[Verse 1] Banks collect deposits from the crowd Money flowing in, they feel so proud But they can't just sit on all that cash Got to lend it out to make some scratch Assets on the left, liabilities right Balance sheet must balance day and night [Chorus] A-L-M keeps the bank alive Asset Liability Management helps them thrive Match the durations, watch the spread Interest rate risk can wake the dead Capital ratios, Basel's rules These are the banker's essential tools [Verse 2] When rates go up, bond values fall Duration mismatch can hurt them all Short-term funding, long-term loans Interest rate gaps shake their bones Gap analysis shows the way Positive or negative, night and day [Chorus] A-L-M keeps the bank alive Asset Liability Management helps them thrive Match the durations, watch the spread Interest rate risk can wake the dead Capital ratios, Basel's rules These are the banker's essential tools [Bridge] Tier One capital stands so strong Common equity where banks belong Risk-weighted assets set the stage Eight percent minimum, that's the gauge Economic value, book value too Different measures, different views [Verse 3] Hedging strategies, swaps and more Derivatives help them even the score Immunization is the goal they seek Portfolio balance, strong not weak Regulatory pressure shapes each choice Basel Committee has a powerful voice [Chorus] A-L-M keeps the bank alive Asset Liability Management helps them thrive Match the durations, watch the spread Interest rate risk can wake the dead Capital ratios, Basel's rules These are the banker's essential tools [Outro] From deposits to loans and back again Portfolio management helps them win Interest rates may rise and fall But ALM principles conquer all
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