Azizi Bank offers a wide range of treasury services including forex services. Treasury is regarded as the “Front Line” in the sense that it either makes profits in its own right or supports other areas of the bank’s business to make profits (or minimize losses). The Azizi Bank treasury takes care of foreign exchange trading, money market trading, liquidity management, interest rate management and maintenance of the reserve requirements. The Azizi bank Treasury Division is also responsible for investments in government securities, debt instruments, bonds, commodity and equity underwriting and trading. It operates under authorities and limits delegated to it by the ALCO, which in turn operates under authorities and limits delegated from the Risk Management Committee.
The main component of the Treasury Division is the dealing room and the Back office. Middle office works in close association with Treasury and in fact has a major role in monitoring of risks assumed by treasury, but independently reports to ALCO. Risk department is responsible for Treasury Mid Office Functions.
Treasury also refers to all activities involving the management of revenues, inflow and outflow of funds, maintenance of Reserve Requirements and Open forex position etc.
Azizi bank treasury department manages and administers the cash resources, borrowing programs, and all investment and debt management activities of the bank. It further manages the borrowing programs and investment activities for all of its crown corporations and may work for government agencies if opportunities available.
Azizi Bank treasury department is manned by Front office, mid office, Back office. The dealer’s and traders constitute the front office. In course of their buying and selling transactions, they are the first point of interface with other participants in the market (dealers of other banks, brokers and customers). They report to their department heads. They also interact among themselves to exploit opportunities. A mid office set-up independent of the treasury unit, acts as a unit responsible for risk monitoring, measurement and analysis and reports directly to Risk Department for control,. This unit provides risk assessment to Asset Liability Committee (ALCO) and is responsible for daily tracking of risk exposures, individually as well as collectively. The back office undertakes accounting, settlement and reconciliation operations. The Internal Audit Department independently inspects/audits daily operations in the Treasury department to ensure adherence to internal/regulatory systems and procedure.
Azizi Bank Dealing activities can be classified into -
Money Market Operations:
The Money Market activities include:
Azizi Bank Foreign Exchange Desk in Treasury Department deals in Merchant and Inter-bank Forex transactions. The Bank actively deals in major currencies.
Azizi Bank Forex desk takes care of the following transactions:
Trading in Foreign currencies is facilitated through different accounts that are maintained with other banks abroad and those of the foreign banks with us (Nostro, Vostro and Loro). Trading is facilitated in the markets through “two-way quotes”. These are called the “bid” and “ask or offer” rates. Bid is the rate at which the person quoting is willing to buy while ask refers to the rate at which the person quoting would be willing to sell. The difference in the rates is the spread that the dealer would make for the bank. The major currencies are USD, Euro, and Pound Sterling. In times of turbulence, the spreads usually widen.
In the forex market, both the buy-sell prices (two-way quotes) are in a particular fashion. For e.g. in USD, a quote of 68.8000/50 signifies that the Bank is willing to buy at 68.8000 and is simultaneously willing to sell at 68.8050. The difference of .0005 is the bank’s spread, and in banking terminology, it is said to have a spread of 5 pips or points. The exchange rates for major currencies are usually quoted to four decimals in the wholesale market. The fourth decimal (0.0001) is called a 'point'. Currencies such as Japanese Yen are quoted to two decimals in the market.
Azizi Bank participates in below transactions executed in the market.
Outright/Cash/Ready: Exchange of currencies takes place on the date of Deal itself.
TOM: Exchange of currencies takes place on the next working day or from Friday to Monday.
Spot: Exchange of currencies takes place on the 2nd working day after the date of Deal or from Friday to Tuesday. This is the most prevalent type of transaction.
Forward: A forward is a contract for exchange of one particular currency into another currency at a set price on a set date. This transaction is done to hedge oneself against the currency risk. A customer locks the exchange rate at which he will sell or buy currency in the future. If an exporter expects an inflow in foreign currency and also expects that currency to depreciate over time, he would book a forward cover.
Ms. Indira Mallela
DY Head - Treasury
Contact: +93 797 999 942