Algorithmics says Royal Bank of Scotland (RBS) has selected and begun implementing its Algo Credit application for global limits and exposures management.
RBS will be using Algo Credit to oversee financial credit risk for all of its commercial and treasury portfolios. Algoritmics says the bank’s commercial portfolio is quite complex, due to multi-counterparty facility structures with a number of credit mitigants like collateral and guarantees applied against them at various levels. Algo Credit will manage these relationships as well as specified counterparty restrictions.
“We needed the most effective solution available to obtain a comprehensive view and management capability of our wholesale credit risk,” says Laurie Mayers, Group Head of Basel 2 and Credit Systems Coordination at RBS. “With Algo Credit, we are getting a single, fully integrated view of our counterparty exposure across all products and business lines. Longer term, Algo Credit will also serve as a core data storage and aggregation platform for our BIS II risk architecture at the Group and core wholesale bank level.”
RBS chose Algorithmics following a review of other vendors and cited the solution’s scalability and component based architecture, its coverage of both banking book and trading book and proven customer record as key to RBS’ strategic decision. Algo Credit will replace some internal limit and exposure management systems at the Group and divisional level, and will in other cases be integrated with existing operating systems for the Group to achieve a global view of its credit risk.
Following installation by end-2003 of Algo Credit for RBS’ core corporate bank and financial markets businesses, interfaces to subsidiaries’ credit systems will be completed.
“We are extremely pleased to enter into this relationship with Royal Bank of Scotlan,” concludes
Michael Zerbs, Chief Operating Officer at Algorithmics. “RBS joins a growing list of ten of the top fifteen global banks that looks to Algorithmics to help manage their risk. Algo Credit provides the most reliable limit management and aggregation infrastructure to support more effective monitoring and management of credit risk at Group or operating unit level, thereby dramatically saving costs and maximising shareholder value.”