Raft International has supplied a credit risk management solution to Rabobank Intl, the investment banking division of Dutch based Rabobank to enable it to more effectively manage the credit risks being incurred through its OTC derivative dealing activity around the globe. In only twelve weeks the first phase of the component-based solution was developed and rolled out to seventy users at Rabobank’s key branches in London and Utrecht. The application has been so successful that it has now been rolled out to over 300 users in five principle trading locations.
The Rabobank Group is the only privately held bank that has a AAA rating from all the major rating agencies. The Raft solution provides a worldwide infrastructure to combine the credit risk management of the bank’s investment banking division treasury and capital market based operations into a unified global operation. A single global credit risk limit can be equally utilised by all branches, making for a much more efficient utilisation of the available counterparty credit appetite and enabling trading opportunities to be maximised. A number of applications have been installed as part of the solution including a Collateral Management facility, a Credit Risk Enquiry tool and an intranet-based Deal Checker application.
Nick Allen Executive Director responsible for credit risk systems development at Rabobank Intl. said, 'The bank wanted to quickly enhance the credit risk monitoring framework from front to back more effectively and undertake collateral exchange activity. A key deliverable was a single counterparty global risk limit against which dealers in five locations could trade. We have also been able to leverage the development to provide significantly improved regulatory capital adequacy calculations, almost doubling certain business area’s returns on regulatory capital. Now, as the business changes direction we can follow much more quickly with the controls that back it up. We have gathered a lot more in the way of trading opportunities because we’ve been looking at exposure in a more intelligent and sophisticated way.'
Richard Elliott of Raft, said, 'Our component-based approach allowed us to develop the first release of a solution to meet Rabobank’s requirements for a tailored credit risk system within the short twelve week time-frame. The component architecture also allows us to develop and add new functions easily in a step-wise fashion, continually improving and providing more business benefit.'
The Deal Checker has proved a particular success and has had a profound effect on trading activity at the bank. It represents a single centralised web-enabled application, through which the dealers have access to credit exposure information across the globe. A dealer simply has to enter the details of a proposed deal into the system, which will then tell him or her within seconds if the deal will fall within the agreed credit limit for the counterparty. If the proposed deal would breach a credit limit, the application will show the dealer the options available to them.