This research work was conducted to examine Treasury management
strategies and challenges in the Nigeria. Banking industry, identifying the
various types of bank treasury products, their challenges and the strategies
applied by difference banks in marketing their new and existing treasury
products. The study analyses the treasury management responsibilities assumed
by financial departments and develops a model to confirm those
responsibilities. The study has also developed an explanatory model that brings
together the man functions of the treasurer by means of two concepts: (i) basic
cash management, which group the management of collections and payments,
liquidity monitoring in banking operations, short term treasury forecasts,
management of banking balances on value data and negotiation with financial
organisation; and (ii) “advanced cash management”, which includes the
management of the financing of the positioning of treasury peaks and the
management of financial risks.
TABLE OF CONTENTS
Title Page - - - - - - - - i
Approval Page - - - - - - - - ii
Dedication - - - - - - - - iii
Acknowledgment - - - - - - - iv
Abstract - - - - - - - - - v
Table of Contents - - - - - - - vi
1.0 Introduction - - - - - - - 1
1.1 Background of the Study - - - - - 1
1.2 Statement of the Problem - - - - 2
1.3 Objectives of the Study - - - - - 3
1.4 Research Question - - - - - - 4
1.5 Statement of Hypothesis - - - - - 4
1.6 Significance of the Study - - - - - 5
1.7 Scope of the Study - - - - - - 6
1.8 Limitation of the Study - - - - - 6
1.9 Definition of Terms - - - - - - 7
2.0 Literature Review - - - - - - 9
2.1 Introduction - - - - - - - 9
2.2 Objective of Treasury
Management - - - 13
2.3 Treasury Management
Policy/Guideline - - 15
2.4 Interest Rate Forecasting
and Management - 17
2.5 Methods of Pricing
Instrument by Treasury
Officers - - - - - - - - 20
2.6 New Treasury Product
Development - - 22
2.7 Financial Market
Information Gathering and
Analysis - - - - - - - - 27
2.8 Challenges Encountered by
Managing There Treasury
Products - - - 29
3.0 Research Design and
Methodology - - - 32
3.1 Introduction - - - - - - - 32
3.2 Research Design - - - - - - 32
3.3 Sources/Methods of Data
Collection - - 32
3.4 Population and Sample Size
- - - - 35
3.5 Sample Technique - - - - - - 36
3.6 Validity and Reliability
Instrument - - - - - - - 37
3.7 Method of Data Analysis - - - - - 37
4.0 Presentation and Analysis
of Data - - - 39
4.1 Introduction - - - - - - - 39
4.2 Presentation of Data - - - - - 39
4.3 Analysis of Data - - - - - - 40
4.4 Test of Hypothesis - - - - - - 51
4.5 Interpretation - - - - - - - 55
5.0 Summary, Conclusion and
Recommendations - 56
5.1 Introduction - - - - - - - 56
5.2 Summary of Findings - - - - - 56
5.3 Conclusion - - - - - - - 58
5.4 Recommendation - - - - - - 61
References - - - - - - - 64
Appendix - - - - - - - -
1.1 BACKGROUND OF THE STUDY
emerged as a result of the sophistication of banks. After the recapitalisation
of banks capital to N25 billion in 31 December, 2005 due to increasing
competition, Banks have initiated a lots of product to enhance their treasury
function, knowing that treasury product which is an important aspect of banking
activities especially as Banks operate at the short end of the financial market
known as money market. Indeed treasury function is a critical tool for
controlling liquidity. Interest rate and off balance-sheet risks, loans
deposits, borrowed fund pricing and the execution of assets and liability
Management of bank
treasury comprises fund acquisition, investment in marketable securities,
hedging and the management of the bank’s reserve account at the central bank.
for a bank to be remain profitable and also be able to manage their liquidity
position, such bank should develop treasury management strategies needed to
compete with other banks in the industries, they should also develop and market
new treasury product which will enhance their liquidity and profitability
Banks when trying to
manage its treasure products faced many challenges which may come from customer
when deciding on going to the other bank that they can understand their
treasury product or collect prime interest rate. Another challenges may be from
the regulatory authorities (CBN) by trying to regulate the liquidity position
of commercial bank initial new policy guidelines which all banks must comply
with. These and other are the are which the researcher will cover in the
conduct of this research work.
