Annual Report: - Gorenjska banka

Back office and risk management sector provides the Bank’s management and authorized persons
with various reviews and reports on credit risk management.
Reports on credit exposure at the counterparty level, large exposures and other regular reports
regarding credit risk are typically prepared on a monthly basis, whereas reports on defaults are
provided daily.
4.1.1. Credit risk measurement
The Bank has an established credit approval system, which includes the assessment and analysis of
all important factors that influence the obligator’s risk and/or exposure. The Bank’s credit approval
criteria are defined separately for loans to legal entities and separately for retail loans. The Bank also
assumes credit risk with investments in debt securities; however, this is dealt with on a case-by-case
basis at the highest level.
Credit draft approvals for legal entities are the responsibility of the Credit Committee. In accordance
with internal acts governing signing and authorization, individual employees have the authorization
to deal with particular operations. All operations, for which individual employees are authorized, must
be reported to the Credit Committee and the Management Board on a monthly basis.
The Bank gives special attention to risk exposuremonitoring of the persons that have entered into a
special agreement with the Bank.
To assess credit risk, the Bank has an established classification system of debtors and/or exposure
into credit grades and group classification. Classification process is based on quantitative and
qualitative criteria and takes into account the principal characteristics of individual obligor and/or
exposure. The criteria ensure a clear classification of risks into appropriate credit grades and/groups
on the basis of the principal’s business operations and financial stability. Impairments and provisions
are formed on the basis of classification and potential loss appraisal based on credit risk for certain
groups, or on the basis of individual potential loss appraisal for individual debtors and/exposure.
The process and rules of classification are monitored regularly, and the adequacy of the classification
process and impairment and provisions formation is reviewed in accordance with the International
Financial Reporting Standards as adopted by the EU at least once yearly.
The Bank has an established system of regular credit portfolio management. This involves regular
monitoring of exposure to individual clients and an assessment of obligors’ financial situation. The
Bank monitors daily whether the conditions originating in the credit agreement are complied with,
and special attention is given to monitoring whether repayments of liabilities are made in time.
For the duration of the credit agreement the Bank constantly monitors the debtor’s business
operations, and it examines individual debtor’s risk and/or exposure in detail and assesses the
adequacy of credit ranking as well as the expected payments of contractual obligations at least
monthly. At the same time it also examines the adequacy and value of any insurance.
In accordance with the classification of claims into grades and the formation of impairments, the
entire credit portfolio of individual clients is assessed every month, and eventual necessary changes
of the required level of impairments and/or provisions are suggested. Claims regarding individuals
are classified with regard to the number of unpaid instalments.
Loans and guarantee insurance is examined throughout the entire repayment period or until
the guarantee’s maturity. With all long-term loans and guarantees insurance quality examination
is routine, as is the assessment of adequate insurance. In case of inadequate insurance possible
measures to take up supplementary insurance are suggested.
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Gorenjska banka, d. d., Kranj
Annual Report 2011
Financial Report