DBS BANK CHINA LIMITED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2012 All amounts expressed in Rmb unless otherwise stated
[English translation for reference only]
47
48 FINANCIAL RISK MANAGEMENT continued
48.2 Credit risk continued B
Risk limit control and mitigation policies
The Bank manages limits and controls concentrations of credit risk wherever they are identified in particular, to individual counterparties and groups.
The Bank structures the levels of credit risk it undertakes by placing limits on the amount of risks accepted in relation to single borrower and groups of borrowers. Such risks are
monitored on a revolving basis and subject to an annual or more frequent review, where necessary.
Exposures to credit risk is also managed through regular analysis of the ability of borrowers and potential borrowers to meet interest and principal repayment obligations and by
changing these lending limits where appropriate.
Some other specific control and mitigation measures are outlined below: i
Collateral The Bank employs a range of policies and practices to mitigate credit risk. The most
traditional of these is the taking of collateral, which is common practice. The Bank implements guidelines on the acceptability of specific classes of collateral. The principal
types of collateral for loans and advances are:
Mortgages over residential and commercial properties; Charges over business assets such as premises, equipment, inventory and
accounts receivable; Charges over financial instruments such as debt securities and equities;
Cash deposits. Value of collateral is usually assessed by professional valuer designated by the Bank. To
mitigate the credit risk, the Bank sets limit on the loan-to-value ratio for different types of collateral. The principal types of collateral for corporate loans and retail loans are as
follows:
Collateral Maximum loan-to-value ratio
Time deposit non-matching currency 90
PRC treasury bonds 90
PRC financial institution bonds 80
Local real estate and land use rights 70
The Bank will evaluate the financial condition, credit history and ability to meet obligations of the guarantor on regular basis.
DBS BANK CHINA LIMITED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2012 All amounts expressed in Rmb unless otherwise stated
[English translation for reference only]
48
48 FINANCIAL RISK MANAGEMENT continued
48.2 Credit risk continued B
