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Foreign exchange risk

Foreign exchange risk is the current or prospective risk to earnings and capital that arises from adverse movements in foreign exchange rates. Triodos Bank’s base currency is the Euro. The UK Branch balance sheet and profit and loss are denominated in GBP. Exchange rate differences arising on retranslation the UK Branch balance sheet are accounted for as a hedge of a net investment in a foreign business unit and are taken directly to shareholders’ equity, in the statutory reserve for conversion differences, insofar as the hedge is effective.

Triodos Bank aims to avoid net currency positions, with the exception of those arising from strategic investments. The term positions in foreign currencies reflect mainly the currency derivatives for Triodos Investment Funds which are nearly fully hedged.

The foreign exchange risk is monitored daily and discussed in the Asset and Liability Committee on a monthly basis. Limits are agreed by the Executive Board based on a proposal made by the Asset and Liability Committee.

Foreign currency position

The following table shows Triodos Bank’s foreign currency position in thousands of EUR as at 31 December.

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2012
Amounts in thousands of EUR

Cash position
Debit

Cash position
Credit

Term position
Debit

Term position
Credit

Net position
Debit

Net position
Credit

 

 

 

 

 

 

 

GBP

708,364

707,794

570

USD

5,581

259

214,740

214,727

5,335

NOK

136

136

PEN

12,115

12,115

ZAR

926

926

AUD

801

551

250

ARS

290

290

SEK

52

52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

714,934

708,053

228,071

228,609

6,343

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net open foreign currency position (total of net positions debit and credit): 6,343

 

 

 

 

 

 

 

2011
Amounts in thousands of EUR

Cash position
Debit

Cash position
Credit

Term position
Debit

Term position
Credit

Net position
Debit

Net position
Credit

 

 

 

 

 

 

 

GBP

552,479

552,438

41

USD

4,372

334

192,547

192,573

4,012

MXN

877

877

NOK

129

129

KES

2,198

2,198

PEN

11,329

11,329

ZAR

718

718

DKK

1

1

AUD

808

550

258

ARS

337

337

SEK

48

48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

557,837

552,772

208,006

208,582

4,489

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net open foreign currency position (total of net positions debit and credit): 4,489