“More than a regulations agreement, Basel II heralds a major change in the banking
industry. That's why we needed an instrument that could automatically manage
information presentation and distribution. And that’s why we chose Business Objects.
The new version XI allows us to develop front-line services according to our needs.”
Daniele Moscato, Rating Intelligence Department Manager in the Ratings & Capital Management
Basel II: New Information
At the end of June 2004, a new Basel
agreement concerning estate criteria was
published under the name Basel II. The new
rules are designed to make the international
banking system more stable through
enhanced credit risk control, whether the risks
are tied to the market or a transaction.
Basel II rules require the use of “objective”
evaluation methods that will ensure greater
transparency of bank behavior and of their
relations with corporations.
With the adoption of the new criteria defined
by Basel II, banks must now rank their
customers according to a rating system that
identifies their level of solvency. The cost of
credit granted will therefore depend on a
customer's rating. To satisfy these new rules,
Capitalia has embarked on a series of
measures that are currently implemented.
Basel II allows banks to objectively measure
the risk tied to each credit account. Through
this technical aspect and the rules of the
agreement, financial institutions can develop a
new approach to customers.
Risk “accounting” becomes a third factor,
alongside margins and costs, for fully
evaluating the creation of value for each credit
Measure Value Creation
In this initial phase of the Basel II agreement,
the Ratings & Capital Management division
acted as the Group's own rating agency. It was
responsible for developing internal rating
models, assigning ratings, and determining
the adjusted spread risk. Furthermore, it
publishes reports on dynamic portfolio
management, which mainly concerns the
risk/portfolio return ratio, for which
front-line services and data and analysis
presentation are crucial.
“Our objective is an immediate and highly
functional presentation of value creation and
risk-taking for our portfolio, and to ensure that the
entire company has access to this information,
from executive staff to account managers,” says
1 Provide an
risk-taking and the
creation of value
involved in any
1 Allow company
employees at all
levels to access this
1 BusinessObjects XI
1 A clear vision of a
global data down to
the slightest detail
1 Possibility to select
customers based on
value created for
the bank, in order
targeted actions for
2. 13FI NANCIAL SERVICE S
“We started with ‘homemade’ systems, but we soon
realized we needed instruments that could manage
information presentation and distribution automatically.
That's why we chose BusinessObjects: the new version
XI allows us to develop a full range of front-line services
according to our needs,” says Moscato.
So the reports were structured. Based on the matrix
indicating the ratio between value creation and
risk-taking, the graphic representation allows the
bank to view customer portfolio positions. By
simply clicking on the global data, users can access
each level of detail, all the way down to the
individual accounts of specific customers.
Improved Portfolio Analysis
By being able to select customers according to the
value generated for the bank, changes can be made
to the account, for instance by contacting the “best”
customers to offer them new opportunities.
The approaches underlying the offering are
therefore fundamentally altered.
Until quite recently, industrial firms were far ahead
of banks because they took advantage of their
broader access to detailed information on
customers and products.
Today, banks have moved closer to this Basel II
approach because they have the information
needed and can quickly implement new customer
relations strategies. The internal rating system
gives banks an objective evaluation of risk, so they
can set their rates according to the risk, like
insurance companies do.
A new version of the report generation system is
already being created, again in collaboration with
Business Objects. With dynamic analysis of
portfolio risk-taking, the rating intelligence system
helps Capitalia evaluate model performance and
then decide on follow-up actions.
A Series of Services Directly
Designed for Corporate Customers
Now part of a company's everyday business
management, the Basel II approach—which rests
on the concepts of knowledge and discipline—
increases a company's chance of success. In this
respect, rating advisory services are currently being
tested in the Capitalia Group. They make their
know-how available to companies to help them
gain full awareness of the value they are creating
This system allows us to make a series of swift
decisions based on objective data. In addition, it’s
a very useful operational marketing tool. One of
its most exciting features is its capacity to select
customers inside the matrix, per return level and
therefore per value created.
1 Date founded:
With more than 28,000 employees and 1,950 branch offices in Italy and abroad, Capitalia
is currently the fourth ranking Italian banking group. Outside the holding company, it
includes three commercial banks (Banca di Roma, Banco di Sicilia, and Bipop-Carire),
with branch offices across all of Italy, the investment bank MCC, and Banca Fineco, the
leading Italian online bank and the number one European online trader.