A4 für Copyshop GB.indd - Bayerische Landesbank

114 Report on the Bank and the Group
} Controlling
} Reporting
Management of the liquidity position and strategic liquidity management are the
responsibility of the Global Markets Business Area. The former task ranges from man-
agement of intraday cash flows to measures aimed at compliance with the supervisory
Principle II ratio. Strategic liquidity management, on the other hand, ensures medium-
to long-term solvency, projected over a forecast period of up to 20 years.
In terms of safeguarding the liquidity position, according to supervisory requirements,
a bank’s liquidity is deemed sufficient if the weighted liquid funds available within
30 days cover the weighted payment obligations that are callable during this period.
In the year under review, the ratio was always between 1.18 and 1.36. The minimum
supervisory requirement of 1.0 was thus guaranteed at all times.
The Global Markets Business Area comprises management tasks relating to Principle Il,
all funding activities, as well as collateral management. The Bank ensures access to
the main international money and capital markets by placing certificates of deposit,
medium-term notes, bearer bonds, covered bonds (pfandbriefe) and local government
bonds or other funding instruments. Of particular importance here is collateral man-
agement, which both covers the necessary lines for trading partners and ensures the
superlative quality of BayernLB’s registers of cover.
Each subsidiary of the BayernLB Group balances its liquidity independently. Although it
is not stipulated under national law, each subsidiary reports its Principle II ratio to the
parent company. To disclose their structural liquidity positions, the subsidiaries submit
cash-flow redemption reports to the Bank’s Global Treasury and Funding Division.
To safeguard solvency even in times of crisis (worst case scenarios), the Bank has an
appropriate portfolio of highly liquid securities that can be disposed of. This means
that, even when markets are tight, BayernLB can procure sufficient liquidity by way of
repo and central bank tender deals. As a rule, intraday and overnight net liabilities
must be covered by access to central bank funds. The Bank has developed a special
scenario simulating a liquidity crisis, which reproduces the implications of such a crisis
for future cash flows.
During the regular Board meetings, the Global Treasury and Funding Division keeps
BayernLB’s Board of Management continuously informed of the current liquidity posi-
tion.