Welcome to the May edition of the Bearning newsletter! As the first signs of rate cuts emerge on the horizon, fixed income markets are adjusting to a new narrative. After more than two years of aggressive tightening by major central banks, the expectations for monetary easing are gaining ground—especially in Europe, where inflation has been moderating. The long-inverted yield curves are showing signs of normalization, reviving discussions about the implications for bank balance sheets, hedging strategies, and asset-liability management.

In this issue, we look at how recent news and development on financial market impact banking, present updates from our workshops, share expert insights, and—as always—challenge you with our monthly quiz. Let’s dive in. 🏛️

1. Insights for Banking Professionals

Modeling Non-Maturing Deposits and FTP in ALM

One of the most frequently discussed topics in bank ALM today is how to properly model non-maturing deposits—such as current accounts or savings—and how to assign a suitable Funds Transfer Pricing (FTP) rate to them. In a recent LinkedIn post, we addressed these questions and showcased how our Excel-based ALM model helps banks simulate and analyze such positions effectively.

This post resonated widely with banking professionals, especially those working in ALM, controlling, and risk functions. If you're also navigating the challenges of interest rate risk modeling and FTP allocation, we invite you to read the full post and explore the simulation tools we use in our courses: 🔗 Read the full post

The Rise and Fall of a Successful Bank Manager

In this blog post, we take a closer look at recurring risk management issues we've encountered during consulting projects and workshops with banks across Europe. Titled “The Rise and Fall of a Successful Bank Manager”, the article outlines ten common—but often underestimated—mistakes that even experienced bank managers can make.

This blog is a reflection on how even smaller and simple banks must go beyond surface-level metrics and integrate both net interest income (NII) and economic value (EVE) perspectives. Especially in today’s volatile rate environment, professional ALM is not optional — it's essential. We at Bearning are ready to help with:

1. ✅ Knowledge: https://lnkd.in/eh6V2CWq
2. ✅ Mindset needed for modern banking: https://lnkd.in/eQRZ2fcU
3. ✅ Tools and Solutions: https://lnkd.in/eMGrAvkS

📖 🔗 Read the full blog here

Beyond LCR: FSI/BIS Suggests Prepositioning and Supplementary Liquidity Tools

New Liquidity Ratios proposed in BIS paper could be considered as a response to 2023 Bank Failures. In our recent post, we reviewed this Financial Stability Institute Brief that critically evaluates proposals to tighten liquidity regulation - such as introducing a 5-day or 7-day Liquidity Coverage Ratio (LCR). While these shorter-term ratios might seem like a logical response to rapid bank runs (e.g. SVB), the paper argues that they would likely offer limited practical protection and could add to banks’ compliance burden without improving real resilience - especially when intraday liquidity is under pressure.

Instead, the BIS proposes a more operationally effective solution: prepositioning. This concept involves banks preparing eligible collateral in advance - before a crisis occurs - so that central banks can provide emergency liquidity quickly, even accepting a broader set of assets (not necessarily HQLA).

A case study on page 7 of the BIS paper illustrates how prepositioning can be combined with Supplementary Liquidity Ratios (SLRs) in a central bank standing facility to improve systemic resilience during stress events. 🔗 Read the full post

2. Bearning Courses and E-Learning Updates

Master the Core of Modern Banking with Bearning

Effective management of a bank’s balance sheet requires a solid grasp of several interconnected disciplines: Asset and Liability Management (ALM), Treasury operations, market risk management, fintech and the evolving regulatory landscape. These areas are highly technical, often complex, and increasingly critical to maintaining banks' profitability, affordable risks and regulatory compliance in today’s challenging environment.

At Bearning, we’ve designed a comprehensive educational platform to support banking professionals in building this knowledge. ALM practitioners, bank balance sheet managers, treasury specialists, controllers, and regulatory experts can find targeted know-how on our website to support their professional development and daily work.

🧑🎓 Start with Free E-Learning Courses: Our free courses are a great way to begin. They cover essential banking topics and include rich educational content, from bank strategy and FTP to ALM basics, Treasury and financial controlling.

❓ Quizzes - Learn by Doing: A standout feature of our e-learning platform is the extensive collection of quizzes. With over 1000+ questions and detailed explanations, they allow users to test and reinforce their knowledge. Many quizzes are available within the free courses - but for those seeking advanced scenarios and certification, our paid e-learning courses offer full access.

🎓 Once purchased, these courses offer lifetime access, and you can earn certificates upon successful completion - ideal for documenting your expertise in ALM, treasury, and bank financial management. The most efficient way to access our premium content is through the bundle packages here: 👉 Explore course bundles

🌞 Special Summer Offer – 40% Off: As summer begins, we’re offering a 40% discount on two selected bundles. To apply the discount:

1. Click on your chosen bundle.
2. Select the "Enroll Now" button.
3. Click “Have a coupon?”, enter the code summer40, and hit Apply.
4. The price will be reduced immediately by 40%.

