Asset Liability Management
MANAGING CORE RISKS OF FINANCIAL INSTITUTIONS
ASSET LIABILITY MANAGEMENT
Industry Best Practices
14 July 2005
BANGLADESH BANK
Focus Group Members
Asset Liability Management
Name
Team Co-ordinator Sudhir Chandra Das Arif Khan Asad Khan Jadab Malakar Team Members Nehal Ahmed S. H. Aslam Habib Tapan K. Podder
Designation
DGM GM MD (Designate) Head of Finance & Company Secretary SVP & Company Secretary Head of Finance & Resources and Company Secretary MD
Organization
Bangladesh Bank IDLC of Bangladesh Ltd. Fareast Finance & Investment Ltd. National Housing Finance and Investments Ltd. International Leasing and Financial Services Ltd. Delta Brac Housing Finance Corporation Ltd. Prime Finance & Investment Ltd.
Asset Liability Management
Executive Summary Heading 1.0 1.1 1.2 1.3 1.4 1.5 2.0 2.1 2.2 2.3 2.4 2.5 2.6 3.0 3.1 3.2 3.3 3.4 4.0 4.1 4.2 4.3 4.4 4.5 4.6 5.0 5.1 5.2 5.3 Introduction Background Objectives Scope Methodology Limitations Balance Sheet Risk Profile Liquidity Risk Interest Rate Risk Prepayment Risk Credit Risk Reinvestment Risk Event Risk Asset Liability Management (ALM) Team Composition of Asset Liability Management Team Roles and responsibilities of Asset Liability Management (ALM) Team Periodical Meeting Asset Liability Management Flowchart Policy Statement Loan/Fund Ratio Liquidity Contingency Plan Maturity wise Cashflow Statement Maturity wise Interest Rate Profile Term of Lending Vs. Borrowing Compliance Balance Sheet Risk Management Process ALM Information System ALM Organization ALM Process 5.3.1 Liquidity Risk Management 5.3.2 Interest Rate Risk Management 6.0 6.1 6.2 Conclusion and Recommendation Action Plan Feedback Appendix iv Page No. 1 1 1 1 1 1 2 2 3 3 3 3 4 4 4 4 4 4 5 5 5 5 5 5 5 6 6 6 6 6 8 10 10 10
Executive Summary
Asset Liability Management is the most important aspect for the Financial Institutions to manage Balance Sheet Risk, especially for managing of liquidity risk and interest rate risk.
ASSET LIABILITY MANAGEMENT
Industry Best Practices
14 July 2005
BANGLADESH BANK
Focus Group Members
Asset Liability Management
Name
Team Co-ordinator Sudhir Chandra Das Arif Khan Asad Khan Jadab Malakar Team Members Nehal Ahmed S. H. Aslam Habib Tapan K. Podder
Designation
DGM GM MD (Designate) Head of Finance & Company Secretary SVP & Company Secretary Head of Finance & Resources and Company Secretary MD
Organization
Bangladesh Bank IDLC of Bangladesh Ltd. Fareast Finance & Investment Ltd. National Housing Finance and Investments Ltd. International Leasing and Financial Services Ltd. Delta Brac Housing Finance Corporation Ltd. Prime Finance & Investment Ltd.
Asset Liability Management
Executive Summary Heading 1.0 1.1 1.2 1.3 1.4 1.5 2.0 2.1 2.2 2.3 2.4 2.5 2.6 3.0 3.1 3.2 3.3 3.4 4.0 4.1 4.2 4.3 4.4 4.5 4.6 5.0 5.1 5.2 5.3 Introduction Background Objectives Scope Methodology Limitations Balance Sheet Risk Profile Liquidity Risk Interest Rate Risk Prepayment Risk Credit Risk Reinvestment Risk Event Risk Asset Liability Management (ALM) Team Composition of Asset Liability Management Team Roles and responsibilities of Asset Liability Management (ALM) Team Periodical Meeting Asset Liability Management Flowchart Policy Statement Loan/Fund Ratio Liquidity Contingency Plan Maturity wise Cashflow Statement Maturity wise Interest Rate Profile Term of Lending Vs. Borrowing Compliance Balance Sheet Risk Management Process ALM Information System ALM Organization ALM Process 5.3.1 Liquidity Risk Management 5.3.2 Interest Rate Risk Management 6.0 6.1 6.2 Conclusion and Recommendation Action Plan Feedback Appendix iv Page No. 1 1 1 1 1 1 2 2 3 3 3 3 4 4 4 4 4 4 5 5 5 5 5 5 5 6 6 6 6 6 8 10 10 10
Executive Summary
Asset Liability Management is the most important aspect for the Financial Institutions to manage Balance Sheet Risk, especially for managing of liquidity risk and interest rate risk.