Page 59 - GTBANK GAMBIA ANNUAL REPORT 2021

(ii) Exposures to the counterparty and its likely future The industry limits are arrived at after rigorous analysis of
development, from which the Bank derive the the risks inherent in the industry/economic sectors.
‘exposure at default’ (EAD); and
(iii) The likely recovery ratio on the defaulted obligations The limits are usually recommended by the Bank’s
(the ‘loss given default’) (LGD). Enterprise Risk Management Unit and approved by the
The models are reviewed regularly to monitor their Board. The limits set for each industry or economic sector
robustness relative to actual performance and amended depend on the historical performance of the sector as well
as necessary to optimize their effectiveness. as the intelligence report on the outlook of the sector.
During the year, limits can be realigned (by way of outright
Risk Limit Control and Mitigation Policies removal, reduction or increase) to meet the exigencies of
the prevailing macroeconomic events.
The Bank applies limits to control credit risk concentration
and diversification of its risk assets portfolio. The Bank The Bank also sets internal credit approval limits for
maintains limits for individual borrowers and group of various levels of officers in the credit process. Approval
related borrowers, business lines, rating grade and decisions are guided by the Bank’s strategic focus as well
geographical area. as the stated risk appetite and the other limits established
by the board or regulatory authorities such as Aggregate
The Bank adopted obligor limits as set by the regulators Large Exposure Limits, Single Obligor Limits,
and it is currently at 25% of the Bank’s shareholders’ Geographical Limits, Industry / Economic sector limits etc.
funds. The obligor limit covers exposures to
counterparties and related parties. The lending authority in the Bank flows through the
The Bank imposes industry/economic sector limits to management hierarchy with the final authority residing
guide against concentration risk as a result of exposures with the Board of Directors as indicated below:
to sets of counterparties operating in a particular industry.

Designation Limit

Up to the single obligor limit as advised by the regulatory
Board of Directors Authorities from time to time but currently put at 25% of shareholders’
funds (total equity)
Management Credit Committee Up to GMD3Million
Managing Director Up to GMD2Million

Executive Directors Up to GMD50,000
Other Approving Officers As delegated by the Managing Director

Off-balance sheet engagements
The above limits are subject to the following overriding
approvals. Except where a facility is cash collateralized, These instruments are contingent in nature and carry the
all new facilities below GMD3 million require the approval same credit risk as loans and advances. As a policy, the
of the Credit Committee. The deposit required for all cash Bank ensures that all its off-balance sheet exposures are
collateralized facilities (with the exception of bonds, subjected to the same rigorous credit analysis, like that of
guarantees and indemnities) must be 125% of the facility the on-balance sheet exposures, before availment. The
amount to provide a cushion for interest and other major off-balance sheet items in the Bank’s books are
charges. Totally new facilities require one-up approval i.e. Bonds and Guarantees, which the Bank will only issue
approval at a level higher than that of the person that where it has full cash collateral or a counter indemnity
would ordinarily approve it. from a first class bank, or another acceptable security.

Annual Report 2021

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