Financing & treasury
Deposit rate benchmarking
Deposit rate benchmarking determines the arm's length return an entity should earn when placing surplus cash with a related party, whether through a cash pool, an intercompany loan in reverse, or a standalone treasury deposit, based on comparable third-party deposit rates for similar currency, tenor and counterparty credit.
Unlike borrower-side benchmarking, which centres on the borrower's own credit risk, deposit benchmarking looks at the credit standing of the entity receiving the deposit, since a lender depositing with a weaker counterparty should logically earn a higher return than one depositing with a stronger, more creditworthy group entity.
Comparable data typically comes from bank deposit rates, money market instruments, and short-term corporate bond yields matched on currency and tenor, with the resulting range used to confirm the depositor earns a fair return rather than accepting an artificially low rate that effectively transfers value to the receiving entity.
In practice
What matters when applying deposit rate benchmarking
- Base the rate on the receiving entity's credit standing
- Match comparables on currency, tenor and counterparty quality
- Use bank deposits and money market instruments as sources
- Confirm the depositor earns a genuinely fair return
- Apply consistently within cash pools and standalone deposits
Frequently asked
Common questions
How does deposit benchmarking differ from loan benchmarking?+
It focuses on the credit standing of the entity receiving the deposit rather than the borrower, since a depositor should earn a higher return when placing funds with a weaker counterparty.
What comparable data is typically used?+
Bank deposit rates, money market instruments, and short-term corporate bond yields matched by currency and tenor, providing a defensible range for the intercompany deposit rate applied.
See how the tooling handles this in practice
Our transfer pricing tools calculate intercompany charges, benchmark financing and reconcile the intercompany ledger from your own data. Book a short walkthrough and we will show the workflow on a scenario that matches your group structure, rather than a generic demo dataset.