Good decisions begin with good information. A bank’s Supervisory Council needs concise, accurate, and timely reports to help it perform its fiduciary responsibilities. This section of the material provides a detailed guidance on the examples of the information, generally found in reports to the members of Supervisory Council of the commercial bank.
When evaluating liquidity, members of Council compare the current level of liquidity, plus liquidity that would likely be available from other sources, with funding needs, and they determine whether funds management practices are adequate. Bank management should be able to manage unplanned changes in funding sources, as well as react to changes in market conditions […]
Members of Supervisory Council should also look at the effect of growth on the bank’s asset quality, earnings, capital, liquidity, and exposure to risk. Rapid growth may harm the bank as the bank may assume more risk than expected. Managing additional risk or a new risk profile can be costly and strain resources. In a […]
Normally, the most readily available information for members of Supervisory Council concerning loan quality comes from management ‘s internal risk rating reports, reports on past-due and nonaccrual loans, renegotiated and restructured loan reports, and policy exception reports. Reviewing these reports can help members of Supervisory Council identify negative trends early.
Effective liquidity risk management requires an informed Council, capable management, and appropriate staffing. The Supervisory Council and senior management are responsible for understanding the nature and level of liquidity risk assumed by the bank and the tools used to manage that risk.
Banks own investment securities and money market assets in order to manage asset and liability positions, diversify their earning assets base, maintain a liquidity cushion, and meet pledging requirements. For most banks, the investment portfolio constitutes a significant earning asset. The increasing complexity of the securities available in the marketplace has heightened the need for […]
