2007 Interactive Registration Document - Renault

Renault Finance also trades for its own account in interest-rate instruments
within strictly defi ned risk limits. These positions are monitored and marked
to market in real time. This activity carries very little risk and has no material
impact on the Group’s results.
Sales Financing
The Renault group’s exposure to interest rate risk is concentrated mainly in the
Sales Financing business of RCI Banque and its subsidiaries.
Interest rate risk is monitored on a daily basis by measuring sensitivity for each
currency, management entity and asset portfolio. The entire RCI Banque group
uses a single set of methods to ensure that interest rate risk is measured in a
standard manner across the entire scope of consolidation.
The portfolio of commercial assets is monitored daily on the basis of sensitivity
and is hedged systematically. Each subsidiary aims to hedge its entire interest
rate risk in order to protect its trading margin. However, a slight degree of latitude
is permitted in risk hedging, refl ecting the diffi culty of adjusting the borrowing
structure to exactly match the structure of customer loans.
RCI Banque’s consolidated exposure to interest rate risk over 2007 shows
that sensitivity, i.e., the risk of a rise or fall in the Group’s results caused by a
100-basis point rise or fall in interest rates, was limited.
RCI BANQUE: DAILY SENSIVITY TO INTEREST RATE MOVEMENTS (2007)
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✦ Global Reporting Initiative (GRI) Directives
< TABLE OF CONTENTS >
MANAGEMENT REPORT 02
RISK MANAGEMENT
See note 25 of the notes to the C onsolidated F inancial S tatements for details
of consolidated off-balance-sheet commitments in fi nancial instruments and
by type of activity.
COUNTERPARTY RISK
The Group is exposed to counterparty risk in its fi nancial-market and banking
transactions, in its management of foreign exchange and interest rate risk, and
in the management of payment fl ows. It works with banking counterparties of
the highest caliber and is not subject to any material concentration of risk.
Management of counterparty risk at the Group’s entities is closely coordinated
and uses a rating system based mainly on counterparties’ long-term credit rating
and the level of their shareholders’ equity. This system is used by all companies
of the Renault group that are exposed to counterparty risk.
Some Group companies have signifi cant exposure to counterparty risk owing
to the nature of their business. These companies are subject to daily checks to
ensure they comply with authorized limits, in accordance with precise internal
control procedures.
The Group has introduced a consolidated monthly reporting system that
encompasses all its counterparties, organized by credit rating. These reports
give a detailed analysis of compliance with limits in terms of amount, term and
type, as well as a list of the main exposures.
LIQUIDITY RISK
The Group must always have suffi cient fi nancial resources not just to fi nance
the day-to-day running of the business and the investments needed for future
expansion but also to cope with any extraordinary events that may arise.
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Registration Document Renault 2007 73