Liquidity Risk

Liquidity Risk

A comfortable buffer

Structural liquidity risk is associated with the Bank’s ability to meet its payment obligations and fund its lending activities. The Bank actively monitors liquidity and its forecasts, as well anticipating the measures to be taken in both normal and exceptional situations resulting from internal causes or market behaviour.

The instruments used for liquidity risk control include monitoring changes in the liquidity gap or map, and the specific analysis of the balances resulting from sales transactions, wholesale maturities, interbank assets and liabilities and other sources of funding. These analyses are performed under normal conditions or simulating different scenarios of liquidity needs depending on he different business conditions or market variations.

In 2018, the commercial gap (the difference between customer loans and deposits) dropped by €1,700 million, given the increase in customer funds was much higher than the growth of investment. Therefore, 93.8% of loans and receivables were financed by customer deposits at year-end.

With regard to wholesale funding, the maturity dates in 2018 were partially replaced, thus reducing dependence on wholesale markets by €320 million. Over the course of the year, the liquidity buffer made it possible to maintain the liquidity coverage ratio (LCR) at levels comfortably above 100%, coming to 144.2% at year-end 2018.

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