Don't Let Current Liquidity Be “the Tail that Wags the Dog!”

posted on Wednesday, September 30, 2020 in Strategies

Yes, there is a liquidity crisis, just not the one most financial institutions anticipated…too much current liquidity. With margins and earnings under severe pressure, credit risk and related costs a very real concern, and the prospects for loan growth dampened greatly, well…many avoidable balance sheet strategy mistakes will be made. The current discomfort of “cash burning a hole in my pocket” will be the primary driver and, unfortunately, result in too many institutions once again wishing for a “rewind button.”

Be careful not to let your guard down on appropriate contingency liquidity stress‐testing and planning activities. Liquidity is the lifeblood of every financial institution, and history has proven that in times of extreme stress, strong liquidity is the critical attribute that ultimately determines outcomes ‐ and even survival. Appropriate policy flexibility, institution‐specific risk monitoring/stress scenarios, and diversification of liquidity sources remain critical – this is not a drill!

In this special 90‐minute webinar co‐sponsored with the Federal Home Loan Bank of Des Moines, please join Darling Consulting Group's President Matt Pieniazek and Managing Director Mark Haberland as they address key approaches for liquidity management in today’s challenging and uncertain environment, including:

  1. Determining the right strategies for your institution…on both sides of the balance sheet.
  2. How interest rate derivatives provide important flexibility for liquidity management and earnings enhancement strategies in the current environment.
  3. Why elevated and focused communication with all stakeholders matters.
  4. Rethinking sensitivity analysis and stress testing in a pandemic environment.
  5. Importance of revisiting your definitions and philosophies surrounding total liquidity management.

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