Annual Report 2010 03 August 2011 - Banka Qendrore e ...

CBK
Annual Report 2010
27.12 percent of assets of total portfolio have been invested in central banks of Euro-zone
countries, 53.50 percent of assets in commercial banks of the Euro-zone countries whereas
in securities have been invested 19.38 percent of total assets, where according to the
Investment Policy this exposure is allowed up to 70 percent. Furthermore, in relation to the
Investment Policy, the combined exposure in commercial banks did not exceed 60 percent of
the total CBK investment portfolio.
Average interest rates given by banks, which CBK cooperates with, are characterized by a
positive change in second half of the year, namely from the seventh month up to the end of
2010. The first half of the year is characterized by an average interest rate of 0.21 percent
with differences in interest rates.
Investment Risk Management
Risk Management is conducted through the monthly evaluation of the banks, which CBK
cooperates with. All investment activities take place with banks fulfilling the criteria
envisaged in the Investment Policy. Despite the financial crisis, continuous assessments on
financial sustainability conducted by International Financial Agencies revealed that all
banks, which CBK cooperates with, do fulfill the criteria of the Investment Policy under the
main evaluation categories Aa.
CBK invested assets within the instruments of the cash market. During 2010, special
attention was dedicated to the risk distribution, where the highest concentration of
invested assets was in central banks of the European Union countries with a maturity up to
one year. According to the CBK Investment Policy, the credit risk is managed through
proportional distribution, based on evaluations done by international financial agencies.
According to evaluations carried on banks, which CBK cooperates with, banks which fail to
fulfill the risk classification criteria have been removed from the approved list. No
investment has been carried out with banks, which CBK cooperates with, without the
Investment Committee consideration, review and approval, which meets on regular
monthly basis. Determination of investment limits for each bank, which CBK cooperates
with, and for the country where it is invested is strictly limited. Risk analysis and auditing
of asset management functions are conducted on regular basis.
The accepted deposits by the CBK were paid on the basis of the CBK Interest Rate.
According to this Policy the return from investments achieved by CBK is on average the
minimum of provided interest rates, where the CBK keeps a difference which contributes to
the return from its investments.
Developments in global financial
market
Public debt crisis that
overwhelmed EU in the second
quarter of 2010 created conditions
for funds to be concentrated in
short-term investments in money
market.
A considerable growth in returns
from investments in short-term
and long-term securities was
recorded in European countries
under turbulence, such as Ireland,
Figure 71.EONIA motion throughout the yeart
EONIA
1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
01-10
02-10
03-10
04-10
05-10
06-10
07-10
08-10
09-10
10-10
11-10
Source: CBK (2011)
12-10
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