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| Asset Liability Management in Barclays Bank Ghana: Reference to Interest Rate Risk |
Dr Ramatu Ussif
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Abstract:
Banks generally mobilize resources in the form of deposits and lend them as loans and advances. The resources mobilized by the banks are generally short-term in nature and the deployments of funds are medium and long-term, hence there is always a mismatch between the maturity and repayment of funds in banks. The mismatch risks the banks due to the incurrent risks involved in the business mechanisms and leads to liquidity crunch and loss of margins at times. Assets and Liabilities Management (ALM) is a dynamic process of planning, organizing, coordinating and controlling the assets and liabilities; their mixes, volumes, maturities, yields and costs to achieve a specified Net Interest Income (NII). The NII is the difference between interest income and interest expenses and the basic source of banks profitability. The easing of controls on interest rates has led to higher interest rate volatility in Ghana. Hence, there is a need to measure and monitor the interest rate exposure of Ghanaian banks. This paper entitled "Assets and Liabilities Management (ALM) in Ghanaian Banking Industry, a case study of Barclays Bank Ghana Limited regarding Interest Rate Risk Management" is aimed at measuring the Interest Rate Risk in Barclays Bank by using Gap Analysis Technique. Using publicly available information, this paper attempts to assess the interest rate risk carried out by the Barclays bank from 2007 to 2009. The findings revealed that the bank is exposed to interest rate risk.
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