Consulting on current regulatory reporting topics

For more than 20 years, our team has assisted banks and insurance companies in the area of regulatory reporting. Based on this wealth of experience, we offer all-round support in regulatory reporting, independent of software:

Funding Plans

Funding Plans will create standardized frameworks to strengthen the sustainable refinancing of credit institutions. Therefore the evaluation of the feasibility of financing plans and the evaluation of the impact on the credit supply of the manufacturing industry will improve. A better understanding by market participants and national supervisors of innovative financial products and their risk is being developed. The institutes are confronted with many challenges:

BearingPoint offers specialist advice related to this topic and supports institutes that use the standard software ABACUS/DaVinci for their reporting.

Additional Liquidity Monitoring Metrics (ALMM)

On the basis of the final draft of “Implementing Technical Standards on additional liquidity monitoring metrics under Article 415(3) (b) of Regulation (EU) No 575/203” from 18 December 2013 (update of 24 July 2014), institutions have to report information concerning their liquidity portfolio, which is measured against the type, extent and the complexity of their operations. This regulation will come into force on 1 July 2015 on and will be harmonized throughout Europe.
The forms that have to be reported contain information on outflows, inflows, counterbalancing capacity, concentration of funding by counterparty and by product type, prices for various lengths of funding and concentration of counterbalancing capacity by issuer and by counterparty.
BearingPoint offers specialist advice on this topic and helps with implementing the modul “Additional Liquidity Monitoring Metrics” into the standard software ABACUS/DaVinci.

Fundamental Review of the Trading Book (FRTB)

As part of the fundamental review of the trading book (FRTB), new rules for measuring market risk are currently being introduced by the Basel Committee for Banking Supervision. These rules will cause major changes in regulatory reporting and will also require all banks to calculate the new standardized approach as their market model or in addition to an internal model.
These new requirements cannot easily be met with existing tools.
BearingPoint offers a new software solution to support the quantitative impact study (QIS) by providing preconfigured reports, calculation processes, quality assurance and analysis capabilities.
The software solution uses sensitivities and basic instrument information as input and conducts the required calculations by using stable and transparent netting, aggregation and calculation methodology. In addition, BearingPoint offers a technical consultancy on this topic.

AnaCredit

The European Central Bank (ECB) has recently accorded the project Analytical Credit Dataset (AnaCredit) a significantly increased priority. It calls for the gradual establishment of the harmonized collection of very granular data. As a result of the project, data gaps in the area of credit exposures are to be closed and both monetary as well as micro- and macro-prudential questions can be answered. With the decision taken on 21.02.2014, the European System of Central Banks (ESCB) was obliged to deal with the project and take the first steps towards initiating implementation.
Based on an initial analysis, the reporting requirements associated with the AnaCredit project will generate relatively high implementation costs for financial institutions. The reasons lie mainly in the procurement of granular financial data and the need for the consistent delivery of data to the regulatory reporting software. Accordingly, institutions should begin at an early stage with the analysis of the gaps in their data management and investigate the impact on their institution-specific processes and IT systems.
BearingPoint Software Solutions GmbH will provide software solutions for the implementation of new reporting requirements as a part of the Abacus Solution Suite.
In addition, our specialists, with their many years of experience in regulatory reporting, can support you with your specific issues within the context of your individual implementation projects.

Data management

The efficient handling of data plays a major role in all areas of a financial service institution. In reporting, however, all the data of the bank come together, and the cost and quality of the reports always depend very strongly on the quality of the data supplied.
In addition, in areas adjoining reporting, data and information as well as know-how from the reporting area are increasingly in demand: for instance, in supporting audits of the annual financial statements of the institutions, during special audits and analyses, in risk controlling, in overall bank management, in accounting, in the implementation and further development of core bank systems, etc.
How a bank organises itself in the core area of data quality and data access is decisive for the possibilities of exchanging information between these areas quickly and in overarching form. However, security and data protection should not be neglected either.
With our experience and the team of BearingPoint Software Solutions, we reach the goals of our customers in the field of data management. We set the levers at the right positions:

Here too, the close interaction with BearingPoint GmbH comes into effect. We seek the assistance of our specialists from the “Information Management” sector when necessary. We are thus also able to assist you in the technical implementation.

Optimization of equity

At the latest the financial crisis has shown how important equity is for a bank and how quickly this can decrease. Equity has become scarce and expensive. With our experience and our expertise, we help you to optimize the use of this expensive commodity.

Before the financial crisis, equity was often not the critical factor in the management of a bank. The banks had relatively good capital ratios and were able to procure new equity on the capital market relatively easy. This changed dramatically with the financial crisis. Almost every bank is now trying to optimize the use of equity as far as possible. In the area of economic capital, much has been done, but there is still great potential at many institutions with regard to regulatory capital.

The Solvency Regulation offers many ways to reduce the capital commitment of transactions: credit risk reduction techniques, netting and offsetting, haircuts, internal ratings and many more topics influence the determination of risk-weighted assets (RWA) and thus the capital requirements of transactions. However, many procedural and technical requirements have to be met by the banks to make use of these opportunities.

The experts of BearingPoint have comprehensive experience in this field and have already assisted several banks on this path. We support you from the identification and quantification of the individual thematic areas, the adjustment of processes and procedures, to the connection to the reporting software. With our focus on the customer, our aim to generate added value for our customers and our professionalism in the attainment of these goals, BearingPoint is the partner for optimizing equity allocation.

Stress tests

Banks have to ensure their risk-bearing capacity in the long term, from an intrinsic self-interest and due to regulatory requirements. For this purpose, internal capital adequacy assessment processes (ICAAP) are implemented. These have to meet the regulations from the second pillar of the banking supervisory regulations “Basel III” or the detailed specifications of the German banking supervisory authority, the minimum requirements of risk management (MaRisk).

The risk is quantified in ICAAP, for example, through economic capital models. These are mathematical statistical procedures to measure risk at overall bank level. However, each model by nature is only a simplified depiction of the real world and the market turbulences of the last decades have shown that most models underestimate the actual risk. The insights regarding the limits of VaR models, the effects of so-called “black swans” and the lack of availability of sufficient time series are currently resulting in dramatic changes in risk management and are moving the focus of current discussions to the value of stress tests and scenario analyses.

Usually, within this framework, the target parameters to be stressed are determined by specialised systems. A uniform architecture is rarely available. Frequently, the target parameters for the market, credit and liquidity risk are stressed in different systems, under certain circumstances even with parameters that are not important for the operational management of the bank. This leads to the results of conventional stress tests frequently not having any informative value for the bank management and risk controlling.

Our consultants can help you in the implementation of stress tests that provide relevant results for your bank. We assist you in all phases, from conceptual planning to implementation and testing, e.g., in:

Possible architecture of a stress test platform

Your advantage

Share:

Choose your language

×