Source: Risk Integrated
Risk Integrated, a consulting and technology firm focusing on risk management for specialized finance today announced that West Bromwich Building Society, one of the UK's leading building societies for commercial lending, has installed the firm's Specialized Finance System (SFS).
This will further strengthen the risk management of its commercial real estate portfolio and help in assessing complex structures for new deals.
At a time of increasing regulatory and risk management pressures, West Brom Building Society is using the SFS to strengthen the quantitative analysis of credit risk, both for structuring new deals and in monitoring the portfolio's overall profile. This will help to improve profitability, allow senior management deeper insights into commercial real estate (CRE) deals for business planning and keep the bank firmly in line with the practices of the world's leading commercial real estate institutions. The SFS is now live after undergoing two months of testing with the Building Society, which chose the system above a number of competitors because of its comprehensive functionality, proven track record and readiness.
"Although experienced lenders have an intuitive understanding of how a deal's features will be reflected in the risk, it is difficult to always accurately assess the probability of default in complex CRE deals" says Mike Nixon, Managing Director of West Bromwich Commercial Limited. "Risk Integrated has given us the ability to quantify, for example, the extent to which hedging interest rates can reduce the probability of default. We expect these insights to be a major factor in the development of new business."
Yusuf Jafry, CTO, Risk Integrated commented, "It has been a pleasure working with West Bromwich Building Society - it has been such a smooth implementation. We will continue to support the Society and look forward to seeing it reap the benefits from further insight into the risk profile of the growing portfolio. In addition, this paves the way to meet the Advanced capital requirements for Basel II."
The project was implemented in four phases, with Phase 1 allowing the building society immediate access to the SFS via Risk Integrated's ASP web server. This allowed West Bromwich Building Society to tetest the SFS and quickly satisfy itself that Risk Integrated covered the needs of the Society.
In Phase 2 West Bromwich Building Society specified some minor changes to the system including customised graphs and a reformatting of the automatic credit committee report. In Phase 3 the enhanced system was installed in-house on the Society's servers and in Phase 4 the system is being linked to the Society's core banking systems for analysis of the live portfolio.
The system will be supported through a multi-year maintenance agreement with Risk Integrated.