Annual Report 2010 (PDF) - USB Bank

Notes to the Financial Statements
as at 31 December 2010
30. Risk management (continued)
Liquidity Risk (continued)
The liquidity ratio in Euro was as follows:
2010 2009
% %
31 December 34,97 42,33
Average 36,71 39,43
Maximum ratio 37,80 42,33
Minimum ratio 34,97 35,30
The Bank uses financial assets to manage liquidity risk on the basis of the directives of the Central Bank
of Cyprus (CBC). Relevant information is presented in the liquidity reports prepared for the CBC, which
management uses to obtain information for the Bank’s liquidity ratios.
Financial liabilities presented in the liquidity reports include all deposits irrespective of maturity which
are analyzed in time bands based on the time remaining from the reporting date until the earliest date at
which they become repayable.
Financial assets are presented in these statements as follows:
Cash and deposits with Central Bank
Cash in euro are included in the time band ‘on demand up to 7 days’, while deposits with Central Bank
are analyzed in different time bands according to their maturity. The balance on the minimum reserve is
included in time bands on the basis of residual maturity of the obligations for which minimum reserves
are kept.
Placements with banks
Local and foreign bank balances are included in different time bands according to their maturity.
Loans and advances to customers
Loans are analyzed in different time bands based on their remaining maturity while overdrafts from current
and other related accounts are presented in the first time band, ‘on demand up to 7 days’ because it reflects their
contractual maturity.
Investments held-to-maturity and available for sale
Investments which are highly liquided and can be accepted by other banks as collateral for the provision
of lending facilities, are part of the first band ‘on demand up to 7 days’ after adjusting for the appropriate
discount by the Central Bank of Cyprus. Other investments not covered by the above definition are
disclosed depending on the time remaining to maturity while investments in shares are classified in the
time band of more than twelve months.
Annual Report 2010 71