Page 219 - ACCESS BANK ANNUAL REPORTS_eBook

The range of collaterals acceptable to the Bank include:
• Cash / Deposit (domestic and foreign currency) MaSter NettINg arraNgeMeNtS - traDeD
with the Bank including certificates of deposit or PRODUCTS
comparable instruments issued by the Bank. Credit risk from traded products is managed within the
• Certificates of Deposit from other banks. overall credit risk appetite for corporates and financial insti-
• Commodities. tutions.
• Debt securities issued by sovereigns and
public-sector enterprises. The credit risk exposure from traded products is derived
• Debt securities issued by banks and corporations. from the positive mark-to-market value of the underlying
• Equities - Stocks / Share Certificates of quoted instruments, and an additional component to cater for po-
blue chip companies tential market movements.
• Mortgage on Landed Property For derivative contracts, we limit our exposure to credit
• Asset-backed securities. losses in the event of default by entering into master net-
• Charge on assets (Fixed and/or Floating) ting agreements with certain counterparties. As required
- premises/ inventory/ receivables/ by IAS 32, exposures are only presented net in the financial
merchandise/ plant/ machinery etc. statement if there is a legal right to offset and the assets/
• Negative Pledges liabilities will be settled simultaneously.
• Lien on Asset being financed It is the Group’s policy that all credit exposures are ade-
• Stock Hypothecation quately collateralised. Credit risk mitigation is an activity of
• Shipping Documents (for imports) reducing credit risk in an exposure
• Bankers Acceptance
• Life Assurance Policies PROVISIONING POLICY
A loan or loan portfolio is impaired and impairment losses
are incurred only if there is objective evidence of impair-
ment as a result of one or more events that occurred after
initial recognition of the asset (a ‘loss event’) and that loss
event (or events) has an impact on the estimated future
cash flows of the loan or loan portfolio that can be reliably
estimated.

MARKET RISK MANAGEMENT

DEFINITION ensure that risks faced across business activities and on an
Access Bank is faced with the risk of decline in its earn- aggregate basis are within the stipulated risk appetite of the
ings and capital arising from adverse changes in market Bank. These policies have been benchmarked with industry
variables; such as interest rate and foreign exchange rate. and international best practices, and CBN regulations.
Market Risk is the risk that the value of on/off-balance
sheet positions will be adversely affected by movements in The Board approves the risk appetite for trading and
interest rates and currency exchange rates. Access Bank is non-trading activities and risk limits are set within the con-
exposed to market risk through the positions created in its text of the approved market risk appetite. Limits are set
trading and banking books. based on the approved risk appetite, underlying liquidity as
well as legal limitations on individual positions imposed by
MARKET RISK POLICY MANAGEMENT AND CONTROL the regulatory authorities in Nigeria. The specific limits are
Over the years, the Nigerian financial market has witnessed proposed by the Group Head, Market Risk Management
a dramatic expansion in the array of financial services and and the Bank’s Group Chief Risk Officer and approved by
products. This tremendous growth in scale and scope has the Bank’s Executive Management, relevant management
also generated new risks with global consequences, espe- committees, and ultimately by the Board.
cially market risk, necessitating an assessment of expo-
sures to the volatility of the underlying risk drivers. The Bank runs a state-of-the-art integrated and straight
through processing treasury system for enabling efficient,
These developments have prompted a comprehensive and monitoring and management of interest rate and foreign
dynamic Market Risk Policy, Asset and Liability Manage- exchange risks in the Bank. Liquidity, Exchange Rate, and
ment Policy, Liquidity Policy, Stress Testing Policy, e.t.c. to Interest Rate risks are managed through various metrics

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Annual Report & Accounts 2017