Annual report and accounts 2009 (PDF) - Coventry Building Society

NOTES TO THE ACCOUNTS(continued)40. FINANCIAL INSTRUMENTS (continued)Interest rate risk (continued)More than More Morethree than six thanThree months months one year More Nonmonthsless than less than less than than interestAt 31 December 2008 or less six months one year five years five years bearing Total£m £m £m £m £m £m £mAssetsLiquid assets 3,446 51 72 300 2 2 3,873Loans and advances to customers 7,613 555 991 3,673 315 26 13,173Fixed assets - - - - - 35 35Other assets and adjustments - - - - - 283 283Total assets 11,059 606 1,063 3,973 317 346 17,364Liabilities and equityShares (6,614) (2,253) (1,745) (1,499) (23) (252) (12,386)Deposits, amounts owed tocustomers and debt securities (3,758) (70) (97) (64) - (64) (4,053)Other liabilities and adjustments - - - - - (143) (143)Subordinated liabilities - - - - (71) - (71)Subscribed capital - - - - (161) - (161)Reserves - - - - - (550) (550)Total liabilities and equity (10,372) (2,323) (1,842) (1,563) (255) (1,009) (17,364)Derivative financial instruments 83 860 598 (1,721) 180 - -Interest rate sensitivity gap 770 (857) (181) 689 242 (663) -Credit riskCredit risk is the risk that customers or counterparties will be unable to meet their financial obligations to the Society as they falldue. Impairment provisions are provided for losses that have been incurred at the balance sheet date (see note 13).The Credit Risk and Lending Committee, a sub-committee of the Risk Management Committee, is responsible for approving andmonitoring the Group’s retail credit exposures. The Credit Risk and Lending Committee reviews and approves lending policy andsets limits on credit exposures within the overall parameters set by the board. In addition, the Ratings Committee reviews andapproves the credit scoring systems used by the Group. The minutes of the Credit Risk and Lending Committee and RatingsCommittee are presented to the Risk Management Committee. The minutes of the Risk Management Committee are presentedto the board.The ALCO, a sub-committee of the Risk Management Committee, is responsible for approving and monitoring the Group’s nonretailcredit exposures. It does this through the review and approval of the Group’s lending policy and the setting of limits oncredit exposures to individual counterparties and across countries and industrial sectors.The minutes of the ALCO are presented to the Risk Management Committee and to the board. The minutes of the RiskManagement Committee are also presented to the board.66