Investor Presentaiton
MORGAN STANLEY BANK ASIA LIMITED
UNAUDITED SUPPLEMENTARY FINANCIAL INFORMATION
Year ended 31 December 2020
H. PILLAR 3 DISCLOSURE (CONTINUED)
Table LIQA: Liquidity risk management
(a) Governance of liquidity risk management
(i) Risk tolerance
Liquidity risk refers to the risk that the Company will be unable to finance its operations due to a loss
of access to the capital markets or difficulty in liquidating its assets.
The Company's Liquidity Risk Management Framework is critical to helping ensure that the Company
maintains sufficient liquidity reserves and durable funding sources to meet its daily obligations and to
withstand unanticipated stress events.
The Required Liquidity Framework reflects the amount of liquidity the Company must hold in both
normal and stressed environments to ensure that the Company's financial condition and overall
soundness are not adversely affected by an inability (or perceived inability) to meet financial
obligations in a timely manner. The Required Liquidity Framework considers the most constraining
liquidity requirement to satisfy all regulatory and internal limits at a consolidated and legal entity
level.
(ii) Risk management function
Senior management establishes and maintains liquidity policies. Through various risk and control
committees, senior management reviews business performance relative to these policies, monitors the
availability of alternative sources of financing, and oversees the liquidity, interest rate and currency
sensitivity of asset and liability positions. Corporate Treasury, Liquidity Risk Department, ALCO and
other committees and control groups assist in evaluating, monitoring and controlling the impact that
business activities have on the balance sheet, liquidity and capital structure. Liquidity matters are
reported regularly to the Board and the Risk Committees of the Company.
(b) Funding strategy
The primary goal of the Liquidity Risk Management Framework is to ensure that the Company has access
to sufficient liquidity and assets across a wide range of market conditions and time horizons. The
framework is designed to allow the Company to fulfil financial obligations and support the execution of
its business strategies. The funding management of the Company is centralised in Corporate Treasury.
The following principles guide the Liquidity Risk Management Framework:
•
•
Sufficient liquid assets should be maintained to cover maturing liabilities and other planned and
contingent outflows;
Maturity profile of assets and liabilities should be aligned, with limited reliance on short-term
funding;
•
Source, counterparty, currency, region and term of funding should be diversified;
•
Liquidity Stress Tests should anticipate, and account for, periods of limited access to funding.
89View entire presentation