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THE BANK FOR CORPORATES
Notes
64
Liquidity risks are similarly assessed which enables the bank to meet its payments when they are due, as well as to procure sufficient
means under the expected conditions if the need occurs. Refinancing within the stipulated time is an essential target to be met in
bank controlling.
(62) CREDIT RISK REPORT. Credit risks imply that debtors are not able to meet their payments. Credit risks comprise non-payment
risks, country risks and default risks whereas the probability of non-payment by a debtor is assessed via different rating schemes.
Therefore, the Bank’s rating system first takes into account the non-payment risk of a debtor. Every borrower is assigned an internal
or external rating. There are eight classes for non-defaulting loans and two classes for defaulting/doubtful loans. The internal
classification corresponds to the standard rating scale of both Moody’s Investors Service and Standard & Poor´s and is carried out in
several steps. Changes in the key balance sheet figures or other information, such as the level of indebtedness in the case of Federal
and local government authorities, can lead to continuous changes in ratings. Ratings must be reassessed at least once a year. Where
an external rating by S & P, Moody’s or Fitch/IBCA is available, the least favourable rating of these agencies is used. Thus, the assets
in the banking book and off-balance-sheet transactions are classified completely by credit standing and collateralisation. Furthermore,
the credit risk is presented as value at risk and the return on risk-adjusted capital (RORAC) is calculated for individual asset classes.
The following table shows the portfolio composition (assets and contingent liabilities in the form of guarantees and other offbalance-sheet
commitments) classified by rating categories – before taking into account collaterals and the netting of balance sheet
items:
31.12.2001 31.12.2000
in EUR m Volume Proportion Volume Proportion
AAA 2,633 22 % 1,886 20 %
AA 2,780 23 % 2,242 23 %
A 3,109 26 % 2,882 30 %
BBB 1,865 15 % 1,428 15 %
BB 1,241 10 % 753 8 %
B 186 2 % 192 2 %
CCC 229 2 % 188 2 %
D 8 0 % 18 0 %
Aggregate 12,051 100 % 9,590 100 %
(63) OPERATIONAL RISKS. Operational risks incur losses that are due to the inadequacy and failure of internal procedures, human
resources and systems or external circumstances and thus include fraud, mistakes, insufficient documentation, computer errors,
computer crashes, legal risks, etc. So far operational risks cannot be assessed by means of a standard procedure as is the case with
market and credit risks. Investkredit, however, tries to define a method according to which such risks may be identified, assessed by
means of a uniform standard, reported and minimised or avoided altogether. Therefore, it is essential to document all incurred losses,
to create internal monitoring systems, as well as redundant computer systems and to take care of the necessary insurance coverage.
The future equity accord (Basel II) will require a certain amount of equity to cover for operational risks.
(64) INFORMATION ON EMPLOYEES.
2001 2000
Employees of the Group
Austria 283 268
Abroad 9 3
Aggregate 292 271
The table shows the average number of staff during the financial year, part-time staff being weighted according to the extent of
employment.