Sri Lankaâ€™s Pan Asia Bank strengthens risk management
ECONOMYNEXT – Sri Lanka’s Pan Asia Bank has strengthened risk management and monitoring after the suspension of its primary dealer unit last year, which it described as one of the toughest challenges for 2017.
The bank’s Treasury Middle Office (TMO), which monitors market risk management functions, which are separate from the Treasury, was “further strengthened during the year,” the listed Pan Asia Banking Corporation told shareholders in its annual report.
The independent TMO consists of highly qualified experienced staff members and its key monitoring activities of market risk and middle office include monitoring of Primary Dealer Unit (PDU) transactions.
It also does monitoring of trading platform conversations including take profit and loss limits and monitoring of voice conversations of dealing staff, according to the report.
Other functions are daily monitoring of adherence to Board approved counterparty limits and exposure limits set by the Central Bank of Sri Lanka such as net open position limit, liquidity ratio, reserve requirements, and marked to market calculations of trading, investment and pawing/ran loan portfolios.
“Our challenges for 2017 were probably the toughest in the history of the bank,” Pan Asia Bank said. “Suspension of our primary dealer unit, slowdown in growth amid rising nonperforming loans and slide in our low cost fund base took a toll on our performance.”
“During the year under review, corrective actions have been taken where necessary to mitigate / avoid current and potential market risks envisaged,” the report said.
“The bank will continue to strengthen its Middle Office function in 2018 by further strengthening its market risk assessment and monitoring activities.”
The annual report said that during 2017 there were no significant losses reported due to failures or inadequacies in internal processes, people, and system or from external events.
But it noted that during the reporting period the bank’s primary dealership (primary market access) was temporarily barred for six months until 14th February 2018, without any major impact to the Bank’s core operations, and subsequently extended for another 06 months with effect from 14th February 2018.
(COLOMBO, March 12, 2018)