[smallnamespace]

> overselling

Well, not from the perspective of the bank :)

From my interactions with corporate treasurers, they are basically short a bunch of put options and strongly disincentivized from taking any risk.

Transacting at the fix 'feels' like it's easy to justify to your CFO (hey boss, we got the same rate as the rest of the market, and here's how you can verify that I'm telling the truth), whereas if you trade on screens and screw it up, you'll be out of a job.

The fact that the bank's front running P&L gets pushed into the fix rather than being fully transparent is also probably a feature, not a downside, for the treasurer.

[infinite8s]

Of course they are disincentivized from taking risk - their job is capital preservation, not capital growth (that's the job of the rest of the business).

[smallnamespace]

Yes, but my point is that there's an information asymmetry here: treasurers are incentivized to look like they're preserving capital, and that doesn't always align with actually saving the company money (e.g. learning to trade off screens, which might be better than just taking the fix from a bank).

You could look at it two different ways: the cynical one is that treasurers are paying out from the company purse to marginally increase the chances of keeping their jobs.

The more charitable one is that doing the 'safe' and 'boring' thing is the most economically efficient way to let the CFO and the board know that the balance sheet is safe, and that's exactly what the treasurer is doing.

How that shakes out in a company's internal politics becomes interesting when you have a case like this one.