Alliance & Leicester, the UK financial services group, has opted for the Sungard Basel II Capital Manager to manage its credit risk management and Basel II compliance. Alliance's goal is to achieve compliance and accreditation for the Basel II Internal Ratings Based (IRB) approach for capital calculations. Despite continued wrangling over the Basel II legislation, Alliance's decision reveals how financial institutions are pre-empting the troublesome legislation.
By using the IRB approach Alliance hopes to predict its potential savings when Basel II comes in to effect by using Sungard's tool for retail credit exposures and analysis of mortgage and unsecured portfolios.
"We considered other systems but Sungard had the most efficient, all-round solution and long-term vision for Basel II," commented Simon Navin, retail Basel manager at Alliance & Leicester. "The flexibility of Basel II Capital Manager's model has enabled us to develop advanced models across a broad risk spectrum, including risk segmentation analysis, stress testing of our retail portfolios, and loss provisioning on an expected loss basis."
The new Basel accord is due to be implemented by mid-2006 but work has already begun to integrate the standards in to national capital markets.