management (BA) , abbreviated MaRisk (BA) , the provisions for structuring risk management in German credit institutions are specified by the Federal Financial Supervisory Authority (BaFin) . Above all, it comes to the separation of functions between the commercial area ( market side ) and the management ( back office ).
See also
literature
- Peter Bartetzky, Walter Gruber, Carsten S. Wehn: Handbook Liquidity Risk . Schäffer-Poeschel Verlag Stuttgart 2008, ISBN 978-3-7910-2747-0
