Annual Report - VÚB banka

37. Financial risk management (continued)
Write-off policy
The VUB Group writes off a loan or security balance
(and any related allowances for impairment losses)
when the VUB Group determines that the loans /
securities are uncollectible. As the standard, the
VUB Group considers the credit balances to be uncollectible
based on the past due days (180 past
due days or 360 past due days depending on the
type of segment or product). All credit balances are
reviewed for eligibility to be written off on a monthly
basis.
The credit balance can be written off earlier than
defi ned in conditions described above if there is
evidence that the receivable cannot be collected.
The write off of such receivables is subject to the
approval of the Credit Risk Offi cer.
The VUB Group holds collateral against loans and
advances to customers in the form of mortgage interests
over property, other registered securities
over assets, and guarantees. Estimates of fair value
are based on the value of collateral assessed at the
time of borrowing and the Group updates the fair
value on a regular basis.
An estimate of the fair value of collateral and other security enhancements held against fi nancial assets is
shown below:
2007 2006
Clients Banks Clients Banks
Debt securities 2 28,668 12 22,435
Other 12,126 607 11,028 609
Property 97,768 - 73,586 -
109,896 29,275 84,626 23,044
56
The debt securities collateral received from banks represents the fair value of collateral received in reverse
REPO trades with banks. The Group is permitted to sell or repledge this collateral even in the absence of
default of the owner of the collateral. None of the collateral was sold or repledged at 31 December 2007
and 2006.
The VUB Group monitors concentrations of credit risk by geographic location. An analysis of concentrations
of credit risk at the reporting date is shown below:
2007 2006
Cost Impair- Carrying Cost Impair- Carrying
ment amount ment amount
losses
losses
Europe
Loans and advances to banks 34,598 (2) 34,596 35,498 (2) 35,496
Loans and advances to customers 133,913 (3,949) 129,964 96,721 (4,236) 92,485
Held-to-maturity securities 90,671 (20) 90,651 86,531 (24) 86,507
259,182 (3,971) 255,211 218,750 (4,262) 214,488
North America
Loans and advances to banks 700 (24) 676 3,098 (31) 3,067
Loans and advances to customers 34 (1) 33 14 - 14
Held-to-maturity securities 70 - 70 73 - 73
804 (25) 779 3,185 (31) 3,154
Asia
Loans and advances to banks 7 - 7 11 - 11
Loans and advances to customers 7 - 7 20 - 20
14 - 14 31 - 31
Rest of the World
Loans and advances to banks - - - 4 - 4
Loans and advances to customers 16 - 16 3 - 3
Annual Report 2007
16 - 16 7 - 7
Under Europe, substantially all loans are made to Slovak entities or residents. Generally, the Group does
not engage in cross border lending.