The importance counterparty risk Part-2

In the long run, it is best to think of more sustainable solutions and, in this regard, the levers are very diverse appointment of quality managers in the contributing entities, workflow validation of customer data, standardization of concepts, comparisons with external sources, management of several criteria of uniqueness. The possible solutions are many but their cost, period of implementation and impact on data quality is variable. However, the prioritization of these actions is often subjective: some effects more "visible" are given priority while others are ignored because their quality impacts are unknown.

The success of the business plan requires a continuous improvement in performance. It should be laid down in processes that involve the third party repository, a real cornerstone of the IF bank. Based on the quality approaches used in industry, the virtuous cycle is divided into five phases: definition of indicators and quality objectives of the standard, indicators measuring, analyzing results, identifying actions to improve the quality control of the effect of implemented solutions. We propose in this article, to limit ourselves to the first two phases that we consider most important.
The definition of indicators based on the combination of an empirical, research-based elements of non-quality in the device in place, and a theoretical approach, having as a starting point to identify key parameters management customer risk:
To invest in the improvement actions that correct the non-quality aspects of the most sensitive, the first step is to build a balanced scorecard indicators are most representative. It is an indispensable asset to the achievement of a critical diagnosis and appropriate vis-à-vis business strategies (risk, marketing, sales ...) defined. While some indicators can be retained only for statistical purposes, the others must be action-oriented: this means they must be involved in a lens quality (which will result in the definition of alert thresholds or levels of expected results ...) and an action plan to achieve the objective. The role of each business management and / or SI concerned to arrive at the expected level of quality must be so in a charter previously defined: it is one of the key success factors of the process.

The importance counterparty risk Part-1

Despite the efforts made by financial institutions to ensure compliance with the Basel 2, the internal audits and supervisory bodies highlight gaps in devices management. Beyond the third scoring models in place to comply with regulations (Basel II and Solvency II in particular), financial institutions must continue efforts to ensure a sustainable level of quality control and so effectively and Reliable customer risk. If there are relatively simple and fast to improve data quality, only a comprehensive approach and equipped keeps this level over time and create a culture of quality in financial services, with the image of the industry.

The banking and financial regulation on the internal control of credit institutions and investment firms provides an outline of points to watch it should be integrated within the device management of counterparty risk. To ensure compliance with regulations and ensure the proper level of control internally, branches wish to have the core quality indicators ensuring the validity of the information system risk management, validating the defined risk strategy and organization established to cover the risk client. The only way to dispose of is to use information systems to provide a quantitative analysis, but the relevance of these indicators is based on the quality of the IS.

System-level information, the presence of duplicates, unreliable links or combination obsolescence of customer identification are some of examples of non-referential quality of the third most frequently cited. If they do not prevent the IF function, these problems can have a significant impact on end users and in particular the process of consolidating risks, commercial pilot, the fight against money laundering and grant decisions. Shares of reliability, often initiated by the trades and in consultation with the project owners, are intended to identify areas of non-quality, identify the causes and identify pragmatic ways to mitigate or delete.

The first actions are almost always in the form of manual corrections. These projects mobilize substantial charges to align the repository with the reality-duplication, enhancement or correction of signs, etc ... In addition, these actions if they can have a satisfactory short-term, must be renewed frequently to maintain quality and fight against the progressive drift.

The key points of the implementation in PRC Part.II

Pressed for time; many institutions, even of large size, so consider the use of market solutions. However, uncertainties remain to be addressed regarding the maturity of the editors on this subject, including the ability to manage solutions in standard multiple levels of consolidation within international institutions. Nevertheless, difficulties in producing reliable and comprehensive reports on time are perhaps to be expected.

Reporting related to the Cooke ratio was traditionally produced and controlled by the Finance Department. However, since the implementation of Basel II and McDonough, new entities are involved in solvency calculations which are at the heart of the PRC.

This is the case of Risk Department, which focused knowledge of the risk-weighted assets for credit risk and operational risk (part of the calculation of McDonough). But it is also the case for Directions marketing, which often position themselves as providers of the data used for scoring Basel counterparts (also conditions the new ratio, for institutions using the "IRB").

It is therefore necessary to define now the control process and clarify the appropriate "service agreements" between the various entities. Indeed, the solvency ratio is at the heart of communication facilities and must follow a control circuit, validation, monitoring and operation, prior to its release or its internal operational use. In addition, aspects related to training will not be negligible in the success of the PRC, each actor in the "production line" to control the origin and impact of data it processes.

