(EU) Disclosure in Accordance with Part 8 of Regulation No. 575/2013 (CRR) - Western Union
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Disclosure in Accordance with Part 8 of Regulation
(EU)
No. 575/2013 (CRR)
of Western Union International Bank GmbHTable of Contents About this document .............................................................................................................................................3 1. General information about Western Union International Bank GmbH............................................................3 2. Risk management objectives and policy (Art. 435 CRR)....................................................................................4 3. Scope (Art. 436) ...............................................................................................................................................14 4. Own funds (Art. 437 CRR) ................................................................................................................................15 5. Own funds requirements (Art. 438 CRR) .........................................................................................................18 6. Counterparty credit risk (Art. 439 CRR) ...........................................................................................................20 7. Capital buffers (Art. 440 CRR) ..........................................................................................................................22 8. Indicators of global systemic importance (Art. 441 CRR) ................................................................................23 9. Credit risk adjustments (Art. 442 CRR) ............................................................................................................23 10. Unencumbered assets (Art. 443 CRR) ...........................................................................................................30 11. Use of External Credit Assessment Institutions (ECAIs) (Art. 444 CRR) ........................................................30 12. Market risk (Art. 445 CRR) .............................................................................................................................32 13. Operational risk (Art. 446 CRR) ......................................................................................................................32 14. Exposures in equities not included in the trading book (Art. 447 CRR) ........................................................33 15. Exposure to interest rate risk on positions not included in the trading book (Art. 448 CRR).......................33 16. Exposure to securitisation positions (Art. 449 CRR) ......................................................................................33 17. Remuneration policy (Art. 450 CRR) ..............................................................................................................33 18. Leverage ratio (Art. 451 CRR) ........................................................................................................................36 19. Use of the IRB approach to credit risks (Art. 452 CRR)..................................................................................37 20. Use of credit risk mitigation techniques (Art. 453 CRR) ................................................................................37 21. Use of Advanced Measurement Approaches to operational risk (Art. 454 CRR) .........................................39 22. Use of Internal Market Risk Models (Art. 455 CRR) ......................................................................................39
About this document
In accordance with Part 8 of Regulation (EU) No. 575/2013 (Capital Requirements Regulation – CRR), institutions
within the meaning of Art. 4 (3) CRR are required to fulfil increased information duties in relation to their organisa-
tional structure, their risk management and their risk capital situation within the scope of their external reporting.
With Part 8 of the CRR, the third pillar of Basel II (“Market Discipline”) was implemented in Europe. The CRR applies
directly and uniformly in all Member States of the European Economic Area (EEA) as an EU Regulation and requires
no implementation in national law. In addition to Part 8 of the CRR, all implementing regulations of the European
Commission and guidelines of the European Banking Authority (EBA) have been taken into consideration in the
preparation of this document.
Western Union International Bank GmbH is fulfilling these information duties at the consolidated level of the credit
institution group with this document, which is available on the website www.westernunionbank.com. Unless stated
otherwise, all data refer to 30 June, 2018 and to the credit institution group of Western Union International Bank
GmbH.
The structure of this document follows the structure from Part 8 of the CRR.
1. General information about Western Union International Bank GmbH
Western Union International Bank GmbH (WUIB), with its registered office in Vienna and its business address at
Schubertring 11, 1010 Vienna, registered with the commercial register under no. 256184 t, was founded in 2004
and is a wholly-owned indirect subsidiary of The Western Union Company, which is listed on the New York Stock
Exchange (NYSE: WU) and is the leading service provider for money transfer globally.
WUIB engages in the following business areas:
Money transfer business (private and corporate clients):
WUIB engages in the money transfer business in its own branches in Austria, Germany and France, through branches
of sales partners (agents) in Austria, France, Great Britain, Poland, Bulgaria and Romania, as well as through an In-
ternet platform (www.westernunion.com) in virtually all countries in the European Economic Area. WUIB discontin-
ued the Bulgarian money transfer business via agents by end of March 2018, transferring assets to a WU-Group
subsidiary.
At present, WUIB offers the following products:
• Cash transfer (Cash-to-Cash Money Transfer): This is the standard product, which is sold via WUIB branches
or via the branches of agents by the sender and recipient of the cash transfer. The conclusion of the contract
takes place by order placement and paying-in of the amount to be transferred and the service fees by the
sender. The sender specifies the recipient and the country in which the cash transfer shall be disbursed. This
disbursement takes place in cash to the recipient, whose identity is verified by presenting a valid identification
document. Alternatively, disbursement can be made to a (bank) account.
• Online money transfer: This product version allows the sender to send funds from a credit card and/or from
an online bank account via an Internet platform of Western Union (www.westernunion.com) or via the online
banking platform of specific banks. As with the standard product, the sender specifies the recipient and the
country in which the money transfer shall be disbursed. The disbursement takes place in cash to the recipient.
Alternatively, the disbursement can be made to a (bank) account.
3• Money transfer for corporate clients (QuickPay/QuickCash): The first product version in the corporate client
area (QuickPay) enables private individuals to pay amounts directly to a company, which is in a contractual
relationship with WUIB, for the payment of invoices. The processing takes place by the private individual
handing over the amount to a branch of WUIB or one of its agents, which subsequently transfers the amount
to the corporate client. The second product version in the corporate client area (QuickCash) enables corpo-
rate clients to send monetary amounts worldwide swiftly via the Western Union money transfer system to
private individuals (for example, as “Emergency Cash”). The recipient may collect the money transfer from a
Western Union agent. The corporate client subsequently transfers the owed monetary amounts to WUIB.
The business activities of WUIB in the field of money transfer business are completed by banking business
activities around deposit, giro and credit business with a view to the WUIB agents. For example, the receiva-
bles and liabilities, which arise within the scope of the money transfer business vis-à-vis agents are settled via
accounts of WUIB. On a case-by-case basis, WUIB also grants loans to agents with a requirement for a short-
term loan.
• Foreign currency solutions for corporate clients (Business Solutions): WUIB offers foreign currency solutions with FX
hedging instruments in the form of FX forwards for corporate clients in Great Britain, France, Austria, Germany,
Belgium, Italy, the Czech Republic and Poland, as well as FX options for corporate clients in the Great Britain, Austria,
Germany, France, Italy, Belgium and the Czech Republic.
