Bank Leumi is using SAS Credit Risk Management to help maintain an overall capital ratio of 14-14.5%, while delivering superior shareholder returns. Bank Leumi developed its own commercial and corporate credit risk methodology supported by advanced risk architecture. The bank needed a solutions provider with deep experience building best-fit solutions for credit risk management to build a single credit-risk database to support all aspects of the credit-risk management system.
“Our credit risk management approach goes beyond regulatory requirements, which do not necessarily add business value,” said Boaz Galinson, head of the credit risk modelling and measurement group at Bank Leumi. “Rather, our role is providing information that will help the business make the right decisions.”
Galinson believes that risk management analysis must be integrated into the business. A key lesson from the credit crisis is that risk management should answer questions raised by senior trade officers and not remain on the sidelines. Bank Leumi has developed a competitive advantage through innovative management of the risk profile of its commercial and corporate credit portfolio. More complex than retail banking, corporate portfolios reflect more varied business needs.
In addition, concentrations of credit risk (i.e. the risk profile of a group of connected obligors, a sector, a geography or a significant obligor) can affect the bank’s total portfolio. This is particularly challenging when the commercial and corporate portfolio includes untraded companies with no external credit rating.
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