Treasury operations

KBN's conservative risk profile requires that all interest and currency risk from its lending, liquidity and funding operations are fully hedged. Derivatives are used for hedging purposes only. 

KBN maintains a liquidity portfolio of 12 months net cash requirement, including lending growth, which stands at approximately USD 18 billion. This portfolio consists of highly rated deposits, bonds and floating rate notes (FRNs) issued by governments, local and regional governments supranationals, agencies and financial institutions.

The majority of the liquidity is invested in USD and EUR FRN's and bonds. Investments outside of KBN's base currencies of EUR, NOK and USD, are swapped into one of these currencies on a three month floating basis. 

The majority of investments have maturities shorter than 1 year, and the average duration of the liquidity portfolio is around 1.5 years.

All new counterparties and products are subject to approval by the management credit committee.