The 2019 Annual Meetings of the African Development Bank Group will be held from 11-14 June 2019, in Malabo, Republic of Equatorial Guinea. Find out more
To meet the needs of its borrowers, manage its exposure to fluctuations in market interest rates and currency exchange rates, and to temporarily invest its liquidity prior to disbursement, the Bank utilizes various financial instruments and deals with a multitude of counterparties and securities organizations. All of these transactions involve, to varying degrees, the risk that the counterparty in the transactions may be unable to meet its obligation to the Bank.
The Bank maintains stringent rating eligibility criteria for counterparties and adheres to a framework of exposure limits based on counterparty credit rating and size, subject to a maximum of 10% of the bank’s total risk capital. Furthermore, the Bank executes an ISDA master agreement and netting agreement with its derivative counterparties prior to undertaking any transactions.
To ensure the execution of and compliance to overall risk management policies and guidelines in terms of exposure limits, concentration limits and volatility limits on the Bank's assets and liabilities, the treasury risk manager plays a focal role in the continued monitoring of such exposures and reporting for periodic realignment purposes.