AMBIT

Treasury and ALM

HelpIng banks effectIvely manage tHeIr capItal

Industry Overview
In performing its core function managing the balance sheet in accordance with the policy set by the Asset and Liability Committee the treasury group within a bank examines the current asset and liability position with regard to current and possible market conditions. It then modifies the position as needed, taking historical and expected future conditions into account. In doing this, it should be skeptical of inflated performance plans and should challenge business strategies where necessary. Of key importance, the group ensures that new business is priced relative to its risk and maintains an unflinching eye on the market price for equivalent portfolios of risk. Across the balance sheet, the treasury group must always evaluate whether the best use of capital is for originating risk and holding, or buying-in, transferring or offsetting risk due to irrational pricing or product structuring. To enable it to accurately perform so many different activities requires a diverse staff with deep knowledge and skill across a wide variety of risk disciplines including credit, market, liquidity, operational, legal, and reputational risks. A treasurers activity centers on the balance sheet and on creating the appropriate governance structures, reporting mechanisms and the agility necessary to monitor and control balance sheet utilization. Of all of its responsibilities, perhaps the most important is developing an understanding as to how the banks business, departmental activity and market movements will influence earnings, both today and over an appropriate forecast horizon.

Ambit Treasury We now have a very high level of STP from the deal all the way through the system. Ambit ALM ...We can now create reports that integrate the right information from the relevant systems, enabling us to see the business like never before. Integrated Solution Ambit helps us pull data from our treasury operations and integrate it into our ALM process, thereby enhancing our trading and risk operations.
Jamal Saleh, head of risk management, Commercial Bank of Dubai

there are five principal risks managed by the treasury group: Accrual book market risk (interest rate risk) Funding liquidity risk Investment and derivative portfolio risks Counterparty credit risks Certain elements of capital risk In this regard, the treasury group should be focused not only on routine operational duties and roles as described above, but additionally should seek to understand the firms balance sheet risk exposures in as detailed and analytical manner as practical. Over time, the treasury group will be expected to evolve into a much more active balance sheet management function charged with instilling active risk management strategies across the traditional asset and liability, liquidity and credit risk groups Treasury solutions tend to give good insight into the trading book, particularly in terms of short term and hard values, such as funding gaps, interest gaps, Currency gaps, Value at Risk (VAR) and Nostro cash projections. Adding the risk element gives a much more rounded view on both the trading and banking books. For example, Nostro cash projections are one form of liquidity risk analysis but they are partial. In order to understand a banks liquidity risk position, the mean time to survival given external funding problems, a whole range of positions and instruments needs to be taken into account. In short the treasury group needs to be able to understand the position of both the trading book and the banks overall position, and they then need to be able to transact in the market to change these positions to a more appropriate level.

the solution
SunGard can help. SunGards Ambit Treasury Management and Ambit Risk and Performance Management solutions provide an integrated front-to-back, cross-asset solution for a banks internal treasury operations that reduces cost and risk by providing efficient processing of data and real-time risk and regulatory reporting.

key benefits
Integrated solution Treasury managers need to manage the banks position in line with the boundaries set either by the Asset Liability Committee or Executive Management generally and require integrated treasury and asset liability management solutions that provide the: Treasury group shorter term risk views built from transactional data such as, currency gaps, Nostro cash ladders and yield curve shift simulations. Chief Risk Officer / Asset Liability Committee boards with a longer term view that is more statistically driven. Improved visibility and control over Data An integrated the treasury management and asset liability management approach empowers the treasury group to better do their job as they can see the world also through the Chief Risk Officer view

Improved efficiency By providing a proper 360 degree position view, operating with sufficient depth, enables the treasury group to work better to manage the overall market exposure either by themselves or with the Chief Risk Officer depending on the banks structure. In particular, funding gaps, liquidity positions, currency positions, credit portfolio analysis and Asset and liability management help the Treasurer. An integrated approach also helps the bank, since a joined up view of position and risk is now seen (more than ever) as being important. The Chief Risk Officer also benefits since their interactions with the Treasury group are made easier once a common position view and outlook is achieved. economies of scale Today cost reduction and risk mitigation are high on the agenda of most if not all bank C level executives the term doing more with less is often used. SunGard has experienced more of its clients looking to build strategic relationships with their software providers at the same time as managing few third party relationships. This mitigates their vendor and project risks whilst still acquiring best of breed solutions from a partner that has the balance between innovation and pragmatism.

a localized solution Time to market in new regions is reduced by leveraging Ambits global focus. Existing customers use the solution in a variety of ways, including supporting their Islamic Banking treasury requirements.The solution has multi-lingual and multi-character set capabilities. customer portals Banks can capture a larger share of customers cash and FX business by providing an easy to use customer portal. Price discovery is transparent and transaction costs are less, so the customer is encouraged to do business. White label approach Allows the bank to target branding, messaging and new products direct to the customer over the Web. Integration of processes Reduce both cost and operational risk for the bank as decisions are made based on consistent data. centralized single view of cash and liquidity risk across the enterprise Changes to Nostro balances and forecast flows are available in real-time allowing better and timely investment, funding and hedging decisions. Regulatory reporting is available on-demand. Effective risk management requires that the people and processes that measure and report risk are an intrinsic part of front-office operations with access to the same data in a timely fashion. Risk positions need to be calculated and revalued in real-time and assumptions on future market movements must be stress-tested regularly.

features
comprehensive asset class coverage Time to market for the bank to offer new products is improved as the bank is not waiting for the technology to catch up.

www.sungard.com/ambit

The Well Managed Bank The financial crisis led to the realization that banks need a prudent, long-term balanced view of their business. As the global economy begins its recovery, banking leaders are refocusing on their core business principles; theyve recognized that their sustainability is provided by their customers; that their business operations rely on the expertise of their staff, however much this is leveraged with technology; and that their capital represents their ability to survive into the future. The key therefore, is to ensure that these three assets are managed in a balanced, risk adverse and profit focused manner. SunGard can help. SunGards Ambit banking solution suite helps retail, corporate and private banks to better manage their customers, staff and capital. We work with over 800 customers in over 70 countries, providing services and solutions to help them retain and acquire customers, achieve dynamic staff efficiency and effectively measure and allocate their capital. Stability in Tough Economic Times Backed by SunGard. SunGard is one of the worlds leading software and IT services companies with more than 25,000 customers in more than 70 countries, including the worlds 25 largest financial services companies. With annual revenue exceeding US$5 billion, SunGard is ranked 435 on the Fortune 500 and is the largest privately held business software and services company on the Forbes list of private businesses. Based on information compiled by Datamonitor*, SunGard is the third largest provider of business applications software after Oracle and SAP.
*January 2009 Technology Vendors Financial Database Tracker http://www.datamonitor.com

For more information please e-mail us at ambitinfo@sungard.com or visit us at http://www.sungard.com/ambit

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