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Management Level – Asset & Liability Committee (ALCO)

MOB Bank > Corporate Governance > Management Level – Asset & Liability Committee (ALCO)

MANAGEMENT LEVEL – ASSET & LIABILITY COMMITTEE (ALCO)

PURPOSE

The Executive Committee establishes Asset Liability Committee (ALCO) to ensure effective implementation of asset liability management policy of the Bank. The Committee shall make oversight of capital planning, balance sheet management, performance management, liquidity and asset liability risk management and investments in the financial markets.

ROLES AND RESPONSIBILITIES

Policy Review/Approvals

  • Establish suitable policies for asset liability management and investment operations that would set out proper organization, workflow, methodologies, and controls.
  • Maintain effective ALM organizational structure, coordinate respective activities of the Bank’s structural divisions and evaluate their performance.
  • Determine pricing policy for the main banking products and maintain the market competitiveness through approval of new banking products.

Approval

  • Define adequate levels and effective composition of capital and liquidity buffers, approve main parameters of long-term capital debt financing and payment of dividends.
  • Review and approve large transactions over 5% of the Bank’s equity position, individual transactions with exceptions from standard banking terms and every non trade able equity investment.
  • Make decisions to ensure cash flow obligations are repaid in due time and full amount and future funding requirements are met with available financing.
  • Establish requirement to liquidity buffer and check its compliance with amount of volatile funding, operating environment and regulatory minimum.
  • Resolve situations of excessive maturity concentration and mismatches, monitor early warning signals, approve and lead contingency planning.
  • Make decisions to take up favorable market opportunities, monitor limits violation and approve corrective actions with minimum costs and timeline.
  • Review profitability numbers and secure net interest margin by revising interest rates in accordance with the prevailing market conditions.
  • Make all necessary actions to maintain sustainable profitability of the Bank and reduce interest expenses through diversification of funding sources.

Oversight/Compliance

  • Communicate proposals on balance sheet composition and ALM targets, monitor compliance with internal thresholds, mandatory requirements and financial covenants, elaborate necessary corrective actions.
  • Monitor and ensure compliance with the capital adequacy requirements commensurate with the amount of risk accumulated in the books of the Bank.
  • Review external operating environment, discuss risk drivers and make projections of adverse market conditions and impact on ALM performance.
  • Propose and ensure compliance with the risk limits and tolerance levels for maturity, reprising and currency mismatches in the balance sheet.
  • Review the performance of investments operations and Treasury activities and propose necessary adjustments to the portfolio and risk limits.

The ALCO shall carry out other duties and responsibilities delegated by the Executive Committee that might be appropriate for the specific changing operating environment.