SOUTH AFRICAN Absa BANK SELECTS ALGO OPRISK

TORONTO, CANADA / JOHANNESBURG, SOUTH AFRICA – October 17, 2003 – Algorithmics Incorporated, a world leader in enterprise risk management solutions, announced today that South African banking group Absa has licensed Algo OpRisk for operational risk data collection and reporting as well as regulatory and economic capital allocation. ABSA becomes the sixth client, and first in South Africa, to select the solution.

Demands for stringent operational risk management and emerging regulatory considerations have recently become top-of-mind in South Africa’s banking community. Gert van Wyk, Absa’s general manager of operational risk and assurance as well as chief auditor, says choosing Algo OpRisk will enable the bank to remain ahead of the field. “There is pressure to provide the most advanced, up-to-date systems that meet evolving standards. Algorithmics more than fulfils our requirements in this regard.”

Implementation will begin with the OpData module that collects and manages operational risk data in a highly secure, auditable fashion. Van Wyk is confident that Absa will be able to upgrade to Version 4.4 following the expected release in the new year. The bank has also licensed the OpCapital module that uses Algorithmics’ Mark-to-Future methodology for an advanced loss distribution analysis and enhanced capital allocation. Said Anne-Marie Pothas, head of operational risk at Absa, “From a modelling perspective, Algo OpRisk is the best fit for a tailored solution.”

One of the solution’s key benefits is that it meets Basel II requirements, including loss data collection and tracking, capital calculations, and internal risk-control assessment. South African banks are recognized to be well prepared to meet such requirements. Pothas explains, “Basel II is a key driver in all of this but operational risk standards will evolve beyond the new Accord. We need the right systems to provide us the right information in order to make smart decisions and better manage our business. Algo OpRisk will be a springboard for our Basel II and post-Basel business plans.”

Absa has also been using Algo Market in production for several years. “We are very pleased to continue our relationship with Absa,” said Michael Zerbs, Chief Operating Officer at Algorithmics. “The common risk architecture that Algo Market and Algo OpRisk share will provide Absa with tangible business benefits such as consistency and transparency of risk measurement”.

“Algorithmics has been a ideal partner in this regard as they have agreed to work alongside us as we move forward with our strategy,” concluded Van Wyk and Pothas.

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