What does Compliance mean?
Compliance is the act of fulfilling, complying with, and independently enforcing and implementing laws, regulations, self-regulations, internal standards, policies and procedures, in order to mitigate risks related to the Institution’s activities.
Grupo Rendimento has policies and methodologies duly set and incorporated into risk management infrastructure, aiming both to strengthen this framework as an effective corporate governance pillar, as well as creating a Compliance environment throughout the Group.
She following items are goals of the Risk Management and Compliance Area:
Also, in this context, we detail below a brief report on Risk Management, Compliance and Prevention of Money Laundering and Combating Terrorist Financing, conducted by Banco Rendimento and Group companies for everyone’s knowledge, including our employees.
Goals of Prevention of Money Laundering Department:
In compliance with Circulars 3,461 and 3,654, published by Central Bank of Brazil on July 24th, 2009 and March 27th, 2013, respectively, Grupo Rendimento applies its best efforts in preventing and combating money laundering and terrorist financing, to ensure that its activities are conducted in healthy environments.
Internal Controls, Risks and Corporate Governance
Grupo Rendimento maintains a Corporate Governance, Internal Controls and Risks structure, covering the Areas of Compliance, Internal Audit, Operational Risks, Market, Liquidity, Credit and Money Laundering Prevention procedures, in full adherence to Central Bank of Brazil requirements.
The Internal Controls structure, in accordance with requirements established by CMN Resolution 2,554/98, is composed of Compliance, Risks, Information Security and Internal Auditing areas and reports directly to the Organization’s Senior Management, thus, there is a greater effectiveness and efficiency in preventive and precautionary actions.
Risk management at Grupo Rendimento is in compliance with legal provisions and internal regulations, with its own independent structure, separated from areas committed to results, involving an integrated set of internal controls and actions to mitigate potential losses in credit, term and currency mismatch in its operations and resulting from liquidity management.
This management tool is essential to optimize the use of capital and select the best business opportunities, as well as obtain the best Risk/Reward ratio for its shareholders. Periodically meetings are held, through specific committees, responsible for disclosure of general policies, focusing on greater management efficiency and consolidated risk assessment.
Operational risk management is performed through specific policies, implemented by the Risk and Compliance Area, which define the parameters to be followed by business areas that are monitored independently.
I – Market Risk
Risk associated with the probability that fluctuation in the value of assets and liabilities, caused by uncertainties regarding changes in prices and market rates, will generate losses for the institution.
According to CMN Resolution 3,464/07, we have established a structure for market risk management, responsible for performing daily activities focused on measurement, assessment and reporting of exposures, in order to provide subsidies for monitoring by the Risk Committee and compliance with the regulatory agency.
The risk control process begins by setting limits, approved by the Risk Committee, responsible for market risk management, based on defined policies and the financial capacity of each Group company.
The market risk management and control model is subject to periodic reviews, ensuring it remains in line with good market practices and adherent to the continuous improvement processes used by Grupo Rendimento.
For daily monitoring of market risk, we use VaR* instruments, stress tests, DV01, as well as systematic analyzes to monitor the variations of active and passive strategies with timely information to the involved areas.
*It is a statistical measure that estimates the maximum expected loss under normal market conditions, considering a set time frame and confidence interval.
II – Credit Risk
It is the possibility of losses associated with non-compliance, by the borrower or counterparty, of their respective financial obligations under the agreed terms.
Credit risk management at Banco Rendimento is performed in accordance with CMN Resolution 3,721, and its objective is to maximize the risk/reward ratio of its assets, maintaining the quality of its credit portfolio at levels appropriate to the market segments where it is operating. The strategy is focused on creating value for its shareholders at levels above a minimum reward value adjusted for risks.
Banco Rendimento establishes its credit policy based on internal factors (customer classification criteria, analysis of portfolio evolution, registered default levels, reward rates, portfolio quality and allocated economic capital) and external factors related to the economic outlook in Brazil and abroad, including interest rates, indicators of market default, inflation, consumption increase/reduction.
The process of decision-making and setting the credit policy of Banco Rendimento ensures synchronizing credit actions and optimization of business opportunities. For granting credit, both in the retail and wholesale market, decisions are adopted through an approval hierarchy that guarantees detailed assessment of operation risks.
To protect the institution against losses resulting from credit operations, Banco Rendimento determines the level of provisions appropriate to the risk incurred in each operation, through analyzes that take into account determinant aspects of the customer’s credit risk. Each operation considers the assessment and rating of the customer/economic group, operation rating and operation delay conditions.
III – Operational Risk
It is defined as the possibility of losses resulting from failure, deficiency or inadequacy of internal processes, people and systems, or external events.
The increasing sophistication of the banking business environment and technology progress make organizations’ risk profiles more complex, clearly delineating this risk category, whose management requires a specific structure distinct from those applied to credit and market risks.
In line with the principles of CMN Resolution no. 3,380, from 06/29/2006, Grupo Rendimento set an operational risk management policy, approved by the Risk Committee, consisting of a set of principles, procedures and instruments that provide a permanent adjustment of this management to the nature and complexity of products, services, activities, processes and systems.
The structure formalized in the policy establishes the procedures for identification, assessment, monitoring, control, mitigation and communication, related to operational risk, as well as roles and responsibilities of the areas included in this structure.
The organizational structure defined and constituted for managing operational risks is contemplated in Grupo Rendimento’s Internal Regulation, separated in the following hierarchical levels: officers, sub-officers and local officers, with the purpose of decentralizing management and the process of registering occurrences, as well as accurately obtaining information on potential losses, which may be evidenced in the monthly balance sheet.
IV – Liquidity Risk
It is the risk that the institution does not have enough liquid reserves to honor its financial commitments, due to term or volume mismatch between expected receivables and payments.
In accordance with CMN Resolution 4,090/12, and as part of daily controls, minimum cash and liability concentration limits are established, which enable prior actions to be taken to ensure comfortable cash flow levels.
Based on these controls, active and passive flows are analyzed through an internal model, set by policy, which aims to identify the degree of credit leverage, based on Reference Equity, and establish the liquidity margin or insufficiency.
V – Capital Management Structure
According to CMN Resolution 3,988, Grupo Rendimento maintains a structure for the assessment and monitoring of capital requirement necessary to hedge risks, including the projection of the Basel index for three-year periods, with the forecast of financial sources to maintain comfortable capital levels, above the minimum required by regulatory authorities. The organization’s full strategy is described in the Triennial Capital Plan approved by the board of directors, which is submitted to an annual review process.
For additional information, please contact the Risk Management, Compliance & PLD area at Grupo Rendimento.
Avenida das Nações Unidas, 8.501 – 10º andar
São Paulo – SP – ZIP Code: 05425-070
Risks, Compliance & PLD Area