Asset and Liability Committee Charter
Purpose
The ALCO committee has been established to provide the work 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. limits
- Trading room limits
- Stop-loss limits by dealer and by manager
- Branch limits
- 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
