Scotiabank

2) Risk Management in the Bank

a) Liquidity Management

i) Policy-

Scotiabank believes liquidity risk is crucial in maintaining the confidence of the depositors and counter parties. This risk is managed within the framework of policies and limits that are approved by the Board of Directors. The Board has regular reports on risk exposures and risk performance against approved limits. The Liability Committe provides their senior management an oversight of the current liquidity risk and meets weekly to review the Bank’s liquidity profile.

The framework used to manage Scotiabank liquidity risk is

· Set limits to control the key elements of risk

· Measure and forecast cash commitments

· Diversify funding sources

· Maintain appropriate holdings of liquid assets

· Conduct regular liquidity crisis stress testing

· Maintain contingency plans that can be activated to facilitate managing liquidity risk through a disruption

ii) Strategies

The Bank of Nova Scotia maintains large holdings of liquid assets to support its operations. These assets are available to be sold or pledged to meet the Bank’s obligations. The Bank relies on a broad range of funding sources. The main source of funding being capital, deposits drawn from retail and commercial clients domestic and international as well as wholesale funding. The bank does not