Therefore, the use of XBRL (data interchange format for technical interoperability) does not appear to be at the heart of the concerns of the banks. After all, it is only a computer translation of functional data model. This language is, moreover, already common in some international companies for internal reporting...

The key points of the implementation in PRC Part.I

Generally described as a technical project, including the use of exchange format "XBRL" PRC also includes business and organizational issues are often overlooked. Yet they are at least as important and appear to be at the heart of institutional concerns. The establishment of "production lines" PRC, as well as has responsibility for validation and controlling data, indeed require special attention.

From a business perspective, it is primarily the availability and reliability of data on the scope anticipated at the heart of the concerns. On the one hand, Basel II, which must come to power PRC data are not yet stabilized for most institutions (upgrades following the regulator's audits, review the quality of some data, adjusting assumptions modeling, implementation delayed for certain subsidiaries ...). On the other hand, some data expected by the PRC are not provided in standard areas of specific ventilation, presence of aggregates under Pillar II, or references to IAS
A "simple" translation between the PRC and the Basel II appears to be excluded, especially since it must incorporate data from the subsidiaries. The complexity of implementation is also increased for banking groups with entities abroad. In Europe, there will be no one single reporting. On the basis of a reference format defined by the CEBS, each national supervisor has established its own version of the PRC. Therefore, the parent company cannot simply broadcast a unique methodology and to manage complex rules for consolidation and verification. A true "challenge" for groups ADDITION consolidating subsidiaries is not subject to the PRC, nor even to Basel II.

Once key issues arise with regard to functional architecture; indeed, the options selected will be structural, not only because the PRC requires complex treatment (IRB cohabitation methods and standard collection of market risk, high volume ...) but also because it will be necessary to ensure the sustainability of production assumptions (audit ability and interpretability of data on the long term).

Subprime Loans and Crisis Management Part.3

In addition to the survival of the funds involved, the correction of the subprime loans crisis in the United States require "the finest tuning" in order not to fall from bad to worse:

* A massive intervention on behalf of borrowers bail out banks would prevent restoring forces to play their role in the crisis and resume cyclically in a few years.
* Conversely, an inadequate response - but allowing to clear the financial sector by eliminating litigation - would have a major impact on the U.S. economy, the real estate sector (in a city or 20% of loans are subprime, a price collapse would contaminate all borrowers), but also on consumption, the main engine of growth.

The consequences of this crisis will be dramatic for the hundreds of thousands of U.S. borrowers who find themselves in a situation of bankruptcy. The impact should also be very important on the U.S. economy, leading to a likely recession. The direct impact on the global economy has yet to understand the difficulties encountered in three areas.

(I) First of all in asset management systems credit derivatives played their part in spreading the risk. The investors then faced most of the losses.

(Ii) Then the current problems on the short-term liquidity should not continue, the central banks play their role as lender of last resort, and investors rediscovering the charm of the short-term investments.

(Iii) Finally, the credit business knows the beginning of a "flight to quality" that can only be healthy; all observers have denounced the excesses for several months, particularly in terms of investment funds whose growth should slow. You still have to remember that the currently observed spreads are still well below what they were from 2000 to 2001.

Nevertheless it is expected, in continental Europe, that governments use the crisis to demand an additional transparency on Asset Management. However, these trades have become so technical that it is difficult to make them accessible to the uninitiated to measure the risks actually incurred by the funds...

Subprime Loans and Crisis Management Part.2

In recent past the two assumptions above are not true:

* Declining housing market reduces the value of the mortgaged property falls below the debt
* Rising interest rates makes debt burden too heavy for a fragile population.

Moreover, these loans were sold with an initial period of 2 or 3 years with a fixed prime. Loans issued in 2004 and 2005 (time of highest award) so arrive at the end of this period and must be reattached in 2007, triggering a wave of defaults.
If the mechanism occurs on a large scale, the financial institution as a whole is threatened.


To optimize their use of capital, banks that granted these loans have securitized all or part of their subprime loans primarily through CDO or RMBS and this, with the blessing of most credit rating agencies.
Yields offered have attracted all investors: hedge funds but also the more traditional asset managers. Funds that meet today's challenges are mainly dynamic money market funds, which could offer higher yields, not more sophisticated hedge funds.

