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Capitalia Business Objects Case Study
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Capitalia Business Objects Case Study

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  • 1. 12 Capitalia “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 Division, Capitalia Basel II: New Information Requirements 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 account. Measure Value Creation and Risk-Taking 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 Moscato. CHALLENGE 1 Provide an immediate, functional presentation of risk-taking and the creation of value involved in any portfolio credit account 1 Allow company employees at all levels to access this information SOLUTION 1 BusinessObjects XI BENEFITS 1 A clear vision of a customer's portfolio position, from global data down to the slightest detail (individual accounts/customer) 1 Possibility to select customers based on risk-taking and value created for the bank, in order to implement targeted actions for dynamic portfolio management RISK MANAGEMENT Italy
  • 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 for themselves. 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. About Capitalia 1 Activity: Banking group 1 Staff: 28,000 1 Date founded: 2002 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. “ ”

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