In both methods, change the settings in assets and liabilities

Cost dependent on interest rates of assets and liabilities or, respectively, the average duration of assets and liabilities), which is only an indirect effect on future profits of the bank and the future cost of equity capital, but do not define them clearly and directly, as the yields of certain assets, the cost of raising certain liabilities and their shares as a result of balance. Thus, methods based on ALM gepu and duration can not be viewed as methods of synthesis of the optimal structure of assets and liabilities, which directly determine the expected profit and the cost of equity capital of the bank, and do not guarantee to get the best possible result. Interest rate risk through the use of fixed-term financial instruments (synthetic controls). Synthetic Methods of Interest Rate Risk Management provides for the establishment of protection against interest rate risk more urgent conclusion of transactions that may compensate for certain financial losses on balance sheet items due to changes in market interest rates. Category: Management Operations Commercial Bank