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ARMAGH CREDIT UNION

Liquidity Policy
This policy was adopted by the Board of Directors of Armagh Credit Union Limited. Liquidity Policy

Signed:Bridie Ryan Position Chairperson

Richard Smyth

Position

Treasurer

Date:

Armagh Credit Union is authorized and regulated by the Financial Conduct Authority and Prudential Regulation Authority: Registration Number 573925: Version Dec2015


ARMAGH CREDIT UNION

Liquidity Risk Liquidity risk is defined as the risk that a credit union (though solvent) either does not have available sufficient financial resources to enable it to meet its obligations as they fall due, or can only secure such resources at excessive cost. Because credit unions operate with a maturity mismatch (short-term savings and comparatively long-term loans), we are potentially vulnerable to liquidity risk and all of the negative connotations associated with it, especially the effect of member confidence. Policy Objective Armagh Credit Union's objective is to ensure that at all times we have sufficient liquid funds to meet our day to day obligations and also to maintain additional liquidity to meet potential obligations such as an unexpected increased demand for savings withdrawals or loans. Policy Statement Armagh Credit Union will always hold liquid assets of a value at least equal to 10% of total relevant liabilities. Total relevant liabilities are defined by us as Unattached Shares plus Minor 's Deposits plus Creditors plus Short Term Loans. Liquid assets are assets that can be realised for cash within eight days. For the purposes of meeting this requirement, liquid assets are valued at the amount for which they could be realised within eight days. Definition of Liquid Assets To achieve our policy objectives, we hold the required amount in a combination of cash, current account and short-term deposits (maximum maturity of one week). A further 5% of total relevant liabilities are held in short-term deposits with a maturity of not more than three months. Unattached shares are shares held by members in excess of those shares being held as security against any loans they may have. Monitoring of Liquidity Requirements In addition to the above requirements, the Board of Directors monitors the overall liquidity position of the credit union with a view to ensuring that we have sufficient liquidity to deal with known increased demands for fund. The Board does this by analysing the cash flow statement on a month by month basis to identify trends in cash movements and using the results to generate a forecast of future supply and demand. Policy Review This policy is formally reviewed on a regular basis.

Armagh Credit Union is authorized and regulated by the Financial Conduct Authority and Prudential Regulation Authority: Registration Number 573925: Version Dec2015