2012 Registration document and annual financial report - BNP Paribas

5RISKSAND CAPITAL ADEQUACYLiquidity and funding riskLIQUIDITY RISK MANAGEMENT AND SUPERVISIONInternal liquidity management is underpinned by a full range of standardsand indicators at various maturities. The liquidity position is measuredregularly by currency and by maturity, at both Group and entity level.Liquidity risk management and supervision is predicated on the followingindicators:■ the Bank’s cash balance sheet;■ wholesale funding indicators;■ liquidity reserve;■ internal liquidity pr icing;■ regulatory ratios.The main liquidity risk mitigation techniques are building up a liquidityreserve, diversifying funding sources and extending financing maturities.PRESENTATION OF INDICATORS AND TRENDS IN 20125CASH BALANCE SHEETThe Bank’s cash balance sheet is a presentation of the balance sheetadapted to provide an analysis of the Group’s liquidity.Taking the accounting balance sheet as a basis, the main followingadjustments are made:1) transition from the Group’s consolidated accounting balance sheetto the Bank’s prudential balance sheet, by accounting for the Group’sinsurance entities and efficient securitisation vehicles as associates(see table 3 section 5.2);2) netting of derivative financial instruments accounts (including hedginginstruments), repurchase agreements and other financial instrumentsmeasured through profit or loss and payables/receivables, recognisedas assets under the heading “Trading assets with clients” ;3) netting of some banking book repos mostly with debt securitiesrecognised as assets under the heading “Trading assets with clients” ;4) reclassification of certain balance sheet items :a. the Group’s debt securities placed with retail clients transferred tocustomer deposits, (see table 50);b. funding arising from monetary policy allocated to short-termfunding, even if duration can be higher than one year, for exampleLTRO deals .The resulting cash balance sheet is shown hereafter.The diagram below shows the adjustments to the accounting balancesheet made at 31 December 2012 to obtain the Group’s cash balancesheet.3042012 Registration document and annual financial report - BNP PARIBAS