Category: News

Colin McKay joins as Chief Operating Officer

Posted on by Julie Duncan

November 1st 2015, ALMIS® International announces the key appointment of Colin McKay as Chief Operating Officer (COO). This key appointment signals an exciting new phase in the expansion of the company, established in 1992, which has seen significant growth over the past two years. ALMIS® International now supports over 50 clients with the development of a comprehensive Asset Liability Management (ALM) and Regulatory Reporting solution for small and mid-size banking firms.

Joe Di Rollo, founder of ALMIS® International, will transition from his current roles of Managing Director and Head of Operations, to that of Chief Executive Officer (CEO), with an intention to concentrate on product development, customer relations and regulatory developments.

Already a Non-Executive Director of ALMIS® International for some time, Colin now assumes his new executive role after 25 years as a finance lawyer advising banks in domestic and international markets. During spells in London, Tokyo and Edinburgh Colin has worked in several firms including Freshfields, Eversheds and most recently Shepherd and Wedderburn. Along the way he has led service delivery teams, held various management positions and run several key financial institution accounts.

Colin said, “Joe has developed a world-class solution which the banking market needs now more than ever. With the support of a loyal and expanding client base, the prospects for growth of the business are exciting”.

In welcoming Colin to the team Joe comments,” I believe Colin has the ideal combination of banking expertise, management best practice and customer relations experience to take us forward to the next stage of growth and consolidation.”

ALMIS® International hosts its annual user group meeting later this month at which clients will have the opportunity to meet Colin and hear of his initial plans.

For more information, contact Jenna Haston by email or call on 0131 452 8898.

LCR under the new Delegated Act 58 Banks and Building Societies attend ALMIS® webinar

Posted on by Julie Duncan

From 1st October all UK Banks and Building Societies are required to produce the LCR under the new delegated act. To help bring clarity to the new delegated act and address the key points which affect small banks and building societies ALMIS® International, already experts in delivering an automated solution, hosted a highly informative and interactive webinar on Tuesday 29th September, attended by 58 delegates.

The webinar was led by Joe Di Rollo (Managing Director) of ALMIS® International and covered the main points for completing and calculating the new LCR.

This webinar was very relevant to understanding and navigating the issues posed by the new CRD IV liquidity regime which came into force on 1st October. There is definitely an appetite for greater understanding of the new regime and discussion of the more complex and ambiguous issues, as evidenced by the high turnout from both banks and building societies. Everyone agreed on the need for clarity in order to achieve effective compliance and best practice.

The webinar focused on the main points for completing and calculating the LCR and highlighted some key issues.

Key Issues

There is now increased choice for investing in HQLA’s (High Quality Liquid Assets). Delegates were asked which instruments they are considering. The results are captured in the graph below:

lcr-webinar-graph

Outflows are the most complex part of the return with some interesting differences in interpretation. One example of different opinions in interpretation discussed at the webinar is detailed below:

If a customer has a balance greater than the FSGS limit (shortly to be £75,000) should the entire balance be treated as a higher risk outflow of 10% or only the portion of the balance above the insured amount?

The EBA FINAL draft implementing technical standards states:

1.1.1.2 Deposits subject to higher outflows

“Credit institutions shall report here the full balance of the deposits subject to higher outflow rates in accordance with paragraph 2 and 3 of Article 25 of Commission delegated regulation (EU) 2015/61. Those retail deposits where the assessment under paragraph 2 of Article 25 for their categorization has not been carried out or is not completed shall also be reported here”.

This wording suggests that the intent is for the entire balance to be considered non-stable.

On the other hand…

Article 25 para 1 – Credit institutions shall multiply by 10% other retail deposits, including that part of retail deposits not covered by Article 24.

Firms are interpreting this to mean that only the excess over the guarantee is subject to the higher outflow.
ALMIS® software is designed to handle both interpretations.

In summary, ALMIS® is already a fully automated solution which produces the LCR from core data. This same core data is used for liquidity adequacy and analysis, providing a reliable, automated system to help ensure efficient compliance with the new regulations, regardless of interpretation.

For the presentation slides, please contact Jenna Haston by email on [email protected] or call on 0131 452 8898.

Liquidity under CRD IV and ALMM – Additional Liquidity Monitoring Metrics – Is there a positive aspect?

Posted on by Julie Duncan

The imminent introduction of the new LCR and ALMM will indeed increase the volume and even frequency of reporting for many Building Societies but, after closer inspection, is it all bad news or can firms use this data to their competitive advantage?

Volume of Reporting

The amount of regulation reporting for liquidity from each individual firm is now twice the volume that the entire UK Building Society sector was producing prior to 2008. The six new ALMM reports alone contain over 15,000 data points. The new ALMM reports can be considered work in progress as the EBA gain approval from the European Commission and they add technical definitions and validations. For a temporary period, firms are reporting three different cuts of liquidity data as regulations move towards new standards.

