8.
Report on comparing liquidity risk limits and actual results with a detailed
explanation of the causes of violations of liquidity risk limits;
9.
Trigger Report: comparison of trigger values and actual values, including
various loan and asset, loans and deposits, assets and deposits ratios at different time
intervals [10].
Taking into account the above material, the management reports on liquidity risk
should contain sufficient information to objectively assess and forecast the needs of the
bank in terms of liquidity and funding sources at different intervals, as well as the
scenario of probable events and their consequences. Moreover, forecasts of interest
rates and exchange rates volatility, deviations of actual from planned performance in
terms of interest, trade and commission income will be totally reasonable. All
responsible departments should be involved in the preparation of management reports
(Table 5).
Table 5. Options for distributing liquidity risk management in a bank
Types of
liquidity
Reports
Responsible unit
Instant
Balances on correspondent accounts, payment
calendar data on revenues and cash outflows,
units' plans for transactions during the day,
information on customer accounts cash flow
Treasury department,
Corporate department
Current
Determination of the bank’s needs in liquid
funds – sources and use of funds (the difference
between expected inflows and potential
outflows)
Treasury department, Assets
and Liabilities management
department, Risk management
department
Long-term
Resource gap (evaluation of the degree of
discrepancy of the term structure of assets
compared to the term structure of liabilities)
Assets and Liabilities
management department, Risk
management department
Source: Authors’ own development
So, the successful implementation of the managerial accounting system in the
bank, in particular in the treasury department, provides for a clear definition of the
objects of management and responsibility centers. Quantitative indicators will create
even more severe restrictions on liquidity and funding that will affect the financial
position of the organization. In this regard, it is important that the organization is
engaged in liquidity management and funding at an outrunning pace both at the
structural and tactical level. This means the following:
-
inclusion of the finance and liquidity planning system in business planning;
-
setting limits (for example, weighted average maturity limits) and incentives (for
example, through internal transfer pricing systems) for proactive management of the
balance sheet structure;
-
improvement of processes and control measures for daily liquidity management
in all areas of activity, legal entities and currencies.
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