This business division primarily aims at small and medium-sized enterprises (SMEs) and occasionally other corpo-
rates in import and export business with the need for foreign currency payments. For example, if an importer of
specific goods must make a payment in foreign currency, he can process the payment service, as well as the required
foreign currency transaction (FX spot, for example) via WUIB. Furthermore, if a date of payment is agreed and if
there is need for hedging the foreign currency movements, in addition to the payment service, WUIB also offers
clients foreign currency hedging instruments, such as FX forwards and FX options.
The foreign currency solutions in the corporate client division are combined with other banking business activities.
Therefore, in the corporate client division, in addition to the payment service, WUIB offers a wide range of banking
business activities, such as the deposit business or trading in financial instruments. The granting of loans is also part
of the business strategy to supplement the services for corporate clients in import and export business. In this area,
trade credit and settlement credit products are covering the need for short-term financing.
In addition, WUIB offers money exchange business in the WUIB branches in Austria, Germany and France.
2. Risk management objectives and policy (Art. 435 CRR)
2.1. Risk management objectives and policies (Art. 435 (1) letter a CRR)
On the one hand, the risk strategy of WUIB refers to Section 39a BWG [Austrian Banking Act] and on the other hand
to the specifics of WUIB (e.g. the business strategy or organisational structure).
With its risk policy, WUIB follows the general goal of increasing the risk awareness of all employees, in order to
identify all banking business risks and banking operational risks at an early stage, control such risks and align all
bank’s activities in a risk-oriented manner.
Within the scope of its annual risk identification process, WUIB defines all banking business and banking opera-
tional risks, reviews their applicability with respect to the business model operated by WUIB and analyses their
materiality for WUIB within the scope of a risk assessment. Based on the result of this analysis, the management
4and limitation of risk categories is defined.
The risk management system of WUIB comprises all banking business and banking operational risks. The manage-
ment of the risks is integrated into the comprehensive procedure of overall bank management in an appropriate
manner, by taking account of the various risk types, as follows:
Credit risk:
The credit risk is the risk of a contracting party failing to fulfil its payment obligations at all or on time. To secure the
payment obligations, WUIB accepts bank guarantees, letters of comfort and cash collateral. The credit risk is ad-
dressed by detailed and regular creditworthiness checks (balance sheet analyses, valuation of the collateral, assess-
ment of the business models and industries, internal rating etc.), requesting of collateral and the management and
monitoring of limits/warning limits.
Market risk:
The market risk comprises the price, currency and interest rate risk. Due to WUIB’s business model, these risks play
a subordinated role:
- WUIB does not have any trading book activities and therefore does not exceed the limits of Art 94 CRR for
the application of the relevant exceptions.
- Around foreign currency solutions for corporate clients, the contracted option and forward transactions
with customers are secured simultaneously and congruently with a hedging counterparty, which is part of
the Western Union Group.
- The interest rate risk is limited by linking the loan interest to interest rate indices (as a rule, EURIBOR/LI-
BOR), as well as limiting the maturities of term investments.
Risks from the banking book, i.e. interest change risk and the credit-spread risk, are calculated separately and
recorded under pillar 2, as well as being allocated internal limits/warning limits.
Liquidity risk:
The liquidity risk is the risk that WUIB will not be able to fulfil present or future payment obligations completely or
not on time due to a lack of corresponding liquidity (available funds). Through internal settlement systems in the
areas of money transfer, foreign currency payments and nostro account management, the available liquidity and a
possible liquidity requirement can be shown and the liquidity requirements are known. The investments of WUIB
are also aligned towards the requirement for availability of a large part of the liquidity at short notice. For the cov-
erage of additional liquidity requirements, bank credit facilities and a liquidity emergency line provided by another
company in the Western Union Group are set up.
Operational risk:
The operational risk is the risk of losses, which are caused by inadequacy or failure of internal systems or procedures,
due to human error or external events. WUIB classifies operational risks in categories in accordance with BCBS (Basel
Committee for Banking Supervision) Guidelines.
The operational risk potential is addressed within the scope of regular self-assessments, as well as annual risk as-
sessments, the monitoring of early-warning indicators and through the systematic evaluation of the events database
in operational risk. The “Incident Reports” contained therein are reports, which are prepared after each operational
risk event. The events are classified, inter alia, according to business sector, product, department and the potential
5implications for the before mentioned categories. Subsequently, the organisational structure and process organisa-
tion, including the internal rules of conduct and work instructions, are constantly reviewed. If necessary, the internal
rules of policies and operating instructions are revised, and additional measures are implemented for the reduction
or avoidance of operational risks ( Action Plans).
Macroeconomic risk:
The macroeconomic risk is defined as the risk of loss, which results from the sensitivity of WUIB’s business activity
to macroeconomic indicators (e.g. GDP growth, unemployment, etc.). The biggest risk is a persistent recession,
which results in a rise in unemployment and thereby impairs the exposures WUIB has vis-à-vis its clients.
Business risk:
The business risk is the risk of losses from unexpected profit fluctuations, which result from changes to external
general conditions with a given business strategy and cannot be compensated with cost reductions.
Risk of excessive leverage (leverage risk):
The leverage risk means the risk resulting from an institution's vulnerability due to leverage or contingent leverage
that may require unintended corrective measures to its business plan, including distressed selling of assets which
might result in losses or in valuation adjustments to its remaining assets.
2.2. Organisational structure of risk management and monitoring, as well as the scope and nature of the risk
reporting and measurement systems (Art. 435 (1) letter b and c CRR)
The Management Board of WUIB has the joint responsibility for the ICAAP and the ILAAP. It derives the risk policy
principles and the risk strategy from the business strategy of WUIB. The Management Board also makes decisions
about the basic risk management procedures to apply. The Management Board informs the Supervisory Board
about the risk situation of WUIB.
The organisational structure of WUIB is consistently based on a clear and distinct separation between the risk-taking
organisational units in the “market”area (Sales, Marketing, Product Development, etc.) and other - particularly risk-
monitoring organisational units in the “back office” area (Accounting, Risk Management, Operations, Legal, IT, etc.),
in order to avoid conflicts of interest from the very outset. WUIB’s Management Board comprises of three Managing
Directors as of June 30, 2018, whose organisational areas of responsibility are distributed according to this approach,
to the “market” and “back office” area (presently assigned to the CEO and Chief Risk Officer (CRO)).
