On March 16, the Superintendency of Finance of Colombia (SFC in Spanish) put out for public consultation a draft external circular related to the Banking Book Interest Rate Risk (RTILB in Spanish). The initiative proposes to incorporate instructions for banking entities to adopt specific procedures for the identification, measurement, monitoring and control of RTILB in their daily operations. To access the annexes of the bill, please click on the following link. Comments may be sent until April 5 via e-mail to [email protected].
Through the draft circular, the Superintendency of Finance proposes to incorporate to the Integral Risk Management System (SIAR in Spanish) rules for the management of interest rate risk in the banking book, understood as the current or prospective risk to the entity’s capital and profits arising from adverse movements in interest rates affecting positions in the banking book. The amendments take into account the recommendations of the Basel Committee on Banking Supervision (BCBS in Spanish) regarding the management and supervision of this type of risk.
The first annex proposes that the entities supervised by the SFC that consolidate financial statements and that have as subordinates other financial entities adopt measures to define, collect and process data on all the risks to which they are exposed in order to present reports that allow them to evaluate their performance based on their risk appetite framework. As a complement, the second annex modifies the standard methodology for determining the interest rate risk of the banking book, both in the Economic Value of Equity (EVA in Spanish) and in the Net Interest Margin (NIM in Spanish).