If you were anything like us, you imagined the treasury being something like Uncle Scrooge’s pool of coins in Duck Tales, into which he would dive regularly (and, mysteriously, not causing himself any injuries). You might be surprised to find out the ultimate goal of the treasury is to end every day with zero in cash.

This is especially impressive given the amounts of money that passes through the treasury of a bank. The European Investment Bank’s treasury last year settled EUR 8.5 trillion! While our total lending volume for the group was “only” EUR 78 billion.

Francisco Castro Gutierrez, head of the treasury back-office at the EIB, explains that this is due to the different “wheel sizes” of the treasury, the borrowing, and the lending operations of the bank. The average maturity of our treasury operations is 3 months, compared to 7-8 years for our borrowing, and closer to 10 years for our lending. All the money keeps going round and round in the treasury. You need fast fingers to keep verifying and validating all those transactions – almost as fast as if you were playing flamenco guitar!

Francisco, who just so happens to play the flamenco guitar, explains to us what the back-office, the middle-office and the front-office do in the treasury department. This includes reconciliation of accounts, claim processing, funding the short positions, squaring at the end of the day, and a lot more – which you will learn about in this episode.

You will also find out:

• Why you should be a morning-person if you want to work in the treasury back office
• That, in the future, you will need people to control robots in the back office: to make sure that the algorithms don’t go crazy.
• How all transactions are verified and validated by three pairs of eyes (known as the “six eyes rule.”

Credit for the flamenco music on the podcast goes to: http://www.purple-planet.com

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