The Risk Management department (under the management of the Chief Risk Officer, comprised of the “Strategic
Risk Management”, “Credit Underwriting”,“Credit Risk Monitoring and Restructuring” and “Operational Risk and
Outsourcing Oversight” teams) constitutes a dedicated organisational unit. As a risk-monitoring unit, it is completely
independent from the risk-taking business divisions of WUIB and has direct access to the Management Board. The
department reports to the CRO.
The Internal Audit and Compliance departments, which have a risk monitoring function in the wider sense, report
directly to the entire Management Board.
In relation to the strategic management of WUIB, the “Strategic Risk Management” department holds a key role. By
identifying all risks related to the company, their systematic recording, measurement and evaluation, as well as the
implementation of appropriate risk-reducing measures, the “Strategic Risk Management” department makes a sig-
nificant contribution to the achievement of the company’s strategic targets.
6Within the scope of the Risk Committee, reporting takes place on a monthly basis concerning the risk-bearing ca-
pacity of WUIB (ICAAP reporting), within the scope of the ALCO, on a monthly basis, reporting takes place concerning
the liquidity situation of WUIB (ILAAP reporting).
Quarterly, the Supervisory Board receives a full report about the risk-bearing capacity (ICAAP)/liquidity situation
(ILAAP) of WUIB.
For the addition of new business fields, new markets, new client categories or new products, a formalised and struc-
tured product approval process is set up. This ensures that without review and approval by all relevant departments
and the Management Board, no new business fields or new markets are entered, no new products are sold, and no
new customer categories are developed. Subsequently, the product approval process also ensures the correct re-
cording of the innovations concerned around transaction management, risk management, reporting, accounting
and regulatory/statistical reporting.
2.3. Risk policy guidelines of risk management (Art. 435 (1) letter d CRR)
The Management Board specifies the risk management principles and is responsible for their implementation. The
risk management principles, as part of the risk strategy and the risk management processes (procedures) are laid
down in internal policies, operating instructions and process diagrams, which ensures an effective process organi-
sation. The documents referred to are subject to a review at least once per year and are constantly monitored,
whereas the Internal Audit department has an essential function. Furthermore, the employees are trained on a
regular basis in relation to operating instructions and process flows.
2.4. Risk declaration of the Management Board regarding the adequacy of risk management procedures and the
risk profile of WUIB (Art. 435 (1) letters e and f CRR)
Completeness of risk identification is ensured by the annual risk identification process.
A risk management function is set up, which is independent from the operational business and has direct access to
and a reporting duty to the Management Board.
The risk management system and the risk management process of WUIB are appropriately set-up with respect to
the relevance and materiality of the risks and with respect of the complexity of the business model and comply with
the generally applicable standards on risk management according to the regulatory standards (BWG, KI-RMVO, CRR,
CRD IV).
The implemented risk management procedures and processes are subjected to the annually prescribed review. This
review includes
- the complete recording of all banking business and banking operational risks, in consideration of the spe-
cific business model of WUIB
- the adequacy of the strategies and the methods for measurement and limitation of the material risk cate-
gories
- the adequacy of the hedging objectives within the scope of the risk-bearing capacity analysis
- the adequacy of the internal reporting
- the adequacy of the organisational set-up in risk management
The review process is conducted by “Strategic Risk Management” with the involvement of all departments of the
bank, as well as the Management Board. The results are documented in the form of a risk identification report and
communicated to the Management Board and the Supervisory Board.
7To safeguard and monitor the capital adequacy, all significant quantifiable risks are integrated into the risk-bearing
capacity analysis, quantified and compared to the available funds on a monthly basis. Using the defined hedging
objectives for both views of risk-bearing capacity (going concern and gone concern), the risk tolerance is specified
and subject to a monthly review.
The risk tolerance is defined in the gone-concern view and in the going concern view, with consideration of the
results of the monthly stress tests. The risk appetite is defined with respect to the material risks and at the overall
bank level in consideration of a minimum capital buffer, in proportion to the risk tolerance.
The utilisation of the risk limits and the amount of the actual capital buffer are determined and reviewed on a quar-
terly basis using a confidence level of 99.9% in the gone-concern view and with a confidence level of 95% in the
going-concern view.
In 2017 as well as the first six months of 2018, WUIB had a sufficient economic capital base:
As of June 30, 2018, the capital adequacy of WUIB constitutes of:
Value in EUR million Gone-concern view Going-concern view
as of June 30, 2018
Available funds 96,11 59,46
Economic risk exposure 57,37 26,21
Capital buffer 38,74 33,25
Capital buffer in % 40,30 55,92
To check the resilience of the business model and the capital base, stress tests were performed.
The reporting duties to the Supervisory Board were fulfilled in the form of a comprehensive risk report.
8The Management Board and the Supervisory Board have determined that the risk-bearing capacity of the bank ex-
isted at all times in the financial year 2017 and in the first six month of the financial year 2018 and that no risks were
identified, which jeopardised the risk-bearing capacity.
2.5. Management and supervisory functions of the management body (Art. 435 (2) letter a CRR) as at June 30,
2018
Name Function in WUIB Other companies with a management
function
Peter Bucher Chairman of the Management Board 2
Christian Hamberger Member of the Management Board 0
Sandra Simundza-Bil- Member of the Management Board 0
andzic
Wolfgang Fenkart-Frö- Chairman of the Supervisory Board 0
schl
Fedde Tristan van der Member of the Supervisory Board 5
Vijver
Brad Windbigler Member of the Supervisory Board 14
Mary Margaret Henke Member of the Supervisory Board 0
Melahat Lukowitsch Member of the Supervisory Board 0
(employee representative)
Employee
Christian Egger Member of the Supervisory Board 0
(employee representative)
Employee
2.6. Strategy for the selection of members of the management body (Art. 435 (2) letter b CRR)
WUIB has not issued any transferable securities, which are admitted for trading on a regulated market. On the bal-
ance sheet date June 30, 2018 WUIB’s total assets amounted to EUR 514 million. Since the amount is below EUR
1 billion, section 29 BWG for the set-up of a nomination committee is not applicable to WUIB. The Supervisory Board
of WUIB has therefore refrained from setting up a nomination committee. The duties assigned to such a nomination
committee in accordance with Section 29 para. 1 to 3 BWG are therefore correspondingly fulfilled by the entire
Supervisory Board.
