Sponsor's Article > Alliance & Leicester Uses SunGard's Basel II Capital Manager

By providing the relevant calculations and analysis, Basel II Capital Manager will help Alliance & Leicester to achieve compliance and accreditation for the Basel II Internal Ratings Based (IRB) approach for capital calculations. With the ability to use the IRB approach, the bank would expect to free capital that it currently must set aside under existing regulations to cover exposure to potential credit losses.

Alliance & Leicester is using the SunGard solution to predict the capital savings it may enjoy by using the IRB approach when Basel II goes into effect. It uses SunGard Basel II Capital Manager’s factor generation, capital credit calculator and provisioning modules within its credit risk department to generate probability of default, loss given default, expected loss and risk weighted assets within its retail banking operations. The process includes the analysis of mortgage and unsecured portfolios. Alliance & Leicester uses the results to compare capital numbers required under Basel ll against current capital requirements, for a view into future capital savings.

SunGard Basel II Capital Manager provides Alliance & Leicester with capital and economic calculation models for its retail credit exposures, stress testing and reporting for market disclosure, and the flexibility to model different rules for various asset types and to incorporate on-going changes in regulations. SunGard Basel II Capital Manager can also be used to compare the standardized, foundation Internal-Ratings Based (IRB), and IRB Basel II approaches for credit risk, as well for ‘what if’ analysis, stress testing across the retail and wholesale banking books, and Basel II reporting.

Simon Navin, retail Basel manager at Alliance & Leicester, said, "We considered other systems but SunGard had the most efficient, all-round solution and long-term vision for Basel II. The flexibility of Basel II Capital Manager’s model has enabled us to develop advanced models across a broad risk spectrum, including risk segmentation analysis, stress testing of our retail portfolios, and loss provisioning on an expected loss basis. Using Basel II Capital Manager we are aiming to achieve accreditation for the most advanced internal ratings based approach under Basel II."

Terence Faherty, president of SunGard's BancWare operating unit, said, "Capital calculations and data integration are central and challenging requirements of an overall Basel II framework. Basel II Capital Manager can help Alliance & Leicester and other financial institutions to develop risk-sensitive approaches for managing regulatory and economic capital, as well as improve credit risk management with increased transparency, efficiency and cost savings. SunGard also provides the necessary data integration tools, and an overall framework for credit risk management."

About Alliance & Leicester

Alliance & Leicester is one of the UK's major financial services groups. It offers a broad range of financial services to personal, commercial and small business customers. Alliance & Leicester has been a member of the FTSE 100 index of leading shares since converting from its original mutual building society status in 1997.

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