Liquidity Contingency Funding Plan Workshop

The risk that a bank may not have enough liquid assets to meet its obligations.

A plan to ensure a bank has enough funds during an emergency.

A committee responsible for overseeing liquidity risk management.

A committee that oversees liquidity risk management.

The ability of a plan to function effectively in emergency situations.

Communication that arrives on time with accurate information to facilitate swift decisions.

Clearly defining roles and responsibilities for handling a liquidity crisis.

The minimum number of members required to be present for a meeting to be valid.

A period of high subprime mortgage lending, leading to significant financial issues in the housing market.

The collapse of Washington Mutual (WaMu), a major US savings and loan association, largely due to risky lending and the subprime mortgage crisis.

The Federal Deposit Insurance Corporation (FDIC) took control of WaMu and sold its assets to another bank for a substantial amount.

WaMu's stock price reached a high point before its collapse, driven by aggressive expansion in mortgage lending.

WaMu's collection of mortgages. A significant portion was in subprime mortgages, contributing to its problems.

A US-based bank which experienced a major liquidity crisis in 2023.

Risk associated with holding a significant portion of assets or liabilities in a single area or industry.

Large deposits from corporations or institutions, often with specific conditions.

Deposits not fully covered by deposit insurance.

Financial assets whose value is built off of other assets.

The rate charged for borrowing money or earned on savings.

Value of debt securities.

A plan to handle unexpected liquidity issues within a financial institution.

The rate at which a company spends cash.

A US bank that experienced a significant liquidity crisis in 2008.

A situation where a bank doesn't have enough liquid assets (easily convertible to cash) to meet its short-term obligations.

The Bank Negara Malaysia (BNM) sets guidelines for managing liquidity risk, including requirements for liquidity coverage ratios (LCR) and net stable funding ratios (NSFR).

International guidelines that set minimum liquidity requirements for banks, promoting financial resilience and stability.

These sources provide a cushion against unexpected market changes, prevent liquidity crunches, and enhance trust among stakeholders.

Unexpected deposit withdrawals caused by factors like interest rate changes, rumors, or negative media coverage can create a liquidity crisis, as the bank may not have enough cash to meet its obligations.

LCFP stands for Liquidity Contingency Funding Plan. It's a bank's emergency plan to address liquidity issues during a crisis, like when there are unexpected withdrawals.

LCR stands for Liquidity Coverage Ratio. It's a measure of a bank's ability to meet its short-term obligations for a month using high-quality liquid assets.

When a bank's LCR hits crisis alert limit, it means the bank is struggling to meet its short-term obligations and may need to activate its contingency plans to address the situation.

A communication action plan should clearly explain the situation to customers and stakeholders, reassure them about the bank's financial stability, and address concerns or rumors effectively.

A set of strategies a bank uses to overcome a shortage of funds. It includes actions to obtain funding, manage cash flow, and minimize the impact on operations.

The Liquidity Management Committee is responsible for deciding which strategies to execute during a liquidity crisis.

During a liquidity crisis, banks can ask customers to reduce their credit line usage to free up funds.

Banks may actively collect debts to increase cash flow during a liquidity crisis.

Banks may limit ATM access during a liquidity crisis to manage cash withdrawals.

The Liquidity Contingency Funding Plan (LCFP) process helps a bank obtain funding during an emergency.

The Chief Business Banking Officer (CBBO) is involved in developing strategies for mitigating liquidity crises and overseeing the approval of new financing.

The Chief Collection & Recovery Officer (CCRO) is responsible for ensuring cash inflow during a liquidity crisis by enforcing stricter collection processes.