In This Report - Banco Mercantil

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Manuel CABRÉ Río Guaire , 1917 Oil on canvas 26,5 x 48,5 cm Barcelona (Spain), 1890 - Caracas, 1984 Cabré came to Venezuela as a young boy. In 1904, he was accepted at the Caracas Academy of Fine Arts. He participated in the student protests of 1909 and later became one of the most prominent founding members of the Fine Arts Society. Around 1931, after studying in Paris, he joined the national art scene and became known as the “painter from Avila”. From 1942 to 1946, he served as Director of the Museum of Fine Arts. In 1951, he received the National Award in Painting.
Enterprise Risk Management Credit Risk Exposure December 2010 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Real Estate USA Peru Brazil Chile Venezuela Other Countries Commercail Banks Enterprise Risk Management (ERM) at Mercantil Commercebank is a company-wide process that embraces the core principles of the Basel Accord to assess, manage, and mitigate risks and to seize opportunities that will support the achievement of the Bank’s vision, goals and objectives. The mission of the ERM program is to maximize shareholder value through a stateof-the-art risk management program that strengthens the decision making process, enhances the risk-adjusted return on capital and provides a foundation for the Bank’s capital allocation process. ERM employs a framework of qualitative and quantitative risk management processes involving collaborative working relationships with the business units to identify, measure, control, and monitor risks. ERM is executed through three departments: Credit Risk Management, Market Risk Management, and Operational Risk Management. These departments report to the Chief Risk Officer of the Bank, the Global Risk Manager of Mercantil Servicios Financieros and the Board of Director’s Risk Committee. Credit Risk Management Credit risk is the risk of loss arising from obligor or counterparty default. Through lending and investment transactions, the Bank is exposed to credit risk, which is measured, managed and mitigated through a credit risk management process at both the individual transaction and portfolio level. The role of Credit Risk Management (CRM) is to supervise all of these control functions, guide overall credit exposure within the parameters approved by the Board of Directors and optimize the risk-adjusted return to the Bank. During the year, efforts were devoted to further refining the management of concentration risk through the elaboration of limits and policies addressing collateral concentrations and industry exposures. Along those lines CRM was instrumental in the development and evaluation of special limits for credit programs destined for targeted growth in the loan portfolio. To enhance the measurement of credit risk, stress testing was conducted which gave management greater insights into the efficient allocation of capital between investment securities and loans. Also, to ensure that estimates included in the financial statements are adequate, the methodology for calculating the allowance for loan losses (ALL) was evaluated by an independent party, finding it in compliance with both regulatory and accounting requirements and best industry practices. 41 Retail -Non-Residential Credit Risk Exposure At the end of December 2010, credit risk exposure continued to reflect a balanced composition, with 42 percent of the total exposure in the real estate sector, 28 percent in the financial institutions sector, and 29 percent in the commercial sector. The real estate sector is mostly comprised of exposures to domestic borrowers and diversified by product type. The commercial and financial institutions sectors are also well diversified geographically among the U.S., Chile, Brazil, Peru, Venezuela, and other countries. The country exposure to Venezuelan debtors includes approximately $84 million in mortgages on properties situated in the U.S. (Refer to note 4 of the audited financial statements and accompanying notes included in this report.) Mercantil Commercebank
Page 2 and 3: In this report, Mercantil Commerceb
Page 4 and 5: Federico BRANDT Azotea, around 1924
Page 6 and 7: Administration 4 Board of Directors
Page 8 and 9: Bernardo MONSANTO Paisaje, 1961 Oil
Page 10 and 11: 8 help their businesses prosper, wh
Page 12 and 13: Armando Lira El Ávila desde Sarria
Page 14 and 15: 12 Financial Markets During 2010, g
Page 16 and 17: 14 Growth and Consumption During 20
Page 18 and 19: 16 than in 2009. It is important to
Page 20 and 21: César PRIETO Los Caobos, around 19
Page 22 and 23: 20 Net Income Net income of $1.2 mi
Page 24 and 25: Investment Securities Portfolio Dec
Page 26 and 27: 24 Liabilities Deposits and Securit
Page 28 and 29: Elisa Elvira ZULOAGA Paisaje con ni
Page 30 and 31: 28 Domestic Retail Banking utilizes
Page 32 and 33: 30 Looking at the year ahead, Domes
Page 34 and 35: 32 migrated 96 percent of the custo
Page 36 and 37: 34 Private Banking Working in syner
Page 38 and 39: 1,400 1,200 1,000 800 600 400 200 0
Page 40 and 41: 38 Human Resources At the close of
Page 44 and 45: 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.
Page 46 and 47: 44 Compliance The Compliance Depart
Page 48 and 49: Corporate Governance 46 Stockholder
Page 50 and 51: 48 Former Executive President of Me
Page 52 and 53: 50 Salvador López de Azúa Directo
Page 54 and 55: 52 Industry in Venezuela, Venezuela
Page 56 and 57: Pedro Ángel GONZÁLEZ Macuto, 1920
Page 58 and 59: 56 • Housing Opportunities Projec
Page 60 and 61: Próspero MARTÍNEZ El árbol del c
Page 62: T h e F i n e A r t s S o c i e t y

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