Proportionality

There are, however, positive aspects to the new regime announced recently by the PRA.

  • Daily reporting will not be a requirement for firms with >£5bn assets.
  • The new LCR (liquidity under CRD IV) replaces the BIPRU 12 type A/B approach, is more rules based than principles driven and for many produces a lower minimum.
  • The minimum liquidity target is therefore considered easier for most building societies.
  • There is now a wider range of instruments to invest liquid assets.

Turning Compliance to Competitive Advantage

The volume and ‘work in progress’ nature reporting demand that all firms implement smart, automated and flexible systems. The up side though of getting this right will enable firms to better analyse and manage liquidity to their advantage – providing more accurate visibility over a Funds Transfer Pricing allowing understanding of the true cost of liquidity and how to best manage this.

To assist with this, we are developing auto population for four of the main reports and this auto population will be available from beginning of September 2015. We have also prepared a document that explains the reports and a more detailed ALMIS® specification.

For further information or to request an ‘ALMIS® Guide to understanding ALMM’, please contact [email protected]

IRRBB Consultation Document Published by Basel Committee on Banking Supervision

Posted on by Julie Duncan

The Basel Committee at the Bank for International Settlements has just published (8th June 2015) its consultation document on a review of the regulatory treatment of interest rate risk in the banking book (IRRBB).

The BIS wants to strengthen the treatment of IRRBB to ensure that banks have appropriate capital to cover potential losses from their risks to changes in interest rates. Also, to limit any capital arbitrage between the trading book and the banking book, as well as between banking book portfolios that are subject to different accounting treatments.

The BIS is seeking comments on two options for the capital treatment of interest rate risk in the banking book:

  • a uniformly applied Pillar 1 measure for calculating minimum capital requirements, to promote greater consistency, transparency and comparability, thereby promoting market confidence in banks’ capital adequacy and a level playing field internationally;
  • a Pillar 2 option, which includes quantitative disclosure of interest rate risk in the banking book based upon the proposed Pillar 1 approach, which would better accommodate differing market conditions and risk management practices across jurisdictions.

The outcome of this consultation may be expected to feed through – in due course – into amended EU capital rules and will therefore, impact all UK Banks and Building Societies. ALMIS® International are at the forefront of providing a dedicated solution to IRRBB through its market risk module. Banks are invited to make comment before 11th September 2015.

For more information, contact Jenna Haston on 0131 452 8898 or email [email protected]

Scottish Business Pledge

Posted on by Julie Duncan

scottish business pledge

ALMIS® International are delighted to make the commitment to the Scottish Business Pledge.
The Scottish Business Pledge is a values-led partnership between the government and business. It is a shared ambition of boosting productivity, competitiveness, sustainable employment, and workforce engagement and development.

It is built on:

  • a commitment from the Scottish Government, and its partners to support sustainable business growth in Scotland
  • a voluntary code of business practice which you can use to guide and boost the future development of your company
  • a mutual pledge to ensure that prosperity, innovation, fairness and opportunity develop hand in hand in Scotland

Look out for more updates in the coming months around how ALMIS® International pledge to deliver on all nine components of the Scottish Business Pledge.

To find out more, please visit Scottish Business Pledge

Increased Regulation Reporting from June 2015

Posted on by Julie Duncan

Banking institutions across Europe are having to deal with increasingly complex reporting requirements. This is a significant challenge (and cost) for finance departments in Building Societies. At ALMIS® International, we are pleased to provide these additional reporting capabilities seamlessly, on time and without additional cost.

The European Banking Authority has recently published COREP/FINREP Taxonomy 2.3 – for submissions from June 2015.  The focus of the v2.3 taxonomy is on the introduction of Additional Liquidity Monitoring Metrics (ALMM), Supervisory Benchmarking Portfolios (SBP) and corrections to the Funding Plans package released in v2.2, with minor on-going amendments to COREP and FINREP. This has resulted in around 25 new COREP templates.

Taxonomy 2.3.0.0 includes;

  • Over 560 formula assertions changes (additions, reactivated, reintroduced and deleted)
  • 80 changes to overall templates (new and amended)
  • 15 new entry points,  bringing the total to 50
  • First appearance of a metadata item in the taxonomy itself that identifies the “effective to” date of the taxonomy package version
  • A new feature of the validation rules spreadsheet is the ‘severity’ column, with values ‘Blocking’ or ‘Non-Blocking’ for each rule

In addition there are new liquidity reporting requirements and templates which are yet to be finalised and will come into force next year.

EBA releases 2.3 Taxonomy to commence 30th June 2015 containing new ALMM and SBP templates.

