Annual Report 2012 - National Savings Bank

126ASSESSING AND MANAGING OUR RISK FACTORSRISK MANAGEMENTLiquidity management involves theBank implementing strategies of “selfinsurance” or “purchased insurance”against shortfalls of cash requiredto meet current and forthcomingobligations in a variety of ways. Theoptimal mix will reect the relative costsincurred in using each approach andthe risks associated with each.Concentration of Liquid AssetsThe Bank’s regulatory requirement toinvest 60% of its deposits in GovernmentSecurities forces the Bank to maintaina high Statutory Liquid Asset Ratio.Currently, the Bank maintains the ratioat 69% which is well above the statutoryrequirement of 20%. The investment ingovernment securities represents 79%from the total liquid assets of the Bank.Concentration of Liquid Assets0.2% 0.6%42.0%57.2%(%)250,000200,000150,000100,000Stability of FundingCash & cash equivalentsGovernment Securities Less than 12 MonthsGovernment Securities More than 12 MonthsOthersInstitutionalIndividualFurther, the Bank’s off-balance sheetexposure is limited and therefore a veryminimal risk of unforeseen liquidityissues would arise. The ability of theBank to access the Inter-bank market isalso not difcult in a situation of liquidityproblems due to its large investments inT. Bills and T. Bonds, reputation in themarket and the Government afliation.50,000-3 months 6 months 12 months 24 months 36 months 60 monthsOn the other hand majority of the xeddeposits of the Bank includes individualxed deposits which represent 76% ofthe total FDs and only the balance 24%represents the institutional deposits.This re-emphasises the stability of thefunding as well as the liquidity positionof the Bank.NATIONAL SAVINGS BANK . ANNUAL REPORT 2012