Defects increasing the sub primes, the value of credit derivatives is greatly reduced. The managers are then unable to calculate the value of their background, including lack of exchange of the instruments. They then suspend trading, causing investor panic. They wish to sell then all turn, forcing managers to temporarily close the funds until better days.

The funds that have affected not closed had to find cash to meet withdrawals; they then sold the only liquid assets, the shares resulting in lower market share.

Finally, some banks are highly exposed through their funds (including the German bank Sachsen LB, IKB, BBW, etc...) Must meet their losses and introduce and suspicion on the entire area causing tensions in the interbank market.

Subprime Loans and Crisis Management Part.1

In early summer, those fears were fueled by a potential overheating in China and more widely within the BRICs. But it is the first economic and financial power that the crisis began. The crisis is termed as "subprime loans" in the United States.

Indeed, the media outburst is over from negative expectations that cannot be definitely confirmed that over the medium term.

The loans are subprime mortgage loans to counterparties particularly risky, satirically nicknamed "NINJA" (No Income, No Job or Asset). These loans are secured by the good they have to acquire and pay high interest rates that can exceed 10%.

The difficulties faced by two million borrowers in the U.S. and the resulted crisis is the result of two factors:

1. shortcomings in terms of risk assessment borrowers
2. an extensive use of securitization

Origin of the crisis: a failure in terms of risk assessment borrowers

The montages were created based on two strong assumptions:

* Interest rates are permanently down for the duration of the funding that exceeds 25 years in most cases,
* The loan amount is based on a steady growth in the future value of the asset financed.

Funding in place thus follows a logical assessment of market risk (the value of the asset financed), not a logical assessment of credit risk (the risk assessment of default by the borrower) as it is common, especially with the introduction of regulatory reforms such as Basel II credit. Out the regulatory environment in the United States does not in this sense, since they are only 20 large banks operating internationally, which will comply with Basel II. Other credit institutions will be subject to a lighter frame (called Basel IA), whose implementation is planned for 2009 (2007 in Europe).

The Operations "carry trade" Part-3

This trend leads to a significant increase in financial markets, coupled with a loss of the concept of risk in the minds of market players due to a depletion of non cash flow. However, a decline in performance in the financial markets, a sudden reversal of the markets, would cause substantial losses for investors, given the high level of leverage and risk now supported in the carry trade. Such a situation would cause a repositioning of investors and a concomitant rapid unwinding of positions in many currencies.

The decrease in the level of liquidity resulting from this movement would affect all markets and could be the detonator of a currency crisis or a global economic crisis in the world.

The same situation was experienced in 1997-1998 in Asia, while the yen carry trade operations were already in place and that the Russian market, to be distributed, had fallen sharply. Today the extent of yen carry trade is more important and the crisis would reach Europe and the United States, countries in which investments are made.

In a context of continued increase in European markets and U.S. growth of risk borne by financial transactions recently implemented, Japanese monetary policy is closely watched by central banks. To prevent slippage of financial markets, a gradual closing of the "tap" cash is needed and must go through a rate hike. However, the continued movement deflation in Japan does not justify a significant rise in interest rates. Japan cannot afford to hire a real policy of monetary tightening; the Bank of Japan announced Feb. 21 an increase in the rate of 0.25% and should not go much further in the short term.

Several questions arise: what are today the real levers available to the Bank of Japan? Central banks have they yet have the means to weigh on global liquidity? Is it too late to avoid the worst?

The Operations "carry trade" Part-2

Currently, the carry trade the most developed is the yen carry trade, however, note that there are also such operations on the Swiss franc. For investors, the yen carry trade is interesting on two levels: first because of the difference in rates (the Bank of Japan lends at a rate of 0.25%, while investors can invest this money to rates above 5% in England and the United States); the other due to the depreciation of the yen during the duration of the operation.

The situation faced today was introduced by Japan's economic policy. Following the crisis of the 2000s, Japan and the United States and Europe have dropped their rates significantly in order to avoid an economic slump. However, if the United States and Europe have been sharply reversed the trend, growth in Japan that has developed since then have been accompanied by a sharp reduction in unemployment, low wage growth but to no inflationary pressures, the Bank of Japan was not forced to change its monetary policy and rates remained extremely low (0.25%).
The interest rate spread, which has gradually opened up between the rates of Western central banks and the Bank of Japan caused the yen carry trade phenomenon. The main actors are just to take this opportunity, especially as comfortable as it is artificially maintained by the Japanese central bank and no sign of change seems to appear.

