Algorithmics announced today that Danske Bank of Denmark has licensed Algo Collateral to to manage their OTC derivative and repo margining activities.
The Danish bank is a first client for Algo Collateral in Scandinavia, though 36 banks around the world have bought the product so far. Danske Bank is already an Algorithmics client, having licensed the Algo Market risk management solution in June 2001.
Algo Collateral will replace Danske’s existing in-house system. “Our current resources and collateral management processes were overstretched,” says Mogens Dalhoff, First Vice President of Danske Bank. “Algo Collateral now becomes the strategic backbone of our collateral operation to facilitate the growth of our margining activities in terms of the breadth of business lines and the number of collateral counterparties covered by our collateral management function.”
Algo Collateral provides Danske Bank with an enterprise-wide collateral platform to automate the collateral process and minimize the operational risks associated with the margining process. At a macro-business level, Algo Collateral will facilitate a significant increase in the size and scope of Danske Bank’s collateral program without a significant investment in technical or business resources. “In a very short order, we expect to see a significant return on investment,” continues Dalhoff.
Danske Bank selected Algo Collateral after having reviewed the marketplace. “Algo Collateral is established in international markets as the leading collateral management solution,” said Michael Zerbs, Chief Operating Officer at Algorithmics. “We are very pleased to expand our relationship with Danske Bank and earn their continued loyalty to our proven solutions. They represent but one of a number of leading edge banks who are moving toward a firm-wide risk management system which will enable them to realize significant strategic and economic benefits.”
Algorithmics says Algo Collateral is an enterprise-wide solution, dedicated to reducing operational and credit risk, while simultaneously providing cost-effective support throughout the entire collateral management process. “Algo Collateral allows users to consolidate collateral agreement information and manage collateral positions efficiently in a flexible, user-configurable manner that accommodates exposures and market data from both internal and external sources,” says the company. “Key features of Algo Collateral include the potential for the integration of multiple data sources and systems; fully automated workflow and tracking; open, flexible support for STP; advanced 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.”