Risk Management Manual of Examination Policies
Section 17.1 - International Report Pages and Workpapers
- Comment on the general nature and volume of present eurocurrency operations.
Eurocurrency operations are conducted through the Nassau Branch. Investments are primarily loans to South American corporations and central governments, securities of foreign governments and bank placements. Sources of funding are IPC, bank and affiliate time deposits. At examination date, Eurocurrency loans, securities, and bank placements totaled $325 million with $285 million funded by Eurocurrency time deposits and the remainder through main office funds.
- Describe the procedures followed and guidelines utilized in establishing lines of credit and making and approving due to (takings) and due from (placements). Comment on the adequacy of procedures enabling senior management to ascertain compliance with guidelines and directives.
The parent bank has issued general guidelines to be considered before establishing lines of credit and bank relationships. With respect to banks, these criteria center on the obligorís capital resources, country risk, and type of institution. Bank and nonbank clientele analysis includes consideration of volume and maturity factors, as well as a review of financial responsibility and reputation. Senior management receives weekly reports.
- (a) Comment on the maturity composition of present eurocurrency takings and placements and the effect of such on the bank's liquidity position. (b) Are asset and liability maturities reasonably matched?
(a) At examination date, Eurocurrency takings totaled $285 million, while placements aggregate $195 million. All placements and 74% of takings ($210 million) mature within 90 days with no adverse effects on the bankís liquidity position.
(b) Both near-term and longer-term maturities are reasonably matched.
- Are all interbank placements confirmed at inception and, thereafter, subject to periodic direct verification audits?