VKF_FRAE_2017

69 VakıfBank Annual Report 2017 Treasury Control and Reporting Module redesigned a Middle Office Management infrastructure and to integrate it to the other treasury systems in use, was completed. Through a series of system upgrades, the Bank can keep instant track of risks arising from Treasury transactions. VakıfBank constituted the systemic infrastructure necessary for to control, monitoring and reporting of treasury transactions, as a result of The Treasury Reporting and Middle Office Department which had operated under the Risk Management Department from 2014 until August 2017. The Bank has thus achieved a control, warning and reporting infrastructure with a high technical level, in keeping with its internal systems. The notion of independence has been organized in a systematic manner in the activities carried out within the workspace shared with the relevant departments over the designed infrastructure. Upon the approval of the Audit Committee and the decision of the Board of Directors, Treasury Control and Reporting Module redesigned a Middle Office Management infrastructure and to integrate it to the other treasury systems in use, was completed, as of August 2017. The Treasury Management Middle Office Department is in charge of organizing and management of Treasury systems, controlling the compliance of all Treasury limits and transactions with market prices within the limits set by the Board of Directors, system entrance controls of Treasury transactions, their secondary approvals, end-of-day assessments of Treasury transactions, senior management reports on collateral management and Treasury transactions, and provides controls, efficiency and productivity in these areas. »» REAL-TIME MONITORING ACTIVITIES WITH TOP LEVEL TECHNOLOGICAL COMPETENCE Treasury Department Bank Limit Monitoring System (KGR) enables the monitoring of compliance with the limits for the banks that the Head of Treasury is authorized by the Board of Directors to deal with. In the mentioned system, the limits determined as “Credit Limits” and “Reconciliation Limits” are monitored on real-time basis, and treasury users provided with the option to learn the limits before making any transaction with the banks. Furthermore, within the scope of Collateral Management, the daily values according to market prices of the derivative collaterals at the banks are calculated over the Treasury Control and Reporting Module. Depending on their results, the collaterals sent to counterparty banks that are added to the limits of the relevant banks as risk through the Treasury Department Bank Limit Monitoring System. Warning signals have been developed within the system in order not to exceed the limits, and when necessary, system reports on (Warning Report Before Exceeding Limits and Report on Exceeded Limits) are shared instantly with users. Treasury Control and Reporting Module designed to provide a Middle Office Management infrastructure and to integrate it to the other treasury systems in use, was largely completed and commissioned. The project will be fully complete in 2018. Treasury Control and Reporting Module has four functions, namely, the Treasury Valuation Module which reports the daily values of treasury portfolios according to market prices; the Limit Management System Module which monitors compliance with the Board of Directors’ limit decisions; the Market Control Module which checks whether transaction prices differ from market prices; “Treasury Profit/Loss Module” which reports the daily, monthly and yearly funded profit/loss ratios of transactions. The Kondor Upgrade Project was initiated to install at the Bank the latest version of the Treasury Software “Kondor (K+), Kondor Global Risk, K+TP” system, which is used for the entrance, approval, registration and bookkeeping of Treasury transactions. The plan is to complete and commission the system before the end of 2018. In addition, the results of the efforts for monitoring and controlling the foreign exchange position and the position limits for Treasury transactions are discussed in the In-House Committees named “Treasury Foreign Exchange Position and Stop-Loss Limits Management Committee” and “Exchange Rate Committee”, and essential action is taken when necessary. The activity reports submitted to the Audit Committee in six monthly periods provide information to committee members about the results of the controls on treasury transactions and the actions taken. TREASURY MANAGEMENT MIDDLE OFFICE OPERATIONS