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Asset and Liability Committee Charter
Asset and Liability Committee Charter

Purpose

 
The ALCO committee has been established to provide the framework to strategically manage AB's overall assets and liabilities for the long-term and the short term:
  • Establish policies, limits and guidelines within which ALM strategies are to be executed (within limits set by Board)
  • Foreign exchange management
  • Liquidity management
  • Pricing (profit rate) management
  • Monitor activities and review results of ALM strategy implementation and execution
  • Provide direction, guidance, and monitor performance of investment products sold to 3rd parties (client and corporate)
Authority
  • ALCO is primarily a decision making body for executing the ALM strategies of the Bank.
  • All decisions are to be taken by a simple majority vote. The casting vote in the event of a tie will be that of the Chairman of the Committee.
Composition
  • The Composition of the ALCO will be determined by the CEO and will include representatives of the relevant divisions
  • Other members of the management can be invited on a case by case basis, however, they will not constitute a part of ALCO
Responsibilities: The Committee shall be responsible for:
Defining bank's foreign exchange management objectives for customer transactions and for own account dealing
  • Definition of limits
    • Overall currency limits vs. AED limits
    • Trading room limits
    • Stop-loss limits by dealer and by manager
  • Branch limits
  • AED vs. other currencies
  • Cross currencies
Defining bank's liquidity management objectives for Local and for foreign currency
  • Definition of specific liquidity limits, targets and guidelines
    • Statutory reserve management guidelines
    • Basic surplus targets
    • Liquidity ratio limit
    • Liquidity index target
    • Inter-bank funding limit

  • Define bank's gap management objectives
    • Definition of specific gap management limits, targets and guidelines
    • Maturity gap targets for each gap period
    • Desired maturity for new deposits and loans, including money market
    • Alternative investment and funding instruments 

  • Define bank's pricing management objectives
    • Definition of specific pricing management limits, targets and guidelines
    • Profitability targets
    • Growth targets
    • Specific pricing guidelines to achieve desired profitability, growth, liquidity or gap targets 

  • Receive reports from Finance and treasury support department and review, revise and adjust limits as necessary 

  • Provide guidance and monitor performance of Investments of the corporation 
    • Maintain an investment policy and recommend changes as necessary
    • Review markets and new investment opportunities
    • Review performance of existing investments
    • Review and approve new investments and changes in allocations within approved guidelines and risk exposure limits
    • Reviews and maintains agreed risk exposures
    • Occasionally invites internal or external "experts" to meetings to clarify issues and provide advice