Transfer Pricing for Financial Institutions

Establishing and maintaining effective transfer pricing policies is a key challenge in today’s increasingly competitive international financial services sector. There are numerous issues involved, from the requirements of shareholders and risk management to the allocation of capital. There are also many different techniques for establishing efficient transfer pricing systems within an organisation.This illuminating handbook provides a thorough introduction to transfer pricing and its uses within financial organisations, as well as a clear analysis of all the issues involved. Transfer pricing is so complex and variable that there can be no definitive blueprint for success: however, in this book John Smullen has provided a vital contribution to the debate and a much-needed clarification of this important topic.Some of the areas covered:

Part 1 An introduction to transfer pricing in financial institutions: What is transfer pricing? The general theory of transfer pricing; Transfer pricing in commercial organisations; The uses of transfer pricing in financial organisations. Part 2 Setting transfer pricing in financial organisations: Integrating transfer prices with organisational structure; Attitudes to risk. Part 3 Specific transfer prices: Transfer prices based on operating expenses; Transfer pricing the costs of funds: A general perspective; The transfer price of funds: Some perspectives on wholesale and retail funding; The transfer pricing of capital; Risk adjusted performance measures: The transfer price of investment portfolios; Risk adjusted performance measures: Return on risk adjusted capital and associated measures; Risk adjusted performance measures: A critical overview; The transfer pricing of derivatives. Part 4 The strategic perspective: Optimal bank modelling for transfer pricing; Transfer pricing and management information strategy; Issues and conclusions.