FERNBACH launches FlexFinance® Liquidity

Luxembourg - 24 October 2006

New software sets industry standard for ensuring optimal liquidity management by quantifying liquidity risks

FERNBACH has released FlexFinance® Liquidity, a software application that allows a bank to comprehensively manage its liquidity forecast. FlexFinance® Liquidity enables banks to manage its solvency and funding strategy.

FlexFinance® Liquidity is the newest product in FERNBACH’s enterprise-wide Value and Risk Management product suite.

In liquidity management, incorrect decisions and unexpected risks can lead to high funding costs. On the other hand, high costs can result from over-careful stock-piling of liquidity as a result of a lack of knowledge regarding the true liquidity situation. Such problems largely come about when there are deficiencies in the basis for decision-making due to poor data quality and slow processing, inappropriate methods, erroneous assumptions and incorrect conclusions.

Also, ever evolving regulatory requirements such as Basel II require financial institutions to have comprehensive and sophisticated management of their liquidity and risk. Banks must quantify and report their ability to identify and compensate potential liquidity shortfalls in relation to their ability to bear risk. FlexFinance® Liquidity enables users to have a comprehensive and consistent view of overall liquidity, ensuring sound cash management and risk management and providing data transparency down to the individual cash flow.

FlexFinance® Liquidity is the first solution on the market that:

. Offers a consistent methodology for addressing insolvency risk and liquidity related profit and loss risk;
. Offers full coverage of regulatory requirements such as Basel II, including national discretion requirements;
. Includes the risk bearing ability (CounterBalancing Capacity);
. Simulates and maps risks such as the volatile behavior of savings;
. Flexibly simulates market parameters and hypothetical deals, making it possible to develop multifaceted scenarios and to analyse their effects on the liquidity exposure and costs; and
. Is built on a differentiated cash flow concept so that liquidity risk, cash and funding can be managed from a single solution.

Robert Fiedler, head of strategic product management at FERNBACH-Software S.A., said: “Banks are increasingly seeing liquidity management as more than a compliance issue. For those with superior liquidity management capabilities, there is an opportunity to secure competitive advantage. FlexFinance® Liquidity provides a consistent view of the bank’s liquidity exposure as well as its risk bearing ability and plays an important role in enabling value and risk to be managed across the enterprise.”

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