How would you structure an in-house bank?
A core Corporate Treasury interview question — asked in analyst and associate interviews across IB, PE, and the Big 4.
THE SHORT ANSWER
(1) Dedicated treasury entity (often in Luxembourg, Netherlands, or Ireland for tax efficiency). (2) Centralizes: external borrowing, IC lending, cash pooling, FX execution, payment factory. (3) Benefits: single bank relationship point, better pricing, IC interest optimization. (4) Requirements: transfer pricing documentation, substance requirements (real employees, real decisions), regulatory compliance (banking license may be needed depending on structure).
WHAT INTERVIEWERS LISTEN FOR
- ✓Dedicated treasury entity
- ✓Centralizes borrowing and lending
- ✓Cash pooling and FX execution
- ✓Transfer pricing and substance
- ✓Regulatory compliance
COMMON MISTAKES
- ✗Ignoring tax efficiency locations
- ✗Overlooking substance requirements
- ✗Assuming no banking license needed
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