The necessary requirements and qualifications for the selection of Management Board Members and Supervisory
Board Members are based on the corresponding legal minimum requirements according to Section 28a (5) BWG,
the EBA Guidelines on the assessment of the suitability of members of the management body and holders of key
9functions, as well as the Fit and Proper Circular of the FMA [Austrian Financial Market Authority]. In accordance with
the bank’s internal Fit and Proper Policy, all Members of the Management Board and the Supervisory Board are
subjected to an appropriate review process prior to being appointed, by a specifically set up “Fit and Proper Com-
mittee”. The ongoing compliance with these requirements is ensured with regularly held training courses and ses-
sions under the responsibility of a Fit and Proper Officer.
2.7. Diversity strategy for the selection of members of the management body (Art. 435 (2) letter c CRR)
WUIB presently has no explicit diversity strategy or target quotas with respect to the gender-specific composition
of the Supervisory Board or the Management Board. The female gender is presently under-represented in both the
Supervisory Board and the Management Board. The quota as of June 30, 2018 for the under-represented gender is
33% in the Supervisory Board and 33% in the Management Board.
2.8. Disclosures on the formation of a separate risk committee (Art. 435 (2) letter d CRR)
Section 39d BWG concerning the set-up of a risk committee is therefore not applicable to WUIB. The Supervisory
Board of WUIB has therefore refrained from setting up a nomination committee. The duties assigned to such a risk
committee in accordance with Section 39d BWG are therefore correspondingly fulfilled by the entire Supervisory
Board.
2.9. Information flow concerning risk-relevant aspects to the management body (Art. 435 (2) letter e CRR)
As of June 30, 2018, WUIB has an independent Risk Management department, which reports directly to the Man-
agement Board (CRO). Furthermore, the following committees are set up within WUIB, within the context of which,
reporting takes place to the Management Board on a regular basis about risk-relevant aspects:
- The Asset and Liability Committee (ALCO) concerns itself with the capital and liquidity position of WUIB.
- The Credit Risk Committee (CRC) is the operational committee with respect to credit-related topics
- The Risk Committee (RC) advises the Management Board on strategic risk management issues, such as the
specification of the bank’s risk appetite.
- The Compliance Committee (CC) provides information, inter alia, about the risk situation in the area of
money laundering and compliance with rules of good conduct for the provision of securities services in the
derivative business solutions.
- The HR Committee (HRC) advises the Management Board, inter alia, on risks of the institution in relation
to remuneration policy issues.
- The Internal Controls and Operational Risk Committee deals with issues from the area of operational risk
and internal controls of the bank.
Reporting takes place to the Supervisory Board on a regular basis about the current risk situation. Furthermore, the
Supervisory Board receives a risk report on a quarterly basis.
2.10. Liquidity risk and liquidity coverage ratio (Art. 435 letter f CRR)
WUIB’s liquidity need is mainly covered by equity capital and intragroup cash flow. As a result, WUIB’s structural
liquidity risk is not considered material. The timely liquidity risk, withdrawal/ retrieval risk as well as the market
liquidity risk have been rated as material for WUIB and have been adequately considered in the bank’s ICAAP/ILAAP
(including stress testing).
As of 30 June 2018 WUIB’s liquidity structure consists of the following:
• 5% customer deposits
10• 30% group internal financing
• 50% equity capital of WUIB
• 15% short term funds/settlements
The risk appetite with regards to the liquidity risk is defined in the risk strategy, the guidelines on liquidity risk and
in the Risk Appetite Statement (RAS).
The RAS (including current values and warning limits) is calculated and managed by Strategic Risk Management and
reported monthly to the Management Board as part of the Risk Committee Meeting.
The short-term risk appetite is managed through limits and warning limits in line with the term structure of the
liquidity gap report (tactical limits), i.e. the counterbalancing capacity reduced by the net capital cash outflow per
time bucket. In addition, the risk appetite is considering a long-term perspective (in form of strategic limits), which
is based on LCR and NSFR as well as on the minimum reserve, which is kept with central banks.
The Liquidity Management department ensures the continuity of the bank business in crises as well as prevents the
bank from unnecessary liquidity costs.
The day to day operations in liquidity management are executed by Liquidity Management & Payment Processes
team. The monitoring and controlling of the liquidity risk (using the gap report, stress test reports as well as liquidity
limits) is done by Strategic Risk Management, who is also responsible to report on the status of the liquidity risk in
the ALCO meeting. The ALCO is the respective decision-making committee for all topics with regards to liquidity and
refinancing risk. The meeting takes place monthly. Additionally, the monthly status of the liquidity risk is presented
in the risk committee meeting as part of the risk report, which covers all material risks. The decisions with regards
to liquidity and refinancing risks are taken in the ALCO.
The Supervisory Board is informed about liquidity risk in the quarterly Supervisory Board Meetings.
