Geschäftsbericht 2015, englisch

münchener Hypothekenbank eg | annual report 2015 management report 40 Mid-Term Structural Liquidity Planning The purpose of structural liquidity planning is to ensure mid-term liquidity. The legal basis consists of the MaRisk BTR 3 and CRD IV for the Net Stable Funding Ratio (NSFR). Mid-term liquidity management in accordance to the terms of MaRisk is based on short-term liquidity management pursuant to the terms of MaRisk, which means that both procedures use the same scenario definitions and modelling assumptions. However, due to the longer observation period, additional modelling assump- tions are also taken into account which are not essential for man- aging short-term liquidity – for example, new business plans or current expenses such as salaries and taxes. Mid-term liquidity planning involves the following key liquidity figures as components for determining results across all due dates:  accumulated total cash flow requirements,  available uncovered and covered potential funding including planned new business and prolongations in line with the sur- plus cover requirements set by the rating agency Moody’s,  additional detailed data for planning and control activities. The limitation of liquidity risks takes place using the structured liquidity forecast and the stress scenarios based on the available liquidity within a year. In addition, pursuant to CRD IV, the NSFR is calculated on a quar- terly basis for all currencies and presented separately for all rele- vant currencies; these are currently the euro and the Swiss franc. As the supervisory authority has not yet issued any binding plans for complying with NSFR requirements, and the values are currently stable at over 100 percent, this ratio is not being actively managed at this time. In order to reduce refinancing risks, MünchenerHyp strives to refi- nance loans with matching maturities and continuously checks if its relevant refinancing sources (primarily those within the Coop- erative Financial Network) remain available. In order to limit market liquidity risks in its lending business with public-sector borrowers and banks, MünchenerHyp primarily acquires securities that are ac- ceptable as collateral by the ECB, and which can be used for open market business at any time. MünchenerHyp does not have any investments in less liquid bonds, like Mortgage Backed Securities (MBS), in its portfolio. Investment Risk Investment risk is understood to mean the danger of financial loss due to a decline in the value of a long-term investment to less than its book value and held by MünchenerHyp in companies belonging to the Cooperative Financial Network due to strategic reasons. Operational Risks Operational risks refer to possible losses caused by personal miscon- duct, weaknesses in procedural or project management, technical failure or negative outside influences. Personal misconduct also includes unlawful actions, improper sales practices, unauthorised actions and transaction errors. The major portion of damages from operational risks sustained by MünchenerHyp last year stemmed, as usual, from losses related to the disposal of properties which were too highly mortgaged. This is part of the Bank’s normal risk of doing business. We minimise our operational risks by qualifying our employees, using transparent processes, automating standard procedures, and by having fixed working instructions, comprehensive functional testing of the IT-systems, as well as appropriate emergency plans and preventive measures. Insurable risks are covered by insurance to the normal extent required by banks. Ability to Bear Risks The professional concepts and models used to calculate the Bank’s ability to bear risks are continuously further developed in accord- ance with legal supervisory requirements. MünchenerHyp calcu- lates its ability to bear risks based on the Going-Concern as well as the so-called Insolvency Case scenarios. However, the Going- Concern scenario is the relevant method used for control purposes, which determines if the bank would still have an adequate equity capital ratio exceeding the legally required minimums after the occurrence of risks contained in all of the risk categories.

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