Design an ALCO terms of reference that defines voting rights, quorum, escalation paths and meeting cadence.
Finance & Banking
Asset and Liability Committee Governance and Balance Sheet Decisions in Banks
Learn to run an effective ALCO: build the balance sheet pack, chair the debate on rate risk and liquidity, and turn decisions into tracked actions.
🗓️Duration5 training days
📚Content4 modules · 8 sessions
🎓On completionAccredited attendance certificate
About the programme
Course Overview
Many banks hold an Asset and Liability Committee meeting every month without the committee actually deciding anything: the pack is descriptive, the debate wanders, and pricing or hedging calls get made afterwards in side conversations. This course rebuilds ALCO as a working decision forum. Participants learn how to assemble a balance sheet pack that surfaces the handful of metrics that matter that month, how to frame options with clear trade-offs between net interest margin, liquidity cost and capital use, and how to write minutes that record a decision, an owner and a deadline rather than a summary of discussion. The course covers the mechanics behind the numbers - repricing gaps, deposit behavioural assumptions, funds transfer pricing curves and liquidity buffer composition - so members can question the assumptions behind a chart rather than the chart itself. Delegates work through a full ALCO cycle using a realistic balance sheet: setting the agenda, challenging a proposed deposit pricing change, deciding on a hedge for a widening rate gap, and escalating a limit breach to the board risk committee. The result is a committee that produces auditable, well-reasoned balance sheet decisions on a predictable cycle, with a governance trail that stands up to supervisory review.
Expected Learning Outcomes
Build a balance sheet pack that highlights exceptions and required decisions ahead of descriptive detail.
Explain repricing gap analysis and deposit behavioural modelling well enough to challenge treasury assumptions.
Frame a funding or hedging decision as a set of costed options with a clear recommendation.
Draft ALCO minutes that record decisions, owners and deadlines in an auditable format.
Set escalation triggers that route limit breaches to the board risk committee without delay.
Evaluate deposit pricing proposals against net interest margin and liquidity cost objectives.
Who Should Attend
Treasury and balance sheet management professionals preparing ALCO packs
Chief financial officers and finance directors who chair or attend ALCO
Risk managers responsible for interest rate and liquidity risk oversight
Board risk committee members receiving escalations from ALCO
Internal auditors reviewing ALCO governance and decision trails
Product and pricing managers whose proposals go through ALCO approval
Course Modules
Select any module to see its sessions and points.
01Structuring the Committee and Its Decision Rights
2 sessions · 8 points
Session 1Terms of Reference, Membership and Escalation Design
- Define ALCO's decision rights on pricing, funding, hedging and limit-setting versus matters reserved for the board.
- Set membership, voting thresholds and quorum rules that prevent decisions being made by a narrow subset of attendees.
- Design escalation triggers that route limit breaches and risk appetite exceptions to the board risk committee promptly.
- Separate the ALCO agenda into standing items, decision items and information items to protect discussion time.
Session 2Building a Decision-Focused Balance Sheet Pack
- Lead the pack with exceptions and required decisions rather than a full narrative of every balance sheet movement.
- Present repricing gap, liquidity coverage and net stable funding positions against limits with clear direction of travel.
- Use one-page option papers that lay out two or three costed alternatives with a stated recommendation.
- Standardise chart formats across cycles so members compare trend and magnitude without re-learning the layout each month.
02Reading the Balance Sheet Behind the Pack
2 sessions · 8 points
Session 1Repricing Gaps and Behavioural Assumptions
- Interpret repricing gap ladders and identify which buckets drive net interest income sensitivity to rate moves.
- Question the behavioural assumptions used for non-maturity deposits, prepayments and undrawn commitments.
- Compare economic value of equity and net interest income sensitivity results and explain why they can point in different directions.
- Assess the impact of basis risk between the reference rates used for assets, liabilities and hedges.
Session 2Funds Transfer Pricing and Liquidity Cost Allocation
- Explain how a funds transfer pricing curve allocates funding and liquidity cost to business lines and products.
- Challenge a transfer pricing methodology that misprices term liquidity risk or embedded optionality.
- Link transfer pricing outputs to product profitability reviews and pricing committee decisions.
- Identify when a transfer pricing change requires a parallel review of deposit and lending rate strategy.
03Deciding on Funding, Pricing and Hedging Actions
2 sessions · 8 points
Session 1Deposit Pricing and Funding Mix Decisions
- Evaluate a deposit pricing proposal against net interest margin, liquidity buffer and franchise stability objectives.
- Assess the trade-off between wholesale funding cost and diversification when the deposit base concentrates by segment.
- Decide on the mix between short-term and term funding given the current liquidity buffer and stress test results.
- Set conditions and monitoring triggers attached to an approved pricing or funding decision.
Session 2Hedging Decisions and Risk Limit Management
- Compare hedging instruments such as interest rate swaps and caps against the identified balance sheet exposure.
- Decide on hedge size and tenor that closes an unacceptable gap without over-hedging into a new exposure.
- Review hedge effectiveness results and decide whether re-designation or restructuring is required.
- Approve temporary limit exceptions with a defined remediation plan and review date.
04Governance, Minutes and Supervisory Readiness
2 sessions · 8 points
Session 1Writing Minutes and Tracking Actions
- Draft minutes that capture the decision made, the option chosen, the owner and the deadline rather than the discussion.
- Maintain an action log that is reviewed at the start of the next meeting before new business is opened.
- Record dissenting views and the rationale for overriding a recommendation when the committee departs from it.
- Distinguish information shared for awareness from decisions requiring a recorded vote.
Session 2Supervisory Review and Continuous Improvement
- Prepare an ALCO file that a supervisor can review to trace a decision from data to minute to implementation.
- Benchmark ALCO cycle time and decision quality against prior cycles to identify where the process stalls.
- Run a periodic self-assessment of ALCO effectiveness against its terms of reference.
- Update the terms of reference and pack design as the balance sheet, products or regulatory expectations change.
What the participant receives
4 course modules
A structured syllabus
8 training sessions
across 5 days
32 detailed points
Applied, detailed content
Accredited attendance certificate
On completing the programme
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