Liquidity Risk

The liquidity risk relates to the ability of Hipoteku banka to redeem the legally valid claims of its customers and other creditors in due time and secure that the increase of the anticipated claims presents reasonable costs.

The Bank ensures that the liquid assets are not less than 30% (set by the Financial and Capital Markets Commission) of its short-term liabilities at all times. To evaluate the liquidity risk, the Bank uses the GAP method. The Bank has set liquidity net position limit in each significant currency and total liquidity net position limit as well as maximum deposit amount from a single depositor to control the liquidity risk. Liquidity ratio (min - 30%) as of 31.12.2009 was 82.2%.

To manage liquidity, the senior management and ALCO use a set of reports:

• liquid assets overview
• cash flow analysis and projected balance sheet,
• liquidity ratio calculation,
• term structure of assets and liabilities.