Commonwealth Bank of Australia (CBA) has selected Algorithmics' Sentry collateral management solution for the mitigation of credit risk.
CBA purchased a 50-agreement license, enhanced customer support and an API toolkit, and is investigating the acquisition of additional modules, following rollout and implementation of the core module in early December.
The Sentry product records and tracks master/collateral agreement information and calculates margin call requirements. Additionally, Sentry monitors the status of collateral obligations, collateral inventories and provides management information.
Jean Jacques van Helten, senior risk executive, credit and market risk, CBA, says the bank selected the Algorithmics package after a thorough review and positive references from other Sentry users world-wide. He adds: "Sentry is a sophisticated yet user-friendly piece of work and it removes the ambiguity and inaccuracies inherent in the collateral management area. Most importantly, the technical skills of the Sentry support staff and backup provided by Algorithmics was a decisive factor in acquiring the product."
Van Helten foresees a time when CBA will expand the package beyond its original credit risk remit and use it to deal with a wider range of counterparties in the Australian market, especially lesser-rated counterparties. He says the bank is interested in exploring the revenue-generating potential of the system through the re-hypothecation of collateral.