Asset and Liability Committee Charter

Purpose

 
The ALCO committee has been established to provide the framework to strategically manage AB's overall assets and liabilities for the long-term and the short term:
  • Establish policies, limits and guidelines within which ALM strategies are to be executed (within limits set by Board)
  • Foreign exchange management
  • Liquidity management
  • Pricing (profit rate) management
  • Monitor activities and review results of ALM strategy implementation and execution
  • Provide direction, guidance, and monitor performance of investment products sold to 3rd parties (client and corporate)
Authority
  • ALCO is primarily a decision making body for executing the ALM strategies of the Bank.
  • All decisions are to be taken by a simple majority vote. The casting vote in the event of a tie will be that of the Chairman of the Committee.
Composition
  • The Composition of the ALCO will be determined by the CEO and will include representatives of the relevant divisions
  • Other members of the management can be invited on a case by case basis, however, they will not constitute a part of ALCO
Responsibilities: The Committee shall be responsible for:
Defining bank's foreign exchange management objectives for customer transactions and for own account dealing
  • Definition of limits
    • Overall currency limits vs. AED limits
    • Trading room limits
    • Stop-loss limits by dealer and by manager
  • Branch limits
  • AED vs. other currencies
  • Cross currencies
Defining bank's liquidity management objectives for Local and for foreign currency
  • Definition of specific liquidity limits, targets and guidelines
    • Statutory reserve management guidelines
    • Basic surplus targets
    • Liquidity ratio limit
    • Liquidity index target
    • Inter-bank funding limit

  • Define bank's gap management objectives
    • Definition of specific gap management limits, targets and guidelines
    • Maturity gap targets for each gap period
    • Desired maturity for new deposits and loans, including money market
    • Alternative investment and funding instruments 

  • Define bank's pricing management objectives
    • Definition of specific pricing management limits, targets and guidelines
    • Profitability targets
    • Growth targets
    • Specific pricing guidelines to achieve desired profitability, growth, liquidity or gap targets 

  • Receive reports from Finance and treasury support department and review, revise and adjust limits as necessary 

  • Provide guidance and monitor performance of Investments of the corporation 
    • Maintain an investment policy and recommend changes as necessary
    • Review markets and new investment opportunities
    • Review performance of existing investments
    • Review and approve new investments and changes in allocations within approved guidelines and risk exposure limits
    • Reviews and maintains agreed risk exposures
    • Occasionally invites internal or external "experts" to meetings to clarify issues and provide advice