1.2 STATEMENT OF PROBLEMS
treasury management and inadequate liquidity has recorded some initial failure
evolve of Union Bank Plc to make phenomenal profit, by making them to be
careless or resources utilization and particularly their treasure management.
inadequacy for the management strategies holding by banks.
inability of the Union Bank Plc and UBA Bank Plc to fulfil both its short and
long term obligation, it is based on the management of liquidity.
1.3 OBJECTIVE OF THE STUDY
The under-listed point
generally make up the objectives of the study, they are as follows:
To investigate the various
techniques it treasury management in UBA Plc and Union Bank Plc and also
identify peculiar problems in the management of treasury products.
To find out, it the banks have
initiated new strategies in marketing and management of their treasury
To find out the challenges
encountered by banks in managing their treasury.
To find out how the banks are
monitored and supervised on CBN general policy guidelines.
1.4 RESEARCH QUESTION
The research question
for this work is stated below:
Can management of bank treasury
be a critical tool for controlling it’s liquidity?
Does management of the bank’s
reserve account at CBN means managing the bank’s balances in required reserve
Can marketing of bank treasury
product be an important aspect of banking activities?
Is new products developments
the basic funding strategies in banking?
Can management of bank treasury
help in economic development?
1.5 STATEMENT OF HYPOTHESIS
Ho: There is no relationship between the
commercial bank total assist and her level of profitability.
HA: There is relationship between the
commercial bank total asset and her level of profitability.
Ho: There is no significant relationship
between a treasury management and bank investment.
HA: Thee is significant relationship
between a treasury management and bank investment.
1.6 SIGNIFICANCE OF THE
Treasury function which
is the critical tools used by Banks to manage their liquidity position, will
help the banks to be able to know the new strategies used by their competitors
to manage their treasure products.
It will also help the
regulatory authority (CBN) to regulate the monetary policy thereby enhancing
Academically, it will be
one of the sources through which student and or researcher would understand the
difference forms of treasury, products, the strategies used by banks to manage
their treasury effectively and efficiently, and also help them to do more
research work on management of bank treasury.
1.7 SCOPE OF THE STUDY
The researcher intends
to know how the banking industry management their treasury function because
treasury management which is know as the critical tool used by banks to
management their liquidity position. By knowing when to invest short, medium or
long – term and also the amount of cash to reserve in their vault.
In carrying out this
research work, the researcher will specialize in two Banks i.e. Union Plc and
UBA Plc as areas covered in this research work, which the finding, conclusion
and recommendation will cover the entire system.
1.8 LIMITATION OF STUDY
One of the major
limitation is time constraint since the project is expected to be completed
within a short period of month.
Another limitation is
lack of statistical data and literature to review for the project work
financially constraints is also one of the limitations.
Furthermore, because of
oath of secrecy sworn by the bank officials and fear of divulging vital
information to their competitors, some staff members of Union bank and UBA Plc
found it difficult to release necessary information for this work. This did not
, in any way affect the validity and reliability of this project because the
researcher painskakingly ensure that all relevant fact on ground were
1.9 DEFINITION OF TERMS
To study in detail by breaking it down into various parts, to submit s to
certain test order to identify its constituents to break up into its simplest
This is a financial institutions that provides banking service.
A credit policy package should have in build monitoring device for
comparing the actual result with the policy guidelines. This can be achieved by
specifying a number of commercial returns to be rendered periodically.
Having to do with comparison or comparing what is similar and different
in two or more branches of knowledge measured or judged by company.
This is an assumption, which the person carrying out an investigation
on a particular to made ahead of time, before embarking on the investigation.
The hypothesis could be negative or alternative (positive) hypothesis.
This simply means getting things done through other people.
Guideline: This is the totality of the rules, procedures and processes,
which the management and bank adopts to guide them in their duties.
Market: This refers to care customers of the bank.
A loan is a credit facility extended by one party (Lender) to another
party (borrower), subjected to specific terms and condition agreed to both