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The recent US financial meltdown and the unfolding of the European debt crises have added more pressure on banks to develop deeper visibility into their liquidity risk profiles and meet new tighter regulatory requirements.

 

A fundamental problem banks face when measuring liquidity risk is dealing with the massive amounts of cash flow transactions that need to be constantly tracked and analyzed. Legacy BW architectures and technologies have made it impossible for banks to develop real time insights into these cash flows. The time gap between recording the cash flows and analyzing them meant that banks had to rely on outdated information to understand something as critical as their liquidity position and ability to fulfill their future financial obligations.

 

Moreover, the recent Basel III regulations that were introduced require banks to subject their cash flows to different stress scenarios to better understand how their liquidity risk positions would be impacted under different market conditions. This made it even more critical for banks to have a lightning fast solution that is capable of analyzing these massive numbers of cash flow transactions according to various predefined simulated scenarios.

 

SAP has recently released-to-customer a new HANA solution that will help banks develop real time visibility into their liquidity risks and take corrective actions to address any cash flow gaps that might impact their liquidity positions.

 

SAP Liquidity Risk Management is a new HANA powered application that provides banks with the ability to perform real time, high-speed liquidity risk management and reporting on large volumes of individual cash flows. The solution makes it possible, to instantly measure key liquidity risk figures, such as Cash Flow Gaps and the Basel III Liquidity Coverage Ratio,

The solution also allows banks to apply different stress scenarios to gain a deeper insights on how market volatility can impact their Forward Cash Exposures. Banks can also take corrective actions through calculation of the Counterbalancing Capacity to resolve potential liquidity bottlenecks.

Other solution benefits include:

·         Calculate global liquidity risk profiles on hundreds of millions of cash flows within seconds

·         Support for Key Basel III ratios

·         Ability to predefine stress scenarios through adjusted run-off rates and bond hair-cuts

·         Seamless drilldown functionality into cash flows by country and product at the day level

·         Reduce borrowing and funding costs with real-time liquidity visibility

 

You can read the solution brief and watch a short overview and demo video about the solution here Link


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