Risk & equity management

A sustainable and profitable allocation of equity, taking into account the customer business, own investments, market risks and, in particular, interest rate risk, is an important success factor that has not been prioritized enough to date.
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Framework conditions and current challenges:

Framework conditions and current challenges:

  • Dynamic credit growth, regularly tightening capital requirements (e.g. Basel IV, RBC Directive) and rising risk costs are turning equity into a bottleneck factor for many savings banks and cooperative banks.
  • CONFIDUM considers both the strategic allocation based on capital market scenarios and the operational optimization in individual areas of use in the sustainable and profitable allocation of equity. Methodologically, the present value effect as well as the P&L effect is analyzed.
  • Optimum use of equity is a key cornerstone of CONFIDUM strategy projects. In addition to the latest regulatory know-how and capital market scenarios, CONFIDUM has extensive experience in the area of RWA optimization in the client business. Together with its cooperation partner ACM Alpstein Capital Management AG, CONFIDUM has also developed structured access to AT-1 capital for regional banks.
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CONFIDUM expertise and range of services (excerpt):

CONFIDUM expertise and range of services (excerpt):

  • RAROC analyses across all asset classes and risk positions on the balance sheet
  • Analysis of the existing asset mix
  • Simulations based on capital market scenarios
  • Definition of a target mix of asset classes and risk positions
  • Development of an implementation strategy
  • Optimization of the capital structure and evaluation of options for external capital strengthening
  • RAROC analyses across all asset classes and risk positions on the balance sheet
  • Analysis of the existing asset mix
  • Simulations based on capital market scenarios
  • Definition of a target mix of asset classes and risk positions
  • Development of an implementation strategy
  • Optimization of the capital structure and evaluation of options for external capital strengthening