Lowering cost of funds with interest rate derivatives

When properly structured, from both an economic and hedge accounting perspective, interest rate derivatives are usually the best solution for banks concerned about forecasted interest rate movements that negatively impact their financial performance. Chatham offers outstanding derivatives and hedge accounting advisory and systems designed to reduce this risk. What’s more, our experienced team of advisors can assist in navigating the new derivatives regulatory landscape of Dodd-Frank.

Unlike broker-dealers or counterparties to derivative transactions, Chatham is an independent advisor. We are an unbiased partner with the expertise and resources you need to meet your interest rate risk management goals.

How Chatham helps mitigate interest rate risk

Chatham’s risk management consultants work with clients to develop and execute accounting-friendly hedging strategies that best meet the bank’s ALM objectives. We leverage our strong capital markets presence, Dodd-Frank regulatory experience, proprietary analytical models, and hedge accounting and valuation technology platform on your behalf to structure the best possible derivative terms and price.

  • Policy Development: We draft Derivative and Hedging Policies and educate the board and management in the appropriate use of derivatives to manage risk. We also conduct special training sessions on the fundamentals and application of interest rate derivatives for the purpose of offsetting interest-rate risk.
  • Dodd-Frank Regulatory Compliance: Our consultants have extensive experience advising banks on how best to comply with Dodd-Frank regulations as they relate to derivative transactions. We educate boards and management on setting up and operating a compliant derivatives program as well as assist the bank in completing the regulatory documentation to meet compliance requirements.
  • Counterparty Relationships: Chatham consultants work with clients to identify, negotiate, and set up derivative counterparty relationships, as well as structure, execute and document derivative transactions used for hedging interest rate risk.
  • Hedge Accounting: Our hedge accounting experts manage all aspects of accounting for each derivative transaction (ASC 815), including structuring accounting-friendly hedging relationships, writing hedge designation memos, issuing periodic journal entries, and performing ongoing effectiveness testing as required. Chatham accountants also prepare financial statement disclosures on derivative activity.
  • Valuations: Chatham clients enjoy secure web access to ASC 820 compliant valuation data for each derivative position as well as all ISDA, derivative transaction, and accounting documentation.
    • To learn more about Chatham’s Balance Sheet Risk Management services, please contact us today.