DFCC Bank Team Wins Global Asset and Liability Management Competition
April 4, 2012
DFCC Bank won the award for “Best in Risk Management” at the 5th Asset & Liability Management (ALM) Competition concluded at The Hague in the Netherlands recently. The competition was jointly sponsored by DEG of Germany, FMO – The Netherlands Development Finance Company, Proparco of France and was conducted by SimArch.
DFCC was represented by a team comprising Ms.Manohari Gunawardhena – Senior Vice President Treasury, Mr.Palitha Gamage – Senior Vice President Planning & Plan Implementation, Mr. Sanjeewa Fernando – Assistant Vice President Integrated Risk Management and Mr.Jayan Fernando – Senior Project Executive Asset & Liability Management.
The competition was conducted in two phases. The first phase, which lasted three months, was an online exercise. Twenty Six banks from diverse emerging nations participated in the first round. Six finalists were invited to The Hague, Netherlands for the final round of the competition.
During the Second Phase, participants were tested thoroughly on their ability to make sound judgments on the management of a financial institution under different internal and external scenarios. The four member team from DFCC Bank presented the best risk management framework which satisfied the conditions of profitability and stability.
Commenting on the team’s performance, Mr. Nihal Fonseka Chief Executive of DFCC Bank stated “This Competition offered us a unique opportunity to showcase our ALM skills and created opportunities for the exchange of experience and ideas among emerging international bankers”. He added “DFCC Bank is proud of the capabilities of its professionals and the robust Risk Management culture that exists within the organization. As one of the few successful Development Financing Institutions in the world we are firmly committed to good corporate governance as the driver of a sustainable organization.”
Asset and Liability Management is one of the most important areas of expertise required by financial institutions as it involves managing balance sheet growth with prudent management of market risk elements related to credit, interest rate, liquidity, foreign exchange and operations. The Governance structure for risk management at DFCC is based on the four fundamentals of Board and Senior Management oversight; risk management policies and procedures; risk measurement, monitoring and controls; and internal controls and independent audit.
DFCC uses internally developed credit rating models as a credit risk quantification tool. This has been a part of DFCC’s risk management practice for nearly a decade. These models are periodically reviewed and adjusted depending on the bank’s business focus and external factors. DFCC consistently maintains a total capital adequacy ratio close to 20%, supported by its sustained solid profitability and a healthy economic and operating environment. (The regulatory requirement for capital adequacy has been set at 10% while the industry average ranges between 12-13%).
The Bank’s Risk Management capabilities have continuously been of a high standard, evidenced by Fitch Ratings Lanka’s (FRL) initial Credit Analysis Report, where FRL affirmed that DFCC Bank’s risk management procedure were “Clearly above average in the Sri Lankan context”. Continuous commitment to Corporate Governance procedures coupled with a comprehensive risk management framework has enabled DFCC Bank to provide unmatched security and stability to its depositors and other stakeholders while delivering much needed financial impetus to entrepreneurs who require support and guidance.