LM-6.2.1

Banks must specify in their liquidity risk management strategy the treatment of intragroup liquidity, and assumptions on intragroup dependencies for the purposes of making cash flow projections.

LM-6.2.2

In assessing funding needs (especially under stressed situations), banks should account for any funding or liquidity commitment provided to group entities (e.g. in the form of explicit guarantees or funding lines to be drawn in times of need) and prepare for any withdrawal of funding provided by group entities. Banks should also analyse how the liquidity positions of group entities may affect their own liquidity, either through direct financial impact or through contagion when those entities encounter liquidity strain. Where there is reliance on funding support from group entities, banks should take steps to identify the existence of and take into account any legal, regulatory or other limitations that may restrict their access to liquidity from those entities in case of need.

LM-6.2.3

A bank that has entered into 'back-to-back' transactions⁵ with its group entities must exclude such transactions from cash flow or liquidity calculations, as such transactions usually involve no actual movement of funds and, as such, cannot effectively improve the bank's liquidity.

⁵ These transactions refer to interoffice or intragroup transactions which typically involve two legs, one borrowing long (say, with maturity of more than 1 month) and the other lending short (say, with maturity of 1 month or less). Both legs are for the same or similar amount and at the same or similar rate of interest, and are, in most cases, rolled forward continuously.