The LCR as of June 30, 2018 is as follows:
Western Union International Bank GmbH
Total unweighted Total weighted
value value
in EUR
June 30, 2018
HIGH-QUALITY LIQUID ASSETS
1 Total high-quality liquid assets (HQLA) 79,232,659.69
CASH-OUTFLOWS
Retail deposits and deposits from small business custom-
2 65,602,786.39 5,991,903.63
ers, of which:
3 Stable deposits 26,226,343.63 1,311,317.18
114 Less stable deposits 39,376,442.76 4,680,586.45
5 Unsecured wholesale funding 199,733,376.06 92,013,645.99
Operational deposits (all counterparties) and deposits
6 0.00 0.00
in networks of cooperative banks
7 Non-operational deposits (all counterparties) 199,733,376.06 92,013,645.99
8 Unsecured debt 0.00 0.00
9 Secured wholesale funding 0.00
10 Additional requirements 135,768,192.64 15,903,290.98
Outflows related to derivative exposures and other col-
11 317,504.75 317,504.75
lateral requirements
12 Outflows related to loss of funding on debt products 0.00 0.00
13 Credit and liquidity facilities 135,450,687.89 15,585,786.23
14 Other contractual funding obligations 11,448,093.23 0.00
15 Other contingent funding obligations 21,618,998.68 21,618,998.68
16 TOTAL CASH OUTFLOWS 135,527,839.29
CASH-INFLOWS
17 Secured lending (e.g. reverse repos) 0.00 0.00
18 Inflows from fully performing exposures 279,465,697.52 240,650,512.12
19 Other cash inflows 0.00 0.00
(Difference between total weighted inflows and total
EU- weighted outflows arising from transactions in third
0.00
19a countries where there are transfer restrictions or which
are denominated in non-convertible currencies)
EU- (Excess inflows from a related specialized credit institu-
0.00
19b tion)
20 TOTAL CASH INFLOWS 279,465,697.52 240,650,512.12
EU-
Fully exempt inflows 0.00 0.00
20a
EU-
Inflows Subject to 90% Cap 0.00 0.00
20b
12EU-
Inflows Subject to 75% Cap 280,895,607.59 240,650,512.12
20c
TOTAL AD-
JUSTED VALUE
21 LIQUIDITY BUFFER 79,232,659.69
22 TOTAL NET CASH OUTFLOWS 33,881,959.82
23 LIQUIDITY COVERAGE RATIO (%) 234%
133. Scope (Art. 436)
3.1. Name of the institution which lies within the scope of the CRR (Art. 436 letter a CRR)
Name of the credit institution: Western Union International Bank GmbH
3.2. Information about the basis of consolidation and other equity investments (Art. 436 letter b CRR)
In accordance with Section 30 (2) BWG, Western Union International Bank GmbH (WUIB), as an Austrian credit
institution, which is wholly-owned by Western Union Overseas Limited, Ireland (“WUOL”), forms a credit institution
group, together with its EEA parent financial holding company within the meaning of Section 2 para. 25b BWG. As
WUIB is the credit institution with the domestic registered office, which is not subordinated to any other group-
affiliated credit institution with a domestic registered office, it is regarded as a superior credit institution in accord-
ance with Section 30 (5) BWG and therefore prepares audited consolidated financial statements within the meaning
of Section 59 BWG. The credit institution group is exclusively comprised of WUOL and WUIB.
In accordance with Art. 11 (2) CRR, WUIB is furthermore obligated to regulatory consolidation according to the re-
quirements of CRR on the basis of the consolidated situation of WUOL. This regulatory basis of consolidation in line
with the CRR requirements is identical with the basis of consolidation pursuant to technical accounting standards in
accordance with Section 59 in conjunction with Section 30 (2) BWG and is comprised exclusively of WUOL and WUIB.
In accordance with Art. 13 (2) CRR, WUIB is furthermore obligated to disclosure according to Part 8 of the CRR on
the basis of the consolidated situation of WUOL.
The regulatory basis of consolidation in accordance with CRR and the basis of consolidation pursuant to technical
accounting standards in accordance with BWG/UGB [Austrian Commercial Code] are congruent and exclusively
comprise WUIB and WUOL. As a wholly-owned subsidiary, WUIB is included in the consolidated financial statements
of WUOL with full consolidation.
Neither WUIB or WUOL hold additional equity investments.
3.3. Art. 436 letter c
No material actual or legal impediments exist for the immediate transfer of equity or the repayment of liabilities
within the regulatory basis of consolidation shown above.
3.4. Art. 436 letter d
With WUIB, all subsidiaries of WUOL are included in the basis of consolidation.
Therefore, this disclosure duty does not apply to WUIB.
3.5. Art. 436 letter 3
The exemption options of Art. 7 or the option of consolidation on an individual basis in accordance with Art. 9
CRR have not been exercised. Therefore, this disclosure duty does not apply to WUIB.
144. Own funds (Art. 437 CRR)
4.1. Disclosure of the nature and amounts of the elements referred to under Art. 437 letter d) sub-letters i) - iii)
(Art. 437 (1) letter d CRR) as at June 30, 2018
In EUR 1,000 Attributable equity
Capital components
Capital instruments and the associated pre-
0
mium
of which, subscribed capital 0
of which, premium 0
Capital reserve (committed) 98,411
Reserves 2,389
Total capital 100,800
Deductions
Intangible assets -7,928
Balance sheet profit 13,766
Attributable Common Equity Tier 1 capital 106,638
Attributable Tier 1 capital 106,638
Total attributable own funds 106,638
4.2. Description of the main features and the full terms and conditions of Common Equity Tier 1, Addi-
tional Tier 1 and Tier 2 instruments (Art. 437 (1) letter b and c CRR)
The main features and terms and conditions of the capital instrument issued by WUIB, to which the premium re-
ported as Common Equity Tier 1 (CET 1) relates, is shown in Annex 1. The own funds of WUIB are exclusively com-
prised of Common Equity Tier 1. WUIB has not issued any Additional Tier 1 or Tier 2 instruments.
The share capital of Western Union Overseas Limited, Ireland still amounts to EUR 1 as of June 30, 2018 and is held
directly through several intermediate companies by Western Union Company, Denver, which is listed on the NYSE.
There are no issued and not fully paid-in shares and no authorised shares.