The current danger is that the carry trade is no longer limited to play on differences in rates, but it greatly increases the global liquidity by moving the pockets present in economies with weak currencies to countries with high rates. The yen is borrowed in dollars, pounds sterling, Euros ... then invested in operations with high leverage.

The Operations "carry trade" Part-1

The port - or carry trade - is a relatively simple operation which is to take advantage of a gap in performance between asset classes: asset borrowed at low rates are placed in high-yield assets. Today, the phenomenon has grown strongly on the yen, becoming problematic. that evidenced by recent calls from the President of the Eurogroup, Jean-Claude Juncker, and many analysts, asking the President of the Bank of Japan to reconsider its policy. They do not seem to find echoes in Japan, but show an awareness of the danger generated. However, failure to report the problem exists at the conference of the G8 does not seem to be in line for a quick response.

The carry trade exchange, a concept theoretically unworkable in the long term. A currency carry trade involves borrowing in a currency in a country where rates are low, to change the money into a currency "strong" and place it high (treasuries ...). Theoretically, the operation of the arbitration process is ephemeral because the markets are efficient (at each moment is a financial security to its price) and rebalance through exchange rates and interest rates.

In addition, because of the rule of parity uncovered interest rate, the interest of such an operation is theoretically zero. Indeed, a difference in rates between two countries reflects inflation differentials. But these differences are offset by a realignment of exchange rates. Thus, when an investor speculates on the difference in rates observed between the two countries, he loses the same value on the exchange. That said, sometimes the law does not hold in practice and that the currencies of countries with low rates and suffer the opposite effect depreciate. This is the case of the yen, which reached historic lows against the U.S. dollar and the euro.

The quality indicators

Quality indicators of user processes (Drivers main directions of the risks, liabilities, financial, marketing, commercial)

As part of the approval process with Basel 2 instances of trust, quality indicators should focus mainly on:

* The validity of the SI risk management
* The performance score of grant, the organization of the rating systems and delegation
* Compliance with the risk strategy in terms of authorization and action limits

These include examples of indicators as the rate of customer doubtful with a healthy note, the rate of third unrated or with a note too old, or the rate of others rated their group.

To control effectively the quality of each indicator, it is essential to have previously defined a responsible business and responsible SI (the MOA) on each of the data information system.

The process of defining indicators is iterative, since the priorities may change based on improvements. To control them properly, it is preferable to retain only 10 in the first place. The dashboard can be enriched progressively as the process will be better understood by employees and more mature. For an effective control, must not exceed twenty indicators, which requires the definition of an arbitration process indicator to be adopted.

Once the dashboard as defined with the various indicators chosen, it must be operated and monitored on a recurring basis. Identified as significant variables of a state, the indicators need to restore an image quality of the management of risks by focusing on the area’s most sensitive to the context and business goals. As a minimum, an annual review to define the quality policy to hold, but the quality is a daily challenge; do not forget to make some adjustments over the water...

Definition of Indicators

The definition of indicators based on the combination of an empirical, research-based elements of non-quality in the device in place, and a theoretical approach, having as a starting point to identify key parameters management customer risk:

To invest in the improvement actions that correct the non-quality aspects of the most sensitive, the first step is to build a balanced scorecard indicators are most representative. It is an indispensable asset to the achievement of a critical diagnosis and appropriate vis-à-vis business strategies (risk, marketing, sales ...) defined. While some indicators can be retained only for statistical purposes, the others must be action-oriented: this means they must be involved in a lens quality (which will result in the definition of alert thresholds or levels of expected results ...) and an action plan to achieve the objective. The role of each business direction and / or SI concerned to arrive at the expected level of quality must be so in a charter previously defined: it is one of the key success factors of the process.

Identify the characteristics of the third party repository brings out the different types of people (customers, prospects, guarantees ...), information (customer classification, signs of third party monitoring bodies ...), for which the required quality levels are not necessarily the same. Two examples: the rate of duplication, including the reduction can improve the consolidation process and risk capital allocation, the rate of third parties not identified as an affiliate of the bank, resulting in poor consolidation risk on intra banking group.

Reliability Of Shares

Shares of reliability, often initiated by the trades and in consultation with the project owners, are intended to identify areas of non-quality, identify the causes and identify pragmatic ways to mitigate or delete.

The first actions are almost always in the form of manual corrections. These projects mobilize substantial charges to align the repository with the reality-duplication, enhancement or correction of signs, etc ... In addition, these actions if they can have a satisfactory short-term, must be renewed frequently to maintain quality and fight against the progressive drift.

