Liquidity

Analyze funds requirements for different moments in time, according to the time structure of the institution’s assets and liabilities, analyzing the different currencies and products in which the institution does business.

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Description

Liquidity Risk derives from the potential inability to cover financial obligations, due to an unplanned shortfall of liquid funds, or due to changes in market conditions involving rapid liquidation of assets, triggering a potential loss of value.

The Liquidity Gap tool makes it possible to analyze fund requirements at different points in time, according to the time structure of the institution’s assets and liabilities in a base scenario and in stress scenarios.

Advantages:

  • Liquidity Gap: shows the gaps between inflow/outflow of funds related to the current structure of the institution’s assets and liabilities.
  • Liquidity Gap (stress testing): shows the gaps between inflow/outflow of funds related to the current structure of the institution’s assets and liabilities, in a simulation based on the definition of possible and extreme scenarios.
  • Determination of demand deposit stability and deposit structurality vector, by creating a model for determining the hard core of deposits with no due date.
  • Automation of management reports and regulatory requirements.
  • Automation of daily liquidity reports.
  • Tracking of financing sources to optimize management of liability concentration.

Successful cases:

  • Banco Bandes Uruguay
  • Banco Hipotecario del Uruguay
  • Banco Continental Paraguay
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