When Treasury and business units use different assumptions about the cost of funds, product profitability becomes difficult to measure and accountability less clear. Eskhata Bank's redesigned Funds Transfer Pricing framework provides a consistent approach to internal funding costs, risk allocation and liquidity management, offering practical lessons for banks operating in markets with limited financial data.
Which costs genuinely belong to the bank as a whole? Should branch idle time be charged to products? And what changes when Treasury or the problem asset management unit is treated as a Profit Center rather than a Cost Center? Georgy Zemitan examines five methodology choices that shape cost allocation and profitability analysis in banking.
