About the review
Our review covered all 15 locally incorporated registered banks with the objective of assessing each entity against the quantitative and qualitative requirements of our liquidity policy. We undertook desk-based analysis and on-site interviews for the ten largest banks. Due to timeframe interruptions caused by Covid-19 lockdowns, we limited our analysis for the five smaller banks to a desk-based review of requested documents.
What the review found
All banks demonstrated good practices in the following areas:
- having clear organisational structures for liquidity risk management
- using internal limits and measurements beyond the minimum policy requirements
- monitoring cash positions to understand intra-day liquidity need.
However, compliance with the policy varied amongst banks but was unrelated to bank size. Many of the issues identified were due to weak internal controls and inadequate care in interpreting the policy.