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GENERAL INFORMATION
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CORPORATE MANAGEMENT
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FINANCIAL INFORMATION
A&T BANK 2013 ANNUAL REPORT
The value-at-risk (VAR) model is also used for daily internal
measurements of market risk. Within the framework of
the internal risk limits approved by the Board of Directors,
the results of standard and VAR models are examined and
evaluated periodically. In addition to these, the following studies
are also carried out to effectively measure market risks:
• Duration analyses,
• GAP analyses,
• Sensitivity analyses,
• Ratio analyses,
• Cost/Return analyses,
• Asset/Liability structure analyses,
• Income statement analyses.
Credit Risk
The Bank defines credit risk as the possibility of risk due to the
inability or unwillingness of a customer or counterparty to meet
their commitments in relation to lending, trading, hedging,
settlement, or other financial transactions.
In addition to the standard risk inherent in credit generating
activities, risks relating to economic conditions must also be
considered.
With regards to the portfolio, one of the key components of
credit risk management, the Bank sets in-bank risk limits
in order to manage its loan portfolio more effectively, and
has determined a maximum risk ceiling for both individual
and group customers, both for cash and non-cash loans.
Accordingly, when the volume of certain loans exceeds a set
level, Bank management is alerted, and takes the necessary
precautions to minimize risk.
The Bank also uses an internal rating system as one of its most
important tools for measuring the quality of the companies
in its loan portfolio. A well-structured internal risk rating
system is one of the best ways to rate different credit risks to
which the Bank may be exposed. This system enables a more
accurate determination of credit portfolio characteristics,
the concentration of credits, non-performing loans and the
adequacy of provisions.
As a natural outcome of discussions on the new Basel
Capital Accord, banks’ credit risk management has once
again come into focus. With the new accord in place,
methodology, measurement and portfolio management
attitudes have changed considerably, with the ratings of the
Bank’s counterparties having become increasingly important.
Consequently, the Bank’s 2013 studies on credit risk
management have mainly focused on working to develop and
improve the Bank’s infrastructure in compliance with the new
capital accord.
Operational Risk
The Bank defines operational risk as the risk of loss resulting
from either inadequate or failed internal processes, personnel,
or systems, or else from external events.
Clear strategies overseen by the Board of Directors and senior
management, a strong operational risk and internal control
culture (including, among others, clear lines of responsibility
and a definitive segregation of duties), and effective internal
reporting and contingency planning are all crucial elements of
an effective operational risk management framework for the
Bank. Contingent processing capabilities are also used as a
means of limiting the adverse effects of operational risk. In this
context, a comprehensive Business Continuity Management
Plan has been prepared.