BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2020 74 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED Notes to the Consolidated Financial Statements For the year ended March 31, 2020 (Expressed in Barbados dollars) 57 26. Financial Risk Management, continued 26.2 Credit risk Loans and advances The Group employs a range of policies and practices to mitigate credit risk relating to loans and advances. The most traditional of these is the taking of security for funds advanced. The principal collateral types for loans and advances within the Group are: - Mortgages over residential properties - Charges over financial instruments such as debt securities and equities - Charges over business assets such as premises - Hypothecation of deposit balances It is the Group’s policy to dispose of repossessed properties in an orderly fashion. The proceeds are used to reduce or repay the outstanding claims. The Group does not occupy repossessed properties for business use. Financial investments The Group limits its exposure to credit risk by investing only in entities that have high credit ratings and Government of Barbados securities. Government securities are invested over a longer period than term deposits with other financial institutions which typically mature within one year. The Group also invested in FVOCI equity instruments which gives it an opportunity to monitor the performance of these companies over time and make economic decisions where warranted. The Group has documented investment policies in place, which guide the management of credit risk on investments. Assessment of corporate investments (term deposits) The Group currently has $24,017,907 (2019 - $30,892,467) in corporate term deposits. These investments are assessed on an entity level. Currently, these investments are held in the entities which are either regulated or by the Central Bank of Barbados or the Financial Services Commission as per section 34 A of the Co-operative Society Act. Corporate investments are staged based on the following evaluation criteria: 1. Time to maturity 2. Investee ability to make payment once it becomes due (this is based on past relations with the entity together with an evaluation of whether the entity has experienced a decline in its financial ability to make payments).
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