I have always been interested with private banking and I can see how local banks can make money managing loan portfolio’s and potentially trading interest rate products.
any insights?? and im more curious about the “executive/high level” type positions
Small banks usually don’t get involved with derivative instruments. The first time I mentioned a swap to a bank executive I thought he was going to leap out of his chair.
So, how do small banks manage their interest rate risk? Are they just long a ton of rates?
Attracting term deposits by offering higher rates, CDARS, repo agreements, selling/purchasing MBS/Treasuries, selling loans just to name a few ways. Smaller banks usually can’t cover the swap dealer costs without materially affecting their bottom line and they don’t want to take the risk because they don’t fully understand the terms of the contract.
Just roll 363 style. Pay 3%, Lend at 6%, daily golf at 3.
did you just make that up? i like it
That is an old school banker term. It was also refernced in Liar’s Poker.
^Yup. Say it at the interview if you have not yet had it.