Finnish Alandsbanken is strengthening its risk management tools

Finnish bank Alandsbanken is strengthening its risk management tools

Nordic bank Alandsbanken has chosen risk management tools from SunGard, which it says will help the bank to comply with new financial regulations. SunGard’s Ambit Risk and Ambit Performance products will be used by the bank to manage interest rate and liquidity risk and help the bank keep track of its balance sheet.

Alandsbanken began as a small regional bank in Finland; the bank takes its name from the Aland islands off the coast of Finland and Sweden. The bank now covers both countries from its headquarters on the island town of Mariehamn, with Sweden accounting for around a third of its business according to Heli Huhtala, head of group treasury at Alandsbanken.

Huhtala told Banking Technology that the need to cover FX, credit and liquidity risk increased as the bank expanded its activity across the Baltic Sea into Sweden over the last five years. Ambit will help Alandsbanken with reporting for liquidity capital and net stable funding ratios.

“We needed a tool to help us capture the risk across all of our balance sheet, not just parts of it,” said Huhtala. “For example, we use derivatives to hedge and manage our risk. At the same time, we need to cover both assets and liabilities holistically, and a system that can provide a view of both is critical to earning higher returns.”

Risk management has taken a larger profile in recent years, partly as a result of large fines levied on major global banks for failings in their internal risk management. Then in December, HSBC was fined £1.2 billion for failing to adequately prevent its operations being used to finance fraud and illegal operations in Mexico and the US. The same month, Standard Chartered agreed to pay £204 million to the US for illegally breaching that country’s sanctions on Iran.

The other factors that swayed the bank were the potential reduction in costs arising from the automation of manual processes and the elimination of risk from spreadsheet-based record-keeping, and the need to deal with more frequent reporting requirements from financial regulators such as Sweden’s Finansinspektionen.

“We can’t afford to expend all our resources on reporting, so it’s a big help to have a system that can take care of our needs in this area for us,” said Huhtala. “New efficiencies through data integration and reporting will not only help us to better comply with regulation, but will also help us to boost performance and enhance our competitiveness.”

Finnish banks POP Pankki and Saastopanki are also adopting Ambit Asset and Liability Management and Ambit Liquidity Risk. The tools will be used to help both banks carry out deterministic and stock analysis and develop their internal risk strategies.