Prudential Financial Policy Department
are slotted into the relevant time bands according to the period they are expected to mature or be called upon.
Table 1 Maturity buckets for commercial banks and investment banks
Up to 1 week
Up to 3 days
1 week to 1 month
4 days to 1 month
1 to 3 months 3 to 6 months 6 months to 1 year More than 1 year
Investment banks face a slightly different maturity profile ladder in view of the unique nature of equity business they conduct, where short-term cash flows associated with brokerage activities are experienced.
The primary basis for determining the appropriate time bands is the contractual maturity, which is when the cash flows crystallize. Nevertheless, a number of assets and liabilities experience premature upliftments or, conversely, regular rollover characteristics in their normal course of business, thus deviating in reality from their contractual maturity. Adjustments are permitted for these asset and liabilities to reflect instead their “behavioural” maturity.
Behavioural maturity – As a guide to banking institutions, the Bank
recommended treatment to of loans, deposits and undrawn
arrive at the commitments.
Nevertheless, own in-house
banking institutions will be permitted to employ their method (if available) provided they are able to justify
to the Bank To ensure
that their method provides a more accurate alternative. that due diligence is applied to the projection of
behavioural maturity, Bank Negara Malaysia will require that method and assumptions employed by the banking institution