In the long run, it is best to think of more sustainable solutions and, in this regard, the levers are very diverse appointment of quality managers in the contributing entities, workflow validation of customer data, standardization of concepts , comparisons with external sources, management of several criteria of uniqueness ... The possible solutions are many but their cost, period of implementation and impact on data quality is variable. However, the prioritization of these actions is often subjective: some effects more "visible" are given priority while others are ignored because their quality impacts are unknown.

The success of the business plan requires a continuous improvement in performance. It should be laid down in processes that involve the third party repository, a real cornerstone of the IF bank. Based on the quality approaches used in industry (six-sigma, Total Quality Management ...), the virtuous cycle is divided into five phases: definition of indicators and quality objectives of the standard, indicators measuring, analyzing results, identifying actions to improve the quality control of the effect of implemented solutions. We propose in this article, to limit ourselves to the first two phases that we consider most important.

Operative management - data quality

The importance of data quality in the operative management of counterparty risk.

Despite the efforts made by financial institutions to ensure compliance with the Basel 2, the internal audits and supervisory bodies highlight gaps in devices management customer risk.

Beyond the third scoring models in place to comply with regulations, financial institutions must continue efforts to ensure a sustainable level of quality control and so effectively and Reliable customer risk. If there are relatively simple and fast to improve data quality, only a comprehensive approach and equipped keeps this level over time and create a culture of quality in financial services, with the image of the industry.

The banking and financial regulation on the internal control of credit institutions and investment firms provides an outline of points to watch it should be integrated within the device management of counterparty risk.

To ensure compliance with regulations and ensure the proper level of control internally, branches wish to have the core quality indicators ensuring the validity of the information system risk management, validating the defined risk strategy and organization established to cover the risk client. The only way to dispose of is to use information systems to provide a quantitative analysis, but the relevance of these indicators is based on the quality of the IS.

System-level information, the presence of duplicates, unreliable links or combinations obsolescence of client identification are some examples of non-referential quality of the third most frequently cited. If they do not prevent the IF function, these problems can have a significant impact on end users and in particular the process of consolidating risks, commercial pilot, the fight against money laundering and grant decisions.

About Cross- Selling

The cross-selling as a catalyst for customer loyalty: state of the art of good practices. Faced with increased competition, banks and insurance companies must continually strengthen relationships with their customers. While 1 / 3 of the people have accounts in several banks (IREQ 2006), the challenge is to become the main bank or insurance client.

One way to be the leader is to increase the rate of multi-ownership: the interest is to provide diversified products to the customer to capture it while ensuring sufficient profitability during its life cycle. That is to increase revenue per customer (cheaper than acquiring new customers) by increasing the products held by clients and services sold.

The transformation of the sector as the penetration of bank assurance, the Assurfinance, and banking-real estate agency promotes more cross-selling. Through tailor-made pricing, offers and services can be complementary and beneficial to customers who already own one or more products and thus meet all their needs (offer a discount on the purchase of a coupled auto and home insurance or credit coupled with car insurance, etc ...)

The additional sales are based on an understanding of the client, and updated as and when relationships are maintained. They depend on the life of the client's potential risk (credit risk) and value ("life time value"). The option to develop the relationship with customers most willing to deepen and extend this relationship is vital.

To stimulate the use and income of customers, relationship marketing must move towards a proactive logic by exploiting business opportunities with specific offers that will be triggered through key moments in the client's life: a real estate purchase, a change of vehicle a termination, etc .... These can be transmitted to the client, on the one hand, in "push" or direct marketing (eg on the web, it displays the customer area of the loan amount for which he is eligible, without having make any loan application), and second, in "pull" or sales rebound as enjoy a call from the client to provide a product or service selected by the system depending on its characteristics.

The Private Equity, a market with strong growth driver - part IV

This dynamic cache, however, concerns related to the evolution of the activity. One of the first consequences of market development of private equity buyout is the generalization of so-called secondary, tertiary and even quaternary view, consisting of leveraged acquisitions of companies already owned by one or more other funds. In 2006, the third type of LBO acquisitions was made through these resale between funds. This type of assembly raises serious concerns particularly related to the high level of debt in these successive operations, which raised fears of a bubble bursting. Indeed, the succession of holding recovery strengthens the total weight of debt in financing the acquisition. But a classic LBO average 70% funded by debt. We can now understand the anxieties expressed about the level of debt when several successive LBOs are made on the same entity.

