RISK MANAGEMENT AND RISK FACTORS
guidelines. The process would allow TBANK to effectively manage its capital as well as control and manage risks in the periods ahead. To support such framework, TBANK strategically establish a structure of the organization to support the operation under the direction and supervision of the following committees.
Thailand’s economy contracted in 2009, following the severe downturn in global economy especially in the first quarter of the year. The underlying causes of the downturn stemmed from the credit tightening and shortage of liquidity in global financial institutions including the lack of business and consumers’ confidence worldwide. The crisis led to a sharp decline in most major export items to all major markets. Together with the domestic political issues, the contraction of the Thai economy was more severe than expected. Nevertheless, the Thai exports started to revive since the second quarter as the world economy started to show signs of recovery. In accordance with the timely government’s measures during the crisis, the Thai economy revealed the continued signs of recovery with the improvement of consumption spending and increasing number of inbound tourists. In 2010, the Thai economic recovery is expected to continue with the global economy, leading to the upturns in manufacturing sector and tourism going forward. Thanachart Bank Public Company Limited “TBANK” and Thanachart Financial Conglomerate realized the importance of such risk factors and the Board of Directors and executives of TBANK have therefore closely monitored the business operation as well as made an effort to develop the risk management system continually to cushion for any possible risks. Nonetheless, as the credit lending has been TBANK’s major business and source of earnings, TBANK also continued to give priority to developments of credit lending measures and the credit risk measurement tools, e.g. behavior scoring which would help TBANK to manage risk properly and coherently with the risk profile. Furthermore, to reaffirm the strength and stability of the financial position of TBANK, the Bank is currently in the stage of developing the Internal Capital Adequacy Assessment Process (ICAAP) under Pillar 2 of Basel II framework in accordance with the Bank of Thailand (BOT)
THE BOARD AND COMMITTEES AT THE POLICY LEVEL:
TBANK’s Board of Directors and the Executive Committee has a role in policy determination and establishes guidelines for an efficient enterprise-wide risk management by taking into consideration the impact of risks on TBANK’s operational goal and financial position that has to be in line with its normal operation. Risk Management Committee plays a role in establishing strategic plans and developing the risk management procedure, as well as considering appropriate risk management policy and guideline which were proposed to the Executive Committee and the Bank’s Board of Directors for consideration and approval. Audit Committee has a role in determining the supervisory guidelines for the operation to comply with measures of related authorities as well as assessing the effectiveness and competency of the risk management process and internal control system.
THE COMMITTEES AT THE OPERATIONAL LEVEL:
Asset and Liability Management Committee plays a role in supervising the structure of the Bank’s assets and liabilities to be appropriate for characteristics of the business and in line with the Bank’s risk management policy. Investment Committee plays a role in supervising investment in financial instruments of TBANK to be in line with the Bank’s market risk management policy. 55
ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED