Letno poročilo 2007 - UniCredit Banka Slovenija dd

Risk ReportRisk ReportFair Value of Financial Assetsand LiabilitiesFinancial instruments measured at fair valueusing a valuation techniqueThe total amount of the change in fair value estimated using avaluation technique that was recognized in profit and loss during theperiod is 239,156 euros (2006: 464,187 euros). The Bank calculatesfor all OTC traded instruments, valuations which are based on currentmarket data available from independent market data providers,whereas the models behind are state of the art and embedded in thetrading systems Wall Street and Opus.Financial instruments not measured at fairvalueUniCredit Banka Slovenija d.d. measures all bonds and investmentsat fair value. The fair value of floating rate placements such asEURIBOR or LIBOR linked loans is the carrying amount. The Bankhas granted only a minor amount of fixed rate loans and deems thedifference of fair value and carrying amount as immaterial.continuously by the Bank’s management and filed with the Bank ofSlovenia on a quarterly basis.The Bank of Slovenia requires each bank to maintain a ratio of totalregulatory capital to the risk weighted asset (the capital adequacyratio) at or above the internationally agreed minimum of 8 %.In order not to violate the 8 % ratio, UniCredit Banka Slovenija d.d.underwent, in line with legislation, an interim audit on the ninemonthresult and allocated the interim profit based on an unqualifiedopinion to the eligible capital.The table below summarizes the composition of the regulatorycapital and the capital adequacy ratio for the years ending31 December 2007 and 2006.Capital ManagementUniCredit Banka Slovenija d.d. focuses within the Internal CapitalAdequacy Assessment Process (ICAAP) on the economic view ofmatching the economic capital (capital demand) with the risk-takingcapacity (shareholder’s equity) in line with Pillar II of the new Baselaccord.The economic capital gets calculated retrospectively on a quarterlybasis but also gets monitored within the yearly planning process.As both capital demand and capital supply evolve over time, theBank ensures that, on one side, capital demand mainly driven bybusiness plans and by risk-profile forecasts in combination withmacro-economic scenarios does not exceed capital supply, andon the other side, that capital supply mainly influenced by plannedcapital transactions and expected profits is kept at a level to coverthe calculated risks at all times.Simultaneously, the Bank has to consider the regulatory view. Here,the regulatory capital for credit risk, market risk, and in the future,under Basel II, also for operational risk, accounts for the capitaldemand, while balance-sheet capital (Tier1, Tier 2 and Tier 3)constitutes the capital supply side. Capital adequacy is monitored196 2007 Annual Report · UniCredit Bank