Treasury division of Mercantile Bank Limited is currently comprised of multi-functional activities with a healthy portfolio with diversified asset characteristics. With the rapid expansion pace of the Bank Treasury Division is playing a vital and contributory role in its operations considering the upcoming challenges and risks involved in the day-to-day functions. Under the banner of Treasury Division, four important desks - investment & govt. securities desk, money market operation desk, foreign exchange operation desk and ALM desk are operating in full swing. Thence, wide variety of products with intricate nature are dealt and yet to be dealt in the upcoming days.

The Treasury Department is also regarded as a Profit Center, which generates income by trading instruments in the Financial Market. The Treasury is constituted with well set Front Office, Mid Office and Back Office.

Major Functions of Treasury Division :

• Fund Management
• Management of Statutory Requirement
• Investment
• Trading of F Ex. & Money Market Instruments
• Asset Liability Management
• Risk Management

Money Market Desk

Money market dealers arrange short and medium term funds at most economical terms which are required by the bank aside from customer deposit mobilization efforts. Money market desk ensures that the bank remains sufficiently liquid, meeting all its financial commitments and obligations to its customers besides meeting the SLR & CRR requirement at minimum risk and cost to the bank. In stress liquidity condition the desk always manages sufficient fund to provide business needs.

Investment Desk

Investment desk in Treasury Front Office operates within the policy frame approved by the Board of Directors of the Bank. The philosophy is to manage and maximize income within certain parameters and limits. It also includes use of effective duration, rate shock analysis, as well as total return to analyze and manage the investment portfolio and to determine the effect of movements on the yield and value of the bank’s portfolio. Investment desk operates within available investment opportunities in the country and abroad. The desk keeps an eye on the market movement to reap on every opportunity and to get the best of every penny invested and maximize profit as well as shareholders value.

Govt. Securities Desk & Primary Dealership Business

With a view to activating a secondary market in Treasury bills/Bonds and other Government securities Bangladesh Bank nominated Mercantile Bank Limited as a primary dealer in the year 2009. From the very beginning we are actively trading Government securities in OTC market. We have a large number of clients including individuals and institutions.

Banks need to maintain liquidity in form of CRR (Cash Reserve Ratio) & SLR (Statutory Liquidity Ratio) as per Banking Company Act. Investment in various Govt. securities like Treasury bills and Bonds in different tenors, debentures qualify for SLR. MBL actively participates in Govt. Securities auctions for investment in SLR maintenance and also generation of risk free fixed return on Securities Investment.

Foreign Exchange Desk

Mercantile Forex Desk is one of the leading market maker in spot, swaps, and forward transactions in inter-bank market. The Bank has good sources of Foreign Currency through its own export customers, Non-residence Remittances and local & multinational corporate houses remittances/exports. The Bank is also well equipped to price world major currency spot & forward prices. The Treasury is connected to the International Market through on-line Dealing Platforms of different international banks to quote very competitive prices on world major currency spot & forwards.

Asset Liability Management Desk

Asset Liability Management is one of the major functions of Mercantile Bank Treasury. Mercantile Bank has a highly efficient ALM Desk, which is an independent unit within the Treasury Department. Objective of the desk is to ensure efficient allocation of fund within an acceptable, measurable and defined risk structure. The desk monitor & analyzes various cash flows, cash positions, balance sheet gaps, daily P&L, economic trends, investment options, arbitrage opportunities, future business growth and place the facts & findings before the ALCO. Regular ALCO meeting is conducted once in month but incase of urgent situation special meeting is arranged. The desk proposes balance sheet strategy to the management.