15Annex 1: Main features and terms and conditions of the capital instruments (Art. 437 (1) letter b, c CRR)
1 Issuer Western Union International Bank GmbH
2 Uniform identifier/internal name n.a.
Regulatory treatment CET 1
3 CRR transitional arrangements CET 1
4 CRR regulations after the transitional period CET 1
5 Attribution Attributable at the individual institution
level and at the consolidated level
6 Instrument type Share capital
7 Amount attributable to regulatory own Share capital: EUR 1
funds (CET 1) (rounded to kEUR: 0)
8 Notional value of the instrument EUR 1
9 Issue price in % n.a.
10 Redemption price in % n.a.
11 Accounting classification Liabilities - amortised cost price
12 Original issue date 10/12/2004
13 Time limitation Open-ended
14 Original due date No due date
15 Cancellable by issuer No
16 Selectable cancellation date n.a.
17 Later cancellation dates n.a.
18 Fixed or variable dividends/coupon pay- Variable
ments
19 Notional coupon n.a.
20 Existence of a dividend stop n.a.
21 Completely discretionary, partly discretion- Completely discretionary
ary or compulsory (time-based)
1622 Completely discretionary, partly discretion- Completely discretionary
ary or compulsory (amount-based)
23 Does a cost-increase clause or redemption No
incentive exist
24 Non-cumulative or cumulative Non-cumulative
25 Convertible or non-convertible n.a.
26 Write-down features n.a.
27 Position in the ranking order in case of liqui- Subordinated
dation
28 Improper features of the converted instru- n.a.
ments
4.3. Reconciliation of the components of the regulatory own funds with the balance sheet (Art. 437 (1) letter
a CRR)
Book values in ac-
Own funds in accord-
June 30, 2018 in kEUR cordance with
ance with CRR
UGB, BWG
Capital components
CET 1 0 0
Capital reserves 98,411 98,411
Liability reserve 2,389 2,389
Regulatory deduction items
Balance sheet profit (after netting with
13,766 13,766
2016 annual profit)
Annual profit 2016 (before audit opinion) 6,934 -
Intangible assets 7,928 -7,928
Total own funds n.a. 106,6381
1The annual profit 2018 in the amount of kEUR 6,934 was not taken into account in the calculation of own funds in
accordance with CRR.
175. Own funds requirements (Art. 438 CRR)
5.1. Assurance of an adequate minimum equity base and results of the assessment of the internal capital
The ICAAP (Internal Capital Adequacy Assessment Process) is a core element of pillar 2 of the CRR and is comprised
of all procedures and methods of a bank for the assurance of adequate identification, measurement and limitation
of the risks, adequate capital resources for the risk profile of the business model and the application and ongoing
further development of appropriate risk management systems.
WUIB uses the ICAAP (Internal Capital Adequacy Assessment Process) to assure an adequate capital base, in consid-
eration of all material risks. The concrete structuring of the ICAAP takes place according to the proportionality prin-
ciple. Therefore, it is based on the nature, scope and complexity of the banking business conducted by WUIB. Based
on this, WUIB performs the following assessment of the risks within the scope of its risk-bearing-capacity calculation:
Presently, the operational risk, the credit risk, the market risk (risk for WUIB only arises from FX positions) and the
business risk, the risks from the banking book (credit spread and interest risk), the leverage risk and the macroeco-
nomic risk are classified as material risks. Quantification takes place using the loss distribution approach for the
operational risk and using an internal rating-based approach for the credit risk. The calculation of the market risk
takes place on the basis of article 365 and article 366 of the CRR. For the quantification of the business risk, a statis-
tical value-at-risk model is used. Risks from the banking book are calculated according to the regulatory standard
approach (i.e. 200 bps parallel shift). The macroeconomic risk is calculated using an estimated economic downturn,
which is determined within the scope of a stress test. The leverage risk is calculated using a statistical value at risk
model with the assumption of modelled credit conversion factors of Trade Credit and Settlement Credit products.
The CVA risk, although not categorized as material risk, is based on the standard model in accordance with article
384 CRR. All other risks, which cannot be quantified, are calculated on a lump-sum basis by using corresponding
capital buffers.
For the quantitative assessment of adequate capital resources, WUIB uses the risk-bearing capacity analysis. De-
pending on the hedging objective, the following applies:
a. Gone-concern view
Hedging objective: Creditor protection is paramount and thus the safeguarding of capital, which guarantees that all
debt capital providers can be served with a defined probability in the event of a liquidation. The economically re-
quired capital (internal risk measurement) is compared to the own funds, adjusted by a risk buffer. For the calcula-
tion of the economic risk, a confidence level of 99.9% is used.
Risk status: The economic risks amount to 59,7% of the available funds. Therefore, a risk buffer of 40,3% exists as at
June 30, 2018.
b. Going-concern view
Hedging objective: The continued existence of the bank should be ensured with a specific probability without addi-
tional equity capital, if risks occurs. For the calculation of the economic risk, a confidence level of 95% is used.
Risk status: The economic risks amount to 44,08% of the available funds.
Therefore, a risk buffer of 55,92% exists as June 30, 2018.
In addition to this, annual bankwide stress tests are performed, in order to test the resilience of the business model
and the adequacy of the capital resources and to safeguard the liquidity situation.
18The stress tests performed in early 2018 have confirmed adequate capital resources.
5.2. For the calculation of the risk-weighted exposure amounts according to Part 3, Title II, Chapter 2, 8% of the
risk-weighted exposure amounts by exposure class (Art. 438 letter c CRR)
As at June 30, 2018, the consolidated minimum own funds requirement for the credit risk amounts to kEUR 23,858
and is comprised as follows (amounts in kEUR):
Minimum own funds Minimum own funds
requirement in kEUR requirement in %
Exposures to central governments
104 0.44
and central banks
Exposures to regional govern-
0 0
ments or local authorities
Exposures to public sector entities 0 0
Exposures to multilateral develop-
0 0
ment banks
Exposures to international organi-
2 0.01
sations
Exposures to institutions 4,008 16.80
Exposures to corporates 11,864 49.73
Retail exposures 2,871 12.03
Exposures secured by mortgages
0 0
on immovable property
Exposures in default 55 0.23
Exposures associated with particu-
0 0
lar high risk
Equity exposures 6 0.03
Other items 4,948 20.74
Total standard approach 23,858 100
5.3. For the calculation of the risk-weighted exposure amounts according to Part 3, Title II, Chapter 3 (on an in-
ternal-ratings-based approach - IRB), 8% of the risk-weighted exposure amounts by exposure class (Art. 438
letter d CRR)
Not applicable: WUIB does not use any IRB within the scope of pillar 1, but rather, the standard approach for calcu-
lating the weighted exposure amounts for the credit risk.
195.4. Disclosure of the own funds requirements calculated in accordance with Article 92 (3) letters b and c (Art.
438 letter e CRR)
WUIB makes use of the exemption of Art. 94 CRR for low-volume trading book activities. Therefore, WUIB has no
own funds requirements in accordance with Art. 92 (3) letter b CRR.