You can purchase the bundle for yourself, or as a gift for someone else, making it a valuable investment in professional growth.

📅 Live Courses and Consulting For a more interactive learning experience, Bearning also provides live trainings and consulting, either online or onsite. Most of our courses are tailored in-house for banks, banking groups, associations, or expert education organizers. From multi-day masterclasses to focused workshops, we adapt content to meet the needs of your institution.

We're also preparing a series of public webinars and courses for autumn 2025—so we encourage you to stay connected and follow us for updates.

3. Kurzy v slovenskom jazyku

Bearning kurzy naživo v slovenčine – Máj / Jún 2025

V máji sme v Bearning opäť zrealizovali viacero odborných kurzov v slovenskom jazyku a teší nás, že môžeme aj na lokálnom trhu ponúkať naše špecializované know-how. Májové školenia boli zamerané najmä na oblasti riadenia aktív a pasív (ALM), úrokového rizika a regulácie IRRBB, ako aj na produkty kapitálového trhu a Treasury.

V júni plánujeme pokračovať v ponuke odborných kurzov:

• Už v prvom júnovom týždni organizujeme verejný kurz o novej európskej regulácii kryptoaktív MiCA, vhodný pre pracovníkov bánk, investičných spoločností aj compliance oddelení: 🔗 MiCA - Nová regulácia kryptoaktív (verejný kurz)
• V rovnakom období uskutočníme aj inhouse školenie pre Inštitút bankového vzdelávania na tému využitia umelej inteligencie vo finančnom sektore – moderná a vysoko aktuálna téma s praktickými ukážkami: 🔗 Umelá inteligencia vo finančníctve (inhouse) alebo registrácia na stránke IBV.
• Dňa 18. júna pripravujeme ďalší verejný kurz z oblasti fintech, tentokrát na tému Digitálna transformácia bánk, kde sa pozrieme na praktické príklady zmien v produktoch, distribúcii, technológiách aj organizácii bánk: 🔗 Digitálna transformácia bánk (verejný kurz)

Počas letných mesiacov sa budeme v Bearning viac sústrediť na inhouse programy pre banky a organizácie, vývoj nových obsahov a prípravu jesenného kalendára. Verejné kurzy v lete neplánujeme. Záujemcom o odborné vzdelávanie však odporúčame naše e-learningové kurzy v angličtine, ktoré sú dostupné online, vrátane rozsiahlych kvízov a certifikátov. Pripomíname, že aktuálne ponúkame 40 % zľavu na balíky kurzov (viď vyššie v tomto newsletteri).

4. Banking Industry Quiz

Test Your Knowledge with Bearning's Monthly Quiz ✅❌❔

In our May treasury courses, we covered key financial market instruments used by banks to manage interest rate risk. One of the core tools discussed was the Interest Rate Swap (IRS). Here's a quiz question that will test your understanding of this instrument’s real use in banking practice:

❓ What is an Interest Rate Swap (IRS) NOT suitable for?

• A) Hedging an interest rate risk (IRR) position
• B) Opening an interest rate risk (IRR) position
• C) Exchanging bonds for cash
• D) Closing an interest rate risk (IRR) position

👉 Do you know the answer? We'll reveal the correct option and explanation in our next newsletter issue!

5. Quiz Solution Corner ✅

Review and Learn from Last Month's Quiz

❓ You purchased a 10-year USD zero-coupon bond at a price of 85. If market interest rates suddenly increase by 100 basis points, and the bond still has 10 years to maturity, what would be the new approximate price of the bond?

• A) 70
• B) 77
• C) 82
• D) 90

✅ Correct answer: B) 77

Explanation: Zero-coupon bonds are particularly sensitive to interest rate changes due to their long duration and the fact that they don’t pay periodic coupons. Their value is calculated using the formula:

Price=100 / (1+r)^n

In this case:

• Original price = 85
• Maturity = 10 years
• Implied original yield ≈ 1.67%
• New yield after a 100 bp increase = approx. 2.67%

Using the adjusted rate:

New Price ≈ 100 / (1+0.0267)^10 ≈ 77

This illustrates how even a seemingly small parallel shift in the yield curve can significantly impact the present value of long-term positions — a key concept in Interest Rate Risk in the Banking Book (IRRBB) management.

📲 Do you want more banking quizzes and tests with detailed explanations? Sign up for our Bearning e-learning platform, where you'll find over 1000 questions 📑 with explanations and the opportunity to earn a certificate. Many parts of our e-learning courses are free, including a variety of texts 📖, quizzes, and insightful explanations.

For more information, visit our websites: bearning.com and bearning.sk. Follow us on LinkedIn and stay updated with the latest in banking education and workshops. Contact us at: office@bearning.com

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