For more information on how the ALMIS® solution can work for you, contact Jenna Haston on 0131 452 8898 or email [email protected]

Former ALMIS® developer creates new ALMIS® website

Posted on by Julie Duncan

When we decided to develop a new website for ALMIS® International, the top priority was to optimise our two-way communication with clients. We wanted to make it as easy and as effective as possible for you to monitor support issues, product updates, issue fixes and to give us real-time feedback on the product enhancements that are key to your ALM and Regulatory Reporting processes.

Lighten with Chris as its CEO (or Chief Lightening Officer), was the ideal company to develop the new website. Chris worked as a developer at ALMIS® International in the early days and understands at first hand the power and potential of ALMIS. Chris was the second programmer to work on the system (from 1993-1995) and oversaw the move from Clipper to Visual Objects.

Over ten years ago Chris established his own website development company – Lighten, building elegant web applications which combine great design with software excellence. This was exactly the combination ALMIS® International wanted for the new public and client areas of our website.

The team at Lighten not only specialise in WordPress but have built their own software for managing WordPress websites on a dedicated private cloud. This ensures greater security than other providers, who simply resell generic hosting packages – a factor which is key to the ALMIS® client area. This combined with bespoke technology and flexibility for future development is a winning combination.

Feeling over regulated? Don’t forget to make a healthy interest margin in 2015

Posted on by Julie Duncan

The new regulations that came into force last year and continue into 2015 are a significant challenge particularly for Banks and Building Society finance departments.

The new prudential regulations focus on capital and liquidity. It is widely accepted that Building Societies and Banks have strong liquidity positions and control capital resources well and many close to the detail will find many of the new regulations not only resource consuming and expensive to comply but also not all that helpful. The concern though is we do not want these regulations to take focus away from making a healthy and sustainable interest margin. Managing interest margins needs to be the focus.
In 2015, Interest rate risk and margin management is getting more complex and needs constant scrutiny and analysis, particularly if margins are to remain healthy in the medium term.
Bank base rates have not have changed for years but finance and treasury departments know that Interest rate risk and margin management is probably now the most important financial issue for building societies in 2015.
In the last few months we have seen 10yr swap rates fall by over 50 bp, SwissFranc rates have turned negative and whist this may not effect building society and banks financials straight away, it is a signal of a fundamental change to capital markets.
These market rates are an expression of what the market believes shorter term rates are going to be over the medium to long term, and there is no doubt the market has modified its expectation of an early rise in interest rates. On the other hand competition for funding is increasing and the mix of interest basis on assets and liabilities is changing as building societies face the challenge of market and regulatory pressures. There are however, opportunities to build healthy margins and the finance department with skilled treasury and asset liability management expertise and analysis will be best placed to navigate this.
This involves a good FTP technique where the true cost of liquidity is calculated – a liquidity charge that is right for the particular firms and not based on assumptions only relevant to large firms that access wholesale capital markets. It needs good margin variance analysis to understand margin movements and the relative contribution of that different lines of business provide and most importantly a forward looking analysis that can provide management with a vision to implement the right business strategy. The good news is that it is also far more interesting than filling in COREP returns!
Wishing you all a prosperous 2015.

 

Integrated Solution – Consistent Internal and Regulatory Reporting

Posted on by Julie Duncan

ALMIS® gives financial institutions the ability to manage, monitor and report their financial risk profiles, providing their Executives and Boards with accurate information on current and forward looking positions to help them proactively monitor and plan. The same system provides a single version of the facts and for regulatory reporting.

BSA – Associate News : ALMIS® International article on Regulatory Reporting – Dealing with Change

Posted on by Julie Duncan

Regulatory Reporting – Dealing with Change

BASEL III, CRD IV, COREP, FINREP, BoE reports – the list is seemingly endless and, regardless of size or resource, all UK Building Societies have to comply with the specific demands of submission dates, report formats, data validations and auditability.

ALMIS® has helped more than 40 firms deal effectively with the burden and complexity of regulatory reporting.

ALMIS’ Feedback to Regulators

Our recent presentation to PRA supervisors, requested on behalf of firms, a single point of accurate validation rules to reduce instances of re-submissions. We also highlighted the interpretation differences and the need for more clarification.

Benefits of an Integrated System

Automation of reports and use of the same data sources for management information is a key objective for both regulators and firms. Societies that demonstrate synergy and joined up thinking in their approach are in the best position to take maximum advantage of the favourable interest margins and prove their competence to regulators.

With the rapid approach of the first FINREP submissions (with some clients asked to submit ahead of time), together with the new taxonomy 2.1 (including asset encumbrance reporting), finance departments must effectively combine their finance teams with technology such as ALMIS.