Albaraka Türk has recently upgraded its funds transfer pricing framework in collaboration with Prometeia, a leading provider in risk management technology and advisory.
The project aimed to improve the FTP methodology, consistent with the principles of Participation Banking, and to enhance the FTP technological infrastructure, in line with the industry best practices on ALM and Treasury Risk.
From a methodological standpoint, the Funds Transfer Pricing model of the bank has been harmonized with the specific pricing strategies and sectoral variables implemented by Albaraka Türk and redesigned under Islamic banking principles.
Prometeia conducted a comprehensive analysis of all financial products offered by Albaraka Türk Participation Bank to its clients, enabling a more effective profitability analysis and a risk-adjusted approach to performance management, according to multiple analytical dimensions.
Within this new framework, a Funds Transfer Pricing Rate is quantified based on all specific funding costs for Albaraka Türk Participation Bank, which are translated into a vector or liquidity spreads that are added to the market base rate.
The evolution of the FTP framework, along with its integration with the Asset Liability Management processes of the bank, puts the premises for the implementation of a risk-based pricing approach and, ultimately, the maximization of the shareholders’ value.