Treasury: the heart of the bank

A managing director and an analyst at Barclays explain to Hannah Langworth what their department does and why it's so important

Banks help their customers manage their money, but who manages a bank's money? How does a bank decide where to invest its capital across its business and how much to hold back in reserve? How does a bank make sure that each of its business areas has enough cash to serve its clients and function efficiently while keeping enough cash available centrally at all times to cover any unexpected market developments? Why have these questions become more important to the finance world in recent years, and why could working in these areas be a great career choice?

Understanding how a bank's treasury department functions today will help to answer these questions, so we spoke to Mark Dearlove, a managing director in Barclays' Treasury department, and Sarah Chu, an analyst in the team, to find out more.

Mark Dearlove, Managing Director

Mark's career

I've been working in the financial markets for 28 years now, the last 16 of which have been at Barclays. I started off in operations, then moved into a trading role, but have always been focused on the money markets. I've progressed from working in these markets at a junior level to running part of the Treasury department, including five years working in Japan - Treasury here at Barclays is a global function.

What does a bank's treasury department do?

Every bank has a treasury department. Particularly in the last five years, these departments have been at the heart of all major financial institutions.

One of the main functions of a treasury department is to control and manage the bank's money (in terms of capital and liquidity) and to make sure that all parts of the bank can readily access the cash they need for their business activities. By doing so, it makes sure that the bank remains financially secure, stable and able to function effectively to help its clients.

A treasury department is also responsible for liaising with the bodies that regulate banks, which set rules regarding banks' capital and liquidity.

In order to ensure that banks are better able to withstand any future market stresses, their capital and liquidity requirements have become an area of increasing focus. Banks' treasury departments work closely on these issues and have a critical role to play. The treasury function of a bank is now an even more challenging and interesting place to work.

How does Treasury work with other parts of the bank?

Working in Treasury gives you the opportunity to interact with all the different parts of the bank. It's important for people across the bank to understand the implications of their trading activity on the bank's capital, the cost of the funding they use, and how our capital and liquidity are regulated and controlled. All parts of the organisation come to us to get that knowledge and practical advice.

For banks like Barclays, operations are global, so the Treasury department is not just people here in London. The department is spread across the world - for example, we have teams in many locations, from Singapore to New York to the UAE.

How do you interact with clients?

The Treasury department plays an external as well as an internal role at the bank. I spend a lot of time going out and explaining to clients the strong position we have in terms of our liquidity pool, our capital position and our balance sheet.

What challenges are banks' treasury departments facing in the current economic climate?

New regulatory guidelines - in particular Basel III - will require banks to hold significantly more capital in reserve than before. Treasury teams across the industry will continue to play a key role in ensuring all new regulation and standards are properly implemented.

Why is Barclays' Treasury department a good team for graduates interested in banking and finance to join?

Treasury is a great place for graduates interested in banking and finance to be. Working in Treasury gives you a real appreciation of how a bank is set up and run. It gives you a broad understanding of everything a bank does.

The breadth of knowledge you build gives you a lot of options to develop your career across the whole of the bank. At Barclays, Treasury is a very international team, so these options could include opportunities to work in our offices abroad. I think that Barclays is a great place to work - I've stayed for 16 years!

Sarah Chu, Analyst

Sarah's career

I studied Economics and Management at Oxford. While I was at university, I did two summer internships. The first was with an Indian retail bank in Mumbai and the second was at Barclays. At Barclays, I worked on a trading desk within the Treasury department, which led to an offer of a graduate job. I joined as a permanent employee in September 2010.

What made you decide to start your career at Barclays?

When I first started looking at internships, I didn't know a great deal about all the different areas of banking. I applied to a number of major banks, but Barclays was at the top of my list because it was a familiar household name with strong momentum. I was interviewed at Barclays, it went well, and I was fortunate enough to be offered an internship.

What made you decide to join the Treasury department?

The decision was a two-way process. When you apply for an internship here, you're interviewed by a number of different desks. You also have the opportunity to find out what each department does and whether you're interested in it. Then, successful candidates get invited to intern with the desk they fit best with.

When I was applying to Barclays I knew I wanted to work in something connected to the financial markets rather than, say, retail banking. I wanted a role that was fast-paced and dynamic. Treasury seemed like the perfect choice.

What's your role within Treasury?

I work in the Execution Services team. We're basically responsible for ensuring that the bank has enough cash, both for business purposes and to satisfy our regulators that we're sufficiently liquid.

My role is about communicating with all the different business areas in London that work with dollars, in particular letting them know how much the dollars they need will cost to acquire on the money markets. For example, I might speak to traders dealing in dollars, or our corporate financing teams when they're making long-term dollar loans to clients.

I've had some opportunities to work with our clients who want to understand our business in this area a bit better. I anticipate that I'll get more opportunities to work with clients as I become more senior. Recently I've also been given more opportunities to speak with regulators, giving them commentary on the dollar market.

How international is your work?

The first thing I do when I arrive in the morning is to look at various global markets to see how they've moved overnight and how that has affected our dollar position. Our dollar trading activities run on a 24-hours basis - once London closes, New York takes over, then Singapore, and then us again.

We work closely with other offices across the world and people in Treasury regularly go to see colleagues abroad. I was in New York for a couple of weeks last month, and it was good to meet the team there.

What do you enjoy about your job?

I really like being able to work with the markets, getting to understand, say, the interest rate or liquidity risks a bank might face and then being able to consider this knowledge in the broader context of how a bank works as a business. We have to ask questions like, "What assets do we hold?" and "What regulatory developments are going to affect us going forward?", considering them from both a markets and a strategic perspective.

I also like the fact that my role is constantly developing - there are always new challenges.

What have you learned in your job so far?

We receive ongoing formal training as part of the graduate programme but now I feel I learn the most by simply asking more senior people questions, which I do constantly! I've acquired a lot of market knowledge and understanding of financial products.

I feel I've improved my ability to multitask - here we're constantly dealing with five or more different sources of information and need to be able to pick out what's important and which tasks to prioritise. I've definitely improved my analytical skills - my ability to see what's significant in large pieces of data and why. I think I'm also now a more effective communicator, whether relaying a trade idea, or talking to a regulator.

How do you see your career developing in the future?

In the next few months, I'd like to really focus on expanding my market knowledge. In the longer term, I'd like to work abroad. Being part of a department that plays a central role in a global organisation means that I will have plenty of opportunities to do so.

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