Smarter risk management enables more business
Landbouwkrediet implements SAS ® for Basel II compliance
Landbouwkrediet is among the first banks to meet Basel II regulations. Triggered by increasing regulatory pressure from banking authorities, Landbouwkrediet initiated a project aimed at smarter risk management. Together with SAS, the bank implemented a solution in only nine months that generates better and faster reporting. It will also help calculate required capital reserves and risks more accurately, enabling more banking business. Philippe Eulaerts (Director Reporting and Control) and Joris De Backer (Risk Manager) explain how SAS offered the perfect solution.
Landbouwkrediet, a member of the Credit Agricole group, is a 70-year-old Belgian bank with roots in agriculture. Its retail banking and commercial enterprises have grown to almost equal its agricultural interests. In 2006, the bank reported a growth rate of 49 percent, according to International Financial Reporting Standards (IFRS), with a net result of 52 million euros. In recent years, it acquired Europabank and Keytrade Bank. Landbouwkrediet was officially recognized as a bank insurance company in 2007, further strengthening its market position. It now has 1,700 employees, 280 branches and 430,000 customers.
Fully support the requirements
Basel II compliant in nine months
Successful project approach
Detailed insight in risk exposures
Basel II also provides an opportunity for banks to better calculate their risks. DeBacker notes that a more stringent calculation of required capital reserves tends to free up capital for additional transactions and thereby enable new banking business. In fact, Basel II allows banks to propose their own calculation methods and have them validated by the appropriate authorities. This is known as Internal Ratings Based (IRB) calculation. Landbouwkrediet now plans to switch to IRB calculations within two years. The bank will simply take advantage of the analytical data mining capabilities already built into the SAS tool. “SAS offers a very powerful instrument which has all the required tools to support risk modeling, including ROC curves, Lorenz curves, the Gini coefficient, logical regressions and decision trees,” said De Backer.
Staff from the Landbouwkrediet business lines is currently developing the risk models in SAS, while Risk Management validates them using the same tool. Eulaerts has great confidence. “We have top-quality staff, consultants and software,” he said. “I am certain we will succeed.”
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Joris De Backer
Meeting Basel II regulations and improving risk management
SAS Credit Risk Management for Banking
– Better and faster decision making: The new SAS solution gives detailed insight into risk exposure, enabling management to take timely and appropriate actions.
– More banking business: More stringent risk management frees up capital for additional transactions.
– Easier switch to Internal Ratings Based (IRB) calculations: SAS supports risk modeling with its built-in analytical capabilities.
“Thanks to SAS we were fully compliant with Basel II in only nine months. In the future, we intend to go further and calculate our required capital reserves even more accurately, also using SAS.”
Joris De Backer
Risk Manager, Landbouwkrediet