page_title: Asset and liability management
section_title: Assessment of possible funding sources
hierarchical_section_title: Asset and liability management / Funding management / Putting an operative plan for the normal daily operations and ongoing business activities / Assessment of possible funding sources
caption_attribution_description: English: Provide a view of the main funding sources sensitivity to interest-rate and credit risk
context_page_description: Asset and liability management is the practice of managing financial risks that arise due to mismatches between the assets and liabilities as part of an investment strategy in financial accounting.
  ALM sits between risk management and strategic planning. It is focused on a long-term perspective rather than mitigating immediate risks and is a process of maximising assets to meet complex liabilities that may increase profitability.
  ALM includes the allocation and management of assets, equity, interest rate and credit risk management including risk overlays, and the calibration of company-wide tools within these risk frameworks for optimisation and management in the local regulatory and capital environment.
  Often an ALM approach passively matches assets against liabilities and leaves surplus to be actively managed.
context_section_description: Main characteristics :
  Concentrations level between funding sources
  Sensitivity to interest-rate and credit risk volatility
  Ability and speed to renew or replace the funding source at favorable terms (evaluation of the possibility to lengthening its maturity for liability source)
  For borrowed funds, documentation of a plan defining repayment of the funds and terms including call features, prepayment penalties, debt covenants...
  Possible early redemption option of the source
  Diversification of sources, tenors, investors base and types, currencies and to collateralization requirements (with limits by counterparty, secured versus unsecured level of the market funding, instrument types, securitization vehicles, geographic market and investor types)
  Costs  : a bank can privilegiate interest bearing deposit products for retail clients as it is still considered as a cheap form of stable funding but the fierce competition between banks to attract a big market share has increased the acquisition and operational costs generated to manage large volume treatment (personnel, advertising...)
  Dependencies to endogenous (bank specific events such as formulas, asset allocation, funding methods...) / exogenous (investment returns, market volatility, inflation, bank ratings...) factors that will influence the bank ability to access one particular source.
caption: Funding requirement-liability sensitivity table
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