In the absence of transactions, own funds were also not required for commodities exposure risks.
The own funds requirements in accordance with Art. 92 (3) letter c CRR exclusively result from the foreign currency
risk in accordance with Art. 92 (3) letter c sub-letter i CRR and the settlement risk in accordance with Art. 92 (3) letter
c sub-letter ii CRR. The consolidated minimum own funds requirement for the foreign currency risk amounts to
kEUR 870 as of June 30, 2018 .The consolidated minimum funds for the settlement risk amounts to kEUR 121 as of
June 30, 2018.
5.5. Disclosure of the calculated own funds requirements in accordance with Part 3, Title III, Chapters 2, 3 and 4
(Art. 438 letter f CRR)
For the calculation of the own funds requirement for the operational risk, WUIB uses the basic indicator approach
in accordance with Part 3, Title III, Chapter 2 of the CRR. The own funds requirement for the operational risk amounts
to kEUR 11,800 as of June 30, 2018.
6. Counterparty credit risk (Art. 439 CRR)
6.1. Calculation of the internal capital and maximum limits for counterparty credit exposures (Art. 439 letter a
CRR)
WUIB does not engage in any sale and repurchase agreements, securities and commodities lending transactions or
lombard transactions. The following disclosures therefore exclusively relate to derivative transactions and transac-
tions with a long settlement period, particularly such as FX forwards and FX options.
From the perspective of WUIB, a counterparty default risk arises from exposures vis-à-vis the client, with whom a
FX forward or FX option is entered into, which may occur if the client becomes insolvent, provided that the market
position of the client is “out of the money” and WUIB needs to close the open market position of the defaulted
client. Within the scope of the credit risk assessment, a maximum limit is defined for each client, which limits the
transaction amount in relation to FX forwards and FX options. Furthermore, in principle, the client must collateralize
the dealing with FX forwards and FX options prior to their execution (margin deposit) and provide additional collat-
eral upon request by WUIB (margin call).
The market risk associated with FX forwards and FX options is hedged with the WU Group, by immediately closing
the risk of an open foreign currency positions using an automated hedging system. This occurs by concluding an
identical FX forward/identical FX option deal (“mirror deal”) with a WU Group company, which hedges the relevant
position through third-party banks. From the perspective of WUIB, this also results in a counterparty default risk vis-
à-vis the WU Group company, which has hedged the exposure.
6.2. Policies for securing collateral and establishing credit reserves (Art. 439 letter b CRR)
To reduce the credit risk associated with the balance sheet and derivative exposures, cash collateral and bank guar-
antees exclusively are used.
6.3. Policies with respect to wrong-way risk exposures (Art. 439 letter c CRR)
20For the calculation of the counterparty risk, WUIB does not use any internal model. This disclosure requirement is
therefore not applicable.
6.4. Disclosures concerning the amount of collateral required, if the institution’s credit rating is downgraded (Art.
439 letter d CRR)
Within the scope of its concluded transactions with derivatives (exclusively FX forwards, FX options), WUIB is not
obligated to provide collateral. Furthermore, neither WUIB nor WUOL has an external rating. Therefore, a rating
downgrade is ruled out. A possible downgrade of the credit rating of WUIB/WUOL would not obligate WUIB to
provide additional collateral.
6.5. Disclosures concerning gross positive fair values of contracts, netting benefits, netted current credit expo-
sure, collateral held and net derivatives credit exposure concerning measured parameters for risk exposure
values and notional values of credit derivatives (Art. 439 letter e CRR)
The following derivative transactions existed as of June 30, 2018:
Total current fair values of the transactions (gross) kEUR 76,320
Netting benefits kEUR 42,450
Collateral values held kEUR 9,840
Total current fair values of the transactions (net) kEUR 23,132
* The following types of collateral are considered: Cash collateral from clients and bank guarantees
WUIB has a netting agreement with a company of the WU Group, which serves as a hedging partner for positions in
FX derivatives.
6.6. Measures for exposure value under the methods set out in Part 3, Title II, Chapter 6, Sections 3 to 6 (Art. 439
letter f CRR)
To calculate the exposure value, WUIB uses the mark-to-market method in accordance with Part 3, Title II, Chapter
6, Section 3 of the CRR (Art. 274 CRR)).
6.7. The notional value of credit derivative hedges and the distribution of current credit exposures, itemised by
types of credit exposure (Art. 439 letter g CRR)
Not applicable: WUIB does not use any credit derivatives.
6.8. The notional amounts of credit derivative transactions, segregated between use for the institution's own
credit portfolio, as well as in its intermediation activities, including the distribution of the credit derivatives
products used (Art. 439 letter h CRR)
Not applicable: WUIB does not use any credit derivatives.
6.9. Disclosure of the estimate of α (Art. 439 letter i CRR)
WUIB does not use an internal model for the calculation of the counterparty credit risk. Therefore, this disclosure
requirement does not apply to WUIB.
217. Capital buffers (Art. 440 CRR)
As of June 30, 2018 WUIB was subject to an anti-cyclical capital buffer requirement in the amount of kEUR 1,329,
which amounted to 0.29% of the risk-weighted assets. The composition of the anti-cyclical capital buffer can be
presented as follows:
Exposure under the Anti-cyclical capital
standard approach (in buffer prescribed by the Institution-specific anti-
EUR) regulator cyclical capital buffer
Albania 0.68 0% 0%
Belgium 487.66 0% 0%
Brazil 0.00 0% 0%
Bulgaria 0.00 0% 0%
Denmark 10.93 0% 0%
Germany 15,510.93 0% 0%
Estonia 0.00 0% 0%
France 75,087.25 0% 0%
Gibraltar 27.19 0% 0%
Great Britain 113,449.33 0.50% 0.21%
Guadeloupe 0.02 0% 0%
Hong Kong 0.00 0% 0%
Ireland 8,121.51 0% 0%
Italy 12,034.79 0% 0%
Canada 4.43 0% 0%
Malta 0.01 0% 0%
Martinique 1.39 0% 0%
Monaco 0.00 0% 0%
Netherlands 2,698.68 0% 0%
Norway 84.02 2.00% 0%
Austria 26,564.57 0% 0%
22Poland 1,432.56 0% 0%
Sweden 4,085.19 2.00% 0.02%
Switzerland 4.77 0% 0%
Slovakia 29.21 0.50% 0%
Spain 0.00 0% 0%
Czech Republic 21,030.33 1.00% 0.06%
USA 15,614.03 0% 0%
Cyprus 0.00 0% 0%
Total 296,279.48 6.00% 0.29%
8. Indicators of global systemic importance (Art. 441 CRR)
WUIB is not classified as a G-SII (global, systematically important institution).
