Annual Report 2010 - ProCredit Bank

Risk Management 25
In 2010 the bank introduced the group-wide New
Risk Approval (NRA) process, which is applied to
all materially new or changed products, services
or business processes. Only after the elimination
of any obstacles or deficiencies revealed by
the NRA process does management give its approval
for the innovation to go ahead.
The bank’s Business Continuity Policy ensures
that the bank can maintain or restore its operations
in a timely manner in the event of a serious
disruption. As well as defining the steps to be
taken to restore normal operations, the bank’s
Business Continuity Plan specifies the procedure
for moving critical operations to temporary locations,
the resources that need to be mobilised
in each type of case and the expected cost of
disruptions in specific areas. It also offers guidance
on avoiding disruption in the first place.
ProCredit Bank Serbia has a rigorous three-part
Business Continuity Plan that addresses general
emergency situations, power failures and IT system
integrity.
Fraud has been recognised as the most significant
source of operational risk, especially
in the context of lending operations. To offset
this risk, the bank has established clearly defined
procedures and control mechanisms for
loan approval, disbursement and monitoring.
In addition, a dedicated fraud prevention team
has been set up to address all fraud cases and
propose countermeasures. The bank has since
introduced a system for anonymous reporting of
incidents and training courses aimed at raising
fraud awareness.
Anti-Money Laundering
ProCredit Bank Serbia fully endorses the fight
against money laundering and terrorist financing,
and has implemented the Group Anti-Money
Laundering Policy, which meets the requirements
of Serbian, German and EU legislation. No
customer is accepted and no transaction is executed
unless the bank understands and agrees
to the underlying purpose of the business relationship.
The Group Anti-Money Laundering Department
(Group AML) conducts an annual survey
of all ProCredit banks and updates the policy
accordingly. In addition, all ProCredit banks submit
quarterly reports on their AML activities to
Group AML.
At ProCredit Bank Serbia, responsibility for AML
activities is exercised by the Compliance and
AML Unit, employing one compliance officer, two
AML specialists and a unit supervisor. The Unit
prepares daily reports on all cash transactions
exceeding EUR 15,000. In addition, any attempt
to execute a transaction that arouses suspicion
of money laundering, terrorist financing or some
other criminal activity must be reported, regardless
of the amount. Front-office staff receive intensive
training in how to recognise suspicious
transactions. In cases of doubt, Group AML
takes the final decision on how to handle the
suspicious transactions and suspicious customers
reported by the bank. In the near future, the
bank plans to automate its AML screening process:
the AML, Embargo and PEP modules of the
specialist software package Siron are scheduled
to be installed in the first quarter of 2011.
Capital Adequacy
The bank’s capital adequacy is calculated on
a monthly basis and reported both to the management
and to the Group Risk Management
Committee, together with rolling forecasts to
ensure future compliance with capital adequacy
requirements. Strong support from our shareholders
once again enabled the bank to maintain
a comfortable capital cushion. At year-end
2010 the capital adequacy ratio (tier 1 and tier 2
capital / risk-weighted assets) stood at 14.4%,
well above the group-wide target of 12%. Capital
adequacy according to local regulations was
17.45%, which is also significantly above the locally
required minimum of 12%.
ProCredit Bank’s ratings, issued by FitchRatings,
remained unchanged in 2010. For foreign
currency credit, its long-term Issuer Default Rating
(IDR) was BB- and its short-term IDR was B;
for local currency, its long-term and short-term
ratings were BB and B, respectively.