Annual Report: - Gorenjska banka

4.1. Credit risk
Credit risk is the most significant risk in bank management, which is why it garners the most attention
in the Bank. Credit risk is a risk due to uncertainty that counterparty will meet its obligations fully
when contractually obliged to do so.
The Bank is exposed to the credit portfolio credit risk that includes both accounts receivable (loans,
securities investments, capital investments, etc.) and off-balance sheet liabilities (guarantees, letters
of credit, standing credits, accounts receivable from credit derivatives, etc.) to companies, banks, the
public sector, sole proprietors, individuals and other clients.
The Bank assesses adequate impairments with regard to individual credit risk and when there is
objective evidence of impairments.
The Bank has an established adequate credit process that is comprised of credit approval, credit
monitoring, early detection of increased credit risk, and debtor and/or exposure classification.
The Bank has a clear segregation of duties between marketing or retail banking sector and backoffice
and risk management sector, which enables the separation of commercial function from the
function of operations monitoring and risk management.
The Bank maintains a very conservative approach to credit risk, indicated in the relatively conservative
and prudent policy of credit approval and risk undertaking, as well as in the careful approach to
credit risk assessment and to impairment and provisioning.
The Bank controls credit risk both at the level of individual clients and transactions, and at the entire
portfolio level. Aspects taken into account with regard to credit risk management are:
• quality of investments (principal’s credit ranking, classification of accounts receivable, impairments)
• concentration (high exposure of individual clients and persons related to him, individual principal’s
borrowing, branches, regions, states)
• currency (foreign exchange risks, classification of portfolio regarding currency and monitoring of
conformity with sources)
• maturity (classification of portfolio regarding maturity and monitoring of conformity with sources)
• insurance (determination, evaluating and monitoring the proper amount and quality of insurance),
• credit types (overdrafts, short-term loans, long-term loans).
Existing or potential credit risk is monitored throughout the entire period of the contract, that is from
the receipt of application through the process of approval and until the final repayment of the loan.
The Bank’s credit function is organized in two units, in corporate banking sector and in retail banking
sector, and, in addition, the Bank is exposed to credit risk also with some other operations that falls
under the treasury sector jurisdiction. These three sectors are responsible for business arrangements
and for the preparation of credit drafts by virtue of internal acts governing this area.
Accounting sector is responsible for conducting business operations, all statements and other
activities that fall within the framework of support function. Risk management prepares credit ratings
and analysis of customers, monitors the Bank’s exposure to credit risk, assesses the adequacy of
impairments and provisions, and identifies the amount of necessary impairments in case of group
assessment of exposure.
The Bank has an adequate segregation of duties among market units and risk management,
including at the management level.
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Gorenjska banka, d. d., Kranj
Annual Report 2011
Financial Report