9. Credit risk adjustments (Art. 442 CRR)
9.1. Approaches and methods in relation to specific and general credit risk adjustments; definitions of “past due”
and “impaired” for accounting purposes (Art. 442 letter a CRR)
The definition of “defaulted exposures” applied in WUIB corresponds to that of Art. 178 CRR and includes
- exposures overdue by more than 90 days
- exposures, which are probably not fully recoverable.
For risks in credit business, WUIB uses impairments, where balance sheet exposures are involved. For off-balance-
sheet exposures – this particularly relates to exposures from derivative transactions – provisions for contingent
losses are formed as a precaution. Provisions are made for balance sheet exposures to the following extent, if pay-
ment default exists:
Unsecured exposures, which are past due, are impaired by using the following percentage rates:
a) more than 1 day but not more than 30 days: 0%
b) more than 30 days but not more than 60 days: 25%
c) more than 60 days but not more than 90 days: 75%
d) more than 90 days: 100%
23Notwithstanding the existence or duration of a payment default, if the bank has additional information, which sug-
gests that a repayment is doubtful, a specific loan loss provision is assessed for the unsecured portion.
9.2. Total amount of the exposures, disregarding credit risk mitigations and the average amount of the exposures
by risk exposure classes (Art. 442 letter c CRR)
Exposure values in kEUR (before credit risk mitigation and after impairment) as June 30, 2018
Average exposure
Exposure class Exposure value
value
Exposures to central governments
63,637 74,994
and central banks
Exposures to regional governments
0 0
or local authorities
Exposures to public sector entities 0 0
Exposures to multilateral develop-
0 0
ment banks
Exposures to international organisa-
11 22
tions
Exposures to institutions 215,451 217,208
Exposures to corporates 310,149 260,428
Retail exposures 102,093 111,490
Exposures divided by mortgages on
0 0
immovable property
Exposures in default 489 572
Exposures associated with particular
0 0
high risk
Equity exposures 60 74
Other items 85,679 75,691
Total 777,569 740,479
249.3. Geographic distribution of the exposures, broken down in significant areas and material exposure classes
(Art. 442 letter d CRR)
Exposure value in kEUR (before credit risk mitigation and after impairment) as at 30 June 2018
Exposure class AT EU Other Total
Exposures to central govern-
70,743 4,251 0 74,994
ments and central banks
Exposures to regional govern-
0 0 0 0
ments or local authorities
Exposures to public sector en-
0 0 0 0
tities
Exposures to multilateral de-
0 0 0 0
velopment banks
Exposures to international or-
0 0 22 22
ganisations
Exposures to institutions 31,126 182,537 3,545 217,208
Exposures to corporates 11,820 228,475 20,133 260,428
Retail exposures 1,932 109,558 0 111,490
Exposures divided by mort-
0 0 0 0
gages on immovable property
Exposures in default 120 452 0 572
Exposures associated with par-
0 0 0 0
ticular high risk
Equity exposures 1 66 7 74
Other items 14,143 61,480 68 75,691
Total 129,885 586,819 23,775 740,479
259.4. Distribution of the exposures by industry or counterparty type (Art. 442 letter e CRR)
Exposure value in kEUR (before credit risk mitigation and after impairment) as of June 30, 2018
Exposure class Financial company Non-financial company
Exposures to central govern-
74,994 0
ments and central banks
Exposures to regional govern-
0 0
ments or local authorities
Exposures to public sector enti-
0 0
ties
Exposures to multilateral devel-
0 0
opment banks
Exposures to international or-
22 0
ganisations
Exposures to institutions 217,208 0
Retail exposures 53,984 206,444
Exposures to corporates 2,518 108,972
Exposures divided by mortgages
0 0
on immovable property
Exposures in default 0 572
Exposures associated with partic-
0 0
ular high risk
Equity exposures 8 66
Other items 0 75,691
Total 348,734 391,745
269.5. Itemisation of all exposures by residual maturity (Art. 442 letter f CRR)
Exposure value in kEUR More
Up to
(before credit risk mitiga- On de- Up to 3 Up to 1 than No due
5 Total
tion and after impairment) mand months year 5 date
years
as of June 30, 2018 years
Exposures to central gov-
ernments and central 73,341 1,135 518 74,994
banks
Exposures to regional gov-
ernments or local authori-
ties
Exposures to public sector
entities
Exposures to multilateral
development banks
Exposures to international
22 22
organisations
Exposures to institutions 175,248 26,314 10,613 5,033 217,208
Exposures to corporates 189,614 11,040 32,079 27,695 260,428
Retail exposures 80,257 7,400 15,187 8,646 111,490
Exposures divided by
mortgages on immovable 0
property
27Exposures in default 446 28 96 2 572
Exposures associated with
0
particular high risk
Equity exposures 74 74
Other items 248 75,443 75,691
Total 519,176 45,917 57,975 41,376 0 76,035 740,479
289.6. Detailed by significant industry or counterparty type:
- Amounts of impaired/past due exposures
- Amounts of the specific/general credit risk adjustments
- Amounts of the costs for specific/general credit risk adjustments
(Art. 442 letter g CRR)
Loan loss
Loan loss provi-
Im- Past Balance of provision
sion
impairments formation
Industry
as of June 30,
paired due 2018 release
2018
2018
Financial
175 118 293 0 75
companies
Non-financial companies 1,863 1,168 3,031 2,446 216
9.7. Disclosures concerning impaired and past due exposures by significant geographical areas
Exposure value in kEUR (before credit risk mitigation and after impairment) as of June 30, 2018
Balance of
impairments
Area Impaired Past due
as at 31 De-
cember 2016
AT 164 174 338
EU 1,874 1,107 2,981
Other 0 5 5
Total 2,038 1,286 3,324
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