Annual Report LRP 2007 - Rheinland Pfalz Bank

RISK REPORT
LRP 2007
47
Short-Term Liquidity Risk and Funding Risk
LRP’s medium to long-term funding policy or issue
strategy provides the basis for the Bank’s solid and
continuous liquidity adequacy and has a significant influence
on the short-term liquidity situation. LRP monitors
liquidity in its everyday business activities, according
to external (LiqV – Liquidity Regulation) and
internal procedures. To this end, a liquidity overview is
prepared that is accurate to the day for the first 30
days, accurate to the month in terms of a year’s perspective
and accurate to the year for a long-term forecast.
The overview makes use of various assumptions
for assessing solvency and funding spread risks. The
scenarios take into account the utilization of credit
commitments, the defaults on payment receivables or
the utilization of credit derivatives/guarantees and other
aspects (such as price loss of liquidity reserves). The
earliest possible time is assumed for deduction of due
liabilities. The effects of worsening credit ratings on
the financial result are also examined. In addition, detailed
emergency planning exists for safeguarding solvency
in emergency situations.