2013 Annual Report
RISK MANAGEMENT
CREDIT RECOVERY
The activity of credit recovery includes
the renegotiation of non-performing loans.
As soon as the client is in default, collection is
intensified with strategies such as text messages,
collection letters and the inclusion of the client's
name in the bad credit list. In this phase, several
channels are activated in an attempt to recover
the client, including the Customer Service.
In case of non-performing loans over 90 days,
for low amounts, internal and external teams
(contract firms specialized in administrative
collection) contact the client directly. In case of
higher amounts, the attempts to recover the loan
is done via internal specialists or going to Court.
I RECOVERY OF CREDITS WRITTEN OFF AS LOSS
(R$ million)
1,032
2,064
1,769
2,479
2. Market risk
Santander Brazil market risk management includes
practices of measuring and monitoring the use of limits
that are pre-set by internal committees, the value at risk
of the portfolios, the sensitivities to fluctuating interest
rates, the exposure to foreign exchange, and liquidity gaps.
This allows for the monitoring of risks that might affect
the position of the Bank's portfolios in the various markets
where it operates.
Santander is exposed to market risks resulting especially from
the following activities:
ā financial trading involving risks of interest rates, foreign
exchange rates, share prices and volatility;
retail banking activities involving interest rate risk, given
that variations in interest rates affect revenue, interest
expenses and client behavior;
asset investment (including subsidiaries), with returns or
accounts denominated in foreign currencies, thereby
involving exchange rate risk;
investments in subsidiary companies and other
businesses, subjecting the Bank to share price risk.
Scenario analysis - In addition to historical simulation,
Santander uses stress testing to analyze the impact
of extreme market oscillations and to adopt policies
and procedures in an attempt to protect our capital
and operating results against such contingencies.
THE VAR MODEL
Value at Risk (VaR) is a statistic tool used
to simulate and monitor market risks. According to
the methodology used by the Bank, VaR is an
estimate of the maximum daily loss the Bank would
incur in a certain portfolio for 99% of the time,
taking into consideration the assumptions and
limitations. In addition, it indicates a loss estimate
that the Bank would expect to exceed during
approximately three days per year.
Santander's VaR methodology should be interpreted
in the light of the following limitations:
the one-day time frame might not fully reflect
the market risk of positions that cannot be
eliminated or protected by hedging in a day;
VaR is calculated at the close of business, and
trading positions can change substantially
during the trading day.
3. Social and Environmental Risk
G4-14 G4-FS1 G4-FS2
Pioneer in Brazil, the Social and Environmental Risk
Structure at Santander Brazil was created in 2002.
Currently this practice includes the following aspects:
Analyses of projects under the viewpoint of the Equator
Principles (a set of voluntary international standards on
Social and Environmental Risks) and other projects that are
in tandem with the Bank's social and environmental policy;
Wholesale credit to firms with limits equal to or greater
than R$1 million, with reassessment performed each
12 months;
Acceptance and maintenance of Wholesale clients.
LOANS IN EXCESS OF
R$ MILLION
UNDERGO SOCIAL AND ENVIRONMENTAL RISK ANALYSIS
2010
2011
2012
2013
44 Annual Report 2013
THE BANK PERFORMS PERIODICAL ANALYSES IN ORDER
TO CONTROL CREDIT RISK, INCLUDING OTHER
MANAGEMENT INITIATIVES IN RISK MANAGEMENT
BASED ON ACTUAL LOSSES
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