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ALM for Banking

Asset-Liability Management for Banking

Managing risks that arise in the mismatch between assets and liabilities is crucial for securing the health and profitability of financial institutions. Uncertainty about the future development of markets, tighter regulations, and constant product innovations make this task even more demanding and call for flexibility, increased reaction speed, and advanced product-management possibilities.

Employing a strong framework for asset-liability management (ALM) enables financial institutions to take a proactive approach to managing risk and profitability and to face the complex demands of this subject.

Aquantec Ocean supports firms with strategic planning, scenario analysis, and decision-making processes for an effective asset-liability management.

The Challenge

Responsible asset-liability management needs to cope with the broad range of risks from duration mismatch to cross-asset market risk and from credit and counterparty risk to liquidity and funding risk. Commonly, much analysis is fragmented in silos with each department focusing on managing its particular risk measures. This leaves the organization without means to monitor how different risks combine and affect each other and limits the ability to understand firm-wide risks.

Regulatory pressures are increasing and require banks to have a fully functioning ALM system in place in order to accurately report on diverse requirements:

  • capital and liquidity requirements under Basel III,
  • greater emphasis on scenario and (forward-looking) stress testing,
  • calculation of net interest income under consideration of all relevant factors.

Business pressures also require that firms react to market conditions and product innovation. A strong ALM framework must incorporate results of new strategies and products and attach pricing to risks taken. It must provide the means to continually reappraise the cost of risk as new information arises. ALM should provide the information and means to test and analyze strategies to minimize risk and to maximize profitability.

Key Features of Aquantec Ocean for Asset-Liability Management

Aquantec Ocean integrates in a single system the entire spectrum of functionality required to help firms building and maintaining a robust ALM framework. Aquantec Ocean enables you to efficiently model and monitor key ALM components and allows you to

  • represent and evaluate financial products of all asset classes,
  • perform market- and credit-risk analyses using advanced models and algorithms,
  • compute ad-hoc analyses in a scenario framework reflecting market conditions in a flexible and yet convenient way,
  • derive book values and profit and loss figures under HGB, UGB, and IFRS,
  • integrate returns and credit and funding costs to net interest income figures,
  • forecast capital and financing requirements in conjunction with business development,
  • conveniently formulate and apply allocation strategies including rebalancings and refinancings,
  • calculate Liquidity Coverage Ratios (LCR) and Net Stable Funding Ratios (NSFR),
  • perform reliable processing of large sets of data,
  • easily interface with other systems and smoothly integrate our software in your system landscape.

Aquantec Advantage

Aquantec Ocean delivers asset-liability managers the tools and information needed to meet the requirements for integrated management of assets and liabilities.

Aquantec Ocean provides a robust system for capturing large portfolios and for running complex calculations for accurate and detailed analyses in the context of asset-liability management. Financial institutions are well-prepared to face any risk and liquidity challenges and to easily report their status in compliance with regulations.

Efficiency, accuracy, transparency: The modern architecture of Aquantec Ocean provides the means to chart the course for the future with confidence.