PART A · QUESTION 1
A branch lends at 7.0%. Treasury charges the branch 4.5% for the money. Credit and running costs are charged separately.
// EXAM HALL20 QUESTIONS · 30 MINUTES
Bank Treasury Analyst Practice Test
What money costs inside a bank, one bank's funding, a repricing ladder, and the calls when the chief executive has a view on rates.
BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED
// THE SHORT ANSWER
A bank treasury analyst practice test asks whether you can see the risk a bank's own balance sheet creates, and what a loan really costs to make. This paper has four parts: transfer pricing and how long deposits really stay; one bank's funding; a repricing ladder with a swap and a transfer curve, set on an exhibit; and calls on rate views, sudden outflows, hedging forecasts and delegated authority. Every question is original, and none comes from any bank's test. Sit it against a thirty-minute clock, or take it as practice.
BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.
// HOW TO SIT IT
Answer below as practice, and each read opens as you go. Or sit it as a test: 30 minutes, with every read held back until you finish.
PART A
The sums
What a bank's money costs, and how long it stays.
PART A · QUESTION 2
A bank holds US$3bn of assets it could sell within days at little loss. In a severe stress, it estimates US$2.4bn of its funding would leave within 30 days.
What is its liquidity coverage?
PART A · QUESTION 3
A deposit pays 3%. The bank's treasury credits the branch that gathered it with 4.2%, reflecting what the money is worth to the bank.
What margin does the branch earn on it?
PART A · QUESTION 4
A bank's deposits can leave at a day's notice, and in practice most have stayed for years. It is funding 25-year mortgages with them.
What is treasury's question?
PART B
The bank's numbers
One bank's funding and its rate position.
EXHIBIT J · THE BANK'S NUMBERS
One small bank's year. Figures in US$m.
| US$m | |
|---|---|
| Loans, net of provisions | 8,000 |
| Liquid assets | 2,000 |
| Total assets | 10,000 |
| Deposits | 7,000 |
| Wholesale funding, 600 due within three months | 2,200 |
| Equity | 800 |
| US$m | |
|---|---|
| Interest income | 560 |
| Interest expense | (300) |
| Net interest income | 260 |
| Fees | 40 |
| Total income | 300 |
| Costs | (165) |
| Impairment charge | (35) |
| Profit before tax | 100 |
| Tax | (28) |
| Profit after tax | 72 |
| Gross loans | Provision | |
|---|---|---|
| Stage 1 | 7,330 | 20 |
| Stage 2 | 600 | 30 |
| Stage 3 | 200 | 80 |
| Details | US$m |
|---|---|
| Regulatory deductions from equity | 80 |
| Risk-weighted assets | 5,400 |
| Gross loans on the general ledger | 8130.0 |
| Gross loans on the loan system | 8126.8 |
PART B · QUESTION 5
In Exhibit J, US$600m of the wholesale funding matures within three months. Credit markets have become nervous.
What do you look at first?
PART B · QUESTION 6
Take the bank in Exhibit J, and suppose US$6,000m of assets and US$7,000m of liabilities reprice within a year. Rates rise one percentage point, and everything reprices fully at once.
What happens to a year's net interest income?
PART C
The funding ladder
One pack, seven questions. Read when each side reprices before you read the curve.
EXHIBIT AC · THE FUNDING LADDER
One mid-sized bank's pack for its asset and liability committee. Money in US$m.
| 0–3m | 3–12m | 1–5y | 5y+ | |
|---|---|---|---|---|
| Assets | 3,000 | 1,500 | 3,000 | 500 |
| Liabilities and equity | 4,500 | 2,000 | 1,300 | 200 |
| Gap | (1,500) | (500) | 1,700 | 300 |
| Figure | |
|---|---|
| Treasury's transfer rate: one year | 4.0% |
| Treasury's transfer rate: three years | 4.6% |
| Treasury's transfer rate: five years | 5.0% |
| Wholesale funding due in one month | 400 |
| Wholesale funding due in three months | 600 |
| Share of deposits held by the ten largest | 22% |
PART C · QUESTION 7
From Exhibit AC: assets and liabilities repricing within a year.
What is the one-year gap?
PART C · QUESTION 8
In Exhibit AC, rates rise one point, and everything within a year reprices at once.
What happens to a year's net interest income?
PART C · QUESTION 9
Exhibit AC's bank enters a five-year US$1,000m swap, paying fixed and receiving floating.
What does that do to the one-year gap?
PART C · QUESTION 10
A lender in Exhibit AC offers a five-year fixed loan at 6.2%, using the transfer curve.
What margin does the loan earn before credit and costs?
PART C · QUESTION 11
Exhibit AC shows US$400m of wholesale funding due in one month, and US$600m in three.
What do you look at first?
PART C · QUESTION 12
Exhibit AC's chief executive says: 'Rates are going to fall. Leave the gap open, and we will make money.'
What do you do?
PART C · QUESTION 13
In Exhibit AC, ten depositors hold 22% of deposits. Those deposits have been stable for years, and treasury treats them as long-term funding.
Signal or noise?
PART D
The calls
The balance sheet is yours to fund, and everyone has an opinion on it.
PART D · QUESTION 14
A business head says: 'Treasury charges us too much for funding. A rival would lend this at half a point less. Your transfer price is killing my growth.'
What are you hearing?
PART D · QUESTION 15
An executive asks why the capital ratio fell 0.4 points this quarter, although profit was good. You have two minutes.
What do you say?
PART D · QUESTION 16
News of a rival's failure breaks at noon. Online withdrawals at your bank are running at three times normal. You are on the treasury desk, and the liquidity report is not due until tomorrow.
What do you do?
PART D · QUESTION 17
A bank holds government bonds at amortised cost, on the basis that it will hold them to maturity. Rates have risen, and it now needs cash.
What happens if it sells the bonds?
PART D · QUESTION 18
A bank holds a large portfolio of long-dated government bonds as its liquidity buffer, at amortised cost. Rates have risen a lot, and they now show a big unrealised loss.
What do you ask?
PART D · QUESTION 19
A new fixed-rate mortgage campaign is doing far better than planned. Treasury hedged the expected volume with swaps.
What is treasury's concern now?
PART D · QUESTION 20
You are the junior on the treasury desk. A nostro balance will fall short at today's settlement unless you move US$15m, and your limit for moving money alone is US$10m. Your manager is unreachable.
What do you do?
0 OF 20 ANSWERED · 0 WITH THE SENIOR READ · 0 STANDS UP · 0 OFF THE LINE
// THE REST OF THE ROUND
Every question here is original; none is any bank's real test. Written for: Treasury analyst.
- Treasury analyst: the interview questions, against a two-minute clock.
- Situational judgement, for any seat.
- The assessment centre: a whole case in forty-five minutes.
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