Bayerische Landesbank has chosen the Algo Collateral software application developed by Algorithmics to manage their cross product margining requirements.
“We needed a proven cross-product margining application to automate and improve the operational aspects of our existing Repo margining processes, and to support the future growth of our OTC derivative margining program,” says Jurgen Pohl, Head of Collateral Department, BayernLB.”We’re confident that Algo Collateral will provide a significant return on investment while being a important strategic tool for our organisation.”
BayernLB chose Algo Collateral following a visit to the Algorithmics’ Algo Collateral User Conference in February followed by three-month evaluation of available systems in the marketplace. “Our overall plan is to integrate, step by step, other product lines into Algo Collateral and to achieve global cross-product margining,” adds Claudia Gutke, Collateral Manager, BayernLB. “Production will commence in December with Repo margining and OTC Derivative margining will be incorporated in March 2003.”
BayernLB intends to use the solution to update their limit systems with intra-day collateral balances, and update their regulatory data warehouse with capital requirements and collateral trade costs. Additionally, BayernLB purchased Algo Collateral’s reconciliation and data entry modules that resolve valuation discrepancies and provide security around data changes.
“Algo Collateral’s extensibility and straight-through-processing capabilities take care of all BayernLB’s foreseeable future margining requirements,” claims Michael Zerbs, Chief Operating Officer, Algorithmics. “Moreover, Algo Collateral allows BayernLB to cost-effectively, and with minimal risk, assume better operational management of their key business lines.”
Algo Collateral allows users to consolidate collateral agreement information and manage collateral positions in a way that accommodates exposures and market data from both internal and external sources. Key features of Algo Collateral include: the potential for the integration of multiple data sources and systems; automated workflow and tracking; STP; rehypothecation tools; and the generation of a ‘What If’ scenario analysis to assess how changes in the credit rating of a counterparty or the firm itself may potentially impact margin demands.