Informe_Anual_Cecabank

72 / 76

Page. 72
| | |
| | |
|
03 Our Business Model
Cecabank 2015 Annual Report
What aspects of Cecabank’s risk functions have been
strengthened in the past few years?
Cecabank, which has always believed in prudent
management, has assumed the following risk
management principles, which are aligned with its
strategic plan and its business model:
Firstly, it has established internal governance
which promotes the integration of the risk culture
throughout the entity and always involves senior
management.
Moreover, it has furthered the independence
of risk functions in the different
business divisions.
It conducts an evaluation to
anticipate all the risks.
It has support infrastructures and
robust proportionate methods to
measure, monitor and control the
risks assumed.
Cecabank establishes its risk
strategy, risk tolerance levels and
the risk management framework
in advance.
In addition, it has an information framework which
enables the different governing bodies to monitor
risks and assess the suitability of the investment
and risk policy.
Lastly, Cecabank has set up remuneration
policies which include incentives for
maintaining the risk prof ile.
From the risk perspective, what events marked 2015?
Generally speaking, Cecabank’s risk prof ile
remained stable throughout the year, as occurred
in previous years.
The bank has increased its exposure to credit risk
slightly, with notable investment in Spanish public
debt and high quality fixed income assets.
Sector specialization and counterparties remained at
the same levels.
Non-financial risk (operational, regulatory compliance
and reputational risks) maintained a low profile,
considering the volumes of losses registered.
Moreover, because of the prudence with which the risk
of Securities Services activities is considered, we see the
operational risk of this activity to be low to average.
Exposure to market risk was similar to in the previous
year and it benefited from less volatile markets,
although volatility increased again at
the beginning of 2016.
What’s more, our market risk model
was reviewed by external consultants
who ratified its suitability.
The interest rate risk increased
slightly as we capitalized on market
conditions, but it still remains low
to average. On the other hand,
the liquidity risk fell substantially.
The cash surpluses existing in the
markets were accompanied by stable
customer balances in the Securities
Services business. All of this, together with prudent
management, has produced very high liquidity indices.
But what do external analysts think of Cecabank?
Here we should highlight another important event for
Cecabank in 2015: the upgrade of Moody’s rating by
four notches, taking the rating up to investment grade.
This aligns all the bank’s credit ratings at level 3, the
same as the rating for Spain.
Some of the strong points Cecabank’s rating agencies
highlight are its sound franchise in the domestic
securities services business, which is a stable source of
income, its sound capitalization, which is in line with
its risk profile, and its comfortable liquidity position.
Another
important event
for Cecabank
in 2015: the
upgrade of
Moody’s rating
by four notches