GB00_erste lage_E - Erste Group

2000 CONSOLIDATED FIANCIAL STATEMENTS ACCORDING TO IAS
The decentralised unit Market Risk Management within the Treasury division is responsible for
day-to-day control of market risk associated with trading activities. This unit monitors market risk
limits and counterparty limits. Other main duties include risk reporting, trading support, legal support,
product testing processes and—in co-ordination with Central Risk Management—market risk
management.
The responsibility for credit risk management lies with the two divisions Credit Risk Management
Domestic/Central Europe and Credit Risk Management International. Depending on the size and
level of trading activities, foreign branch offices and subsidiaries either have their own risk management
units or are covered by the decentralised unit Market Risk Management.
The Treasury division is also in charge of measuring the market risks relating to the Banking Book.
The Balance Sheet Management unit submits monthly reports to the Asset Liability Committee
(ALCO) on the interest rate risk for Erste Bank’s banking book to be used as a basis for adjusting
balance sheet structure risks.
Pursuant to the provisions laid down in the Austrian Banking Act, the ultimate responsibility for
risk management lies with the Management Board as a whole. The Management Board carries
out this duty in part by participating in the work of the Risk Committee, which meets on a quarterly
basis. This central committee takes the strategic decisions on risk management in the Erste
Bank Group.
According to the Erste Bank Rulebook, the duties of the Risk Committee are to approve amendments
to the Erste Bank Rulebook and note exceptions thereto, perform capital allocation at the
bank level, set an aggregate bank risk limit based on the risk absorbing capacity of Erste Bank,
set the aggregate limit based on the Value-at-Risk for market risk activities on the Trading Book,
define medium-term objectives for risk management and discuss progress and issues in risk management.
The procedures relating to risk management at Erste Bank are laid down in the Erste Bank’s Rulebook,
a set of rules applied throughout the entire Group. The goal is twofold: to minimise operational
risks and to create a consistent basis for the quality of data on market and credit risk activities.
These rules are consistent with commonly applied international standards such as G30/
Derivatives—Practices and Principles, the German Bundesamt für das Kreditwesen/Minimum Requirements
for Trading Book Activities and GARP/Generally Accepted Risk Principles.
108 Erste Bank 2000
Policies and procedures—
Erste Bank’s Rulebook