Basel-II News

Versabanq's Asset Management Software Set to Help Financial Institutions Reap the Business Benefits of Basel II

(Nov 27, 2007)-- All major Canadian "Schedule 1" (or "chartered") banks passed a significant milestone on Thursday, November 1 by becoming "Basel II" compliant. Basel II is an accord that aims to create an international standard for national banking regulators to use when setting regulations about how much capital banks need in reserve to guard against financial and operational risks from their lending and investment practices.

The "Big Five" Schedule 1 chartered banks accomplished compliance following a major, multi-year, implementation process alone equal to the $750 million "Y2K" effort of Canada's chartered banks. Now it is the turn of other Canadian financial institutions to meet the Basel II challenge.Basel II compliance can deliver significant business benefits and competitive advantage if implemented effectively. Canadian financial
institutions such as the 1,595 credit unions and caisse populaires that serve over 10 million Canadians, trust companies, even some insurance companies and brokerage firms, now have the opportunity to "opt in" to reap the benefits of lower capital requirements and the business benefits of reallocating that capital that Basel II compliance enables.

"In theory financial institutions will benefit from adaptation of Basel II because compliance involves implementing analysis techniques that will increase an organization's understanding of its business, which leads to better risk measurement, risk management and more effective decisions," said Warren Shiau, Lead Analyst IT Research, The Strategic Counsel. "In practice, the system investment required for Basel II and its complex risk analysis methods can be a barrier to effective adoption at the credit union or caisse populaire level."

Featuring enhanced corporate risk measurement and risk management techniques to assess and track credit and operational risk, Basel II's adoption encourages use of more sophisticated capital-allocation and risk
management calculations, which allow even smaller financial institutions to leverage their Basel II technology investment beyond mere compliance, and more efficiently allocate capital to benefit the bottom line.

London, Ontario-based financial software provider Versabanq Innovations in response to this opportunity, offers Basel II-compliant asset management software, Versabanq AMS (Asset Management System), a stand-alone software product. AMS is the result of five years of continuous development and "real-time" use by Pacific Western Bank of Canada and is well-suited to help small and medium-sized financial institutions, such as credit unions and others, better risk manage their complete lending portfolio, including term
loans, leases, mortgages, and other assets.

Improved risk management of the credit decision-making process can enable financial institutions to better evaluate new business opportunities, and manage credit portfolios in an increased efficient and rational manner. As a result financial institutions can, with much greater ease, identify the target credit exposures that provide the best return relative to risk. Senior management is also empowered to proactively pursue business strategies that increase deal volume and maximize profitability within the boundaries of the institution's risk appetite.

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