On the other hand, in a context of rising interest rates, the sector should experience difficulties, but still far from an economic downturn. Indeed, this market should continue to grow in the coming years, particularly in France where many companies are to sell, LBO funds have gained credibility recognized, will no doubt key players in the market.

The number of mega deals (ie acquisitions exceeding the one billion Euros) is more important, the private equity funds have no choice but to raise more funds. This requires, of course, on the one hand by increasing the resources collected from traditional capital providers. But also, for the sake of being less dependent on suppliers of capital and at the same time less sensitive to changes (particularly increased) interest rates on financial markets, the alternative "fund raising" on the stock market seems obvious. The money, usually so discrete and whose activity is based on the original financing of non hand, may now be found in the coast!

The Private Equity, a market with strong growth driver - part III

Then, the low cost of debt, due to low interest rates, gives montages leveraged a significant advantage over other types of acquisition financing transactions. They are based mainly on debt financing of target companies, the current environment when they are particularly favorable to more easily identify a margin between the cost of debt and the return on assets under management. However, this cannot alone suffice to explain the strong growth in activity. Private equity has above all recognition in the governance model in place in companies come under LBO financing. These companies are generally better managed and better valued, and even if some failures can be reported (ten more than 200 annual operations in France), we must recognize that the default rate of the sector is quite low and few are examples of clashes in the area of corporate governance.

Governance is indeed one of the key parameters of a company came under LBO financing. To repay debt must quickly generate cash flow. However, it is recognized that improving the economic value of a target company depends, in large part by the optimization model that will be applied. Therefore, LBO funds agree, from acquisition, to establish a mode of corporate governance more efficient and take the form of a greater focus, accountability of management (generally a shareholder as a result of the operation) and optimization of financial assets.

The Private Equity, a market with strong growth driver - part II

The Private Equity, also known financing LBO (Leverage Buy-Out) groups for its funding and leveraged acquisitions of target companies, usually mature companies with strong growth potential. LBO funds - often associated with managers of the target - develop installation and operation of acquisition of the company with the objective to remain the capital of the latter ideally between 5 and 10 years while significantly improving the result of the business recovery. The solutions for output or funds are then variables: initial public offering, taken over by another fund, an industrial sales ...

Born in the USA, in the 60's, with the purchase by McLean Industries Inc.. Waterman Steamship Corporation, this type of acquisition has been truly popular in the '80s under the aegis of funds such as KKR who have made significant transactions in the image of the acquisition of RJR Nabisco for more 36 billion dollars (which was then the first landmark LBO). The event was followed by a steady evolution for twenty years, but no relation to the recent explosion.

This momentum is the result of a combination of several positive key factors. The first of these is an abundance of liquidity in financial markets. Attracted by high yields (15-16% on average), liquidity providers (banks and insurance institutions, pension funds and private wealth) do not hesitate to fill the capital market allows investors to raise funds more increasingly important. Direct consequence, the number of LBOs has increased but more importantly, the number of very large transactions (over one billion Euros. SMEs are no longer the only target of LBO financing transactions, large groups of interest to certain funds, particularly in terms of business management. So after the frenzy of acquisitions recorded in recent years, these groups now intends to liquidate their related activities generate higher margins.

The Private Equity, a market with strong growth driver

Private Equity market has been experiencing four to five years an unprecedented dynamism. The figures for 2006 speak for themselves:

* 71% growth in business volume in 2006

* 71 billion of funds raised in 2006 or 22% over 2005

* 208 LBOs carried out in France in 2006, with two thirds of companies less than 100M € turnover,

* 1.5 million people now work for a company in France came under LBO, 9 to 10% of private sector employees,

Private equity is one of the five main areas of activity of the market says private equity (intervention in the capital of unlisted companies generally to achieve horizon 3-10 years of strong capital gains), other activities are:

* Seed capital (or seed money) which represents the first stage since it is for investment projects still in its infancy, funded in order to develop a technology still in R & D to enable to go forward to a potential market,

* Venture Capital, also known as the Venture Capital (VC), which translates into a capital in innovative companies, being in the early stages of development and which have a high growth potential but also a very high risk,

* Capital development which is a capital contribution in companies with strong growth but at a more advanced level of development that target companies for venture capital, they are usually companies who have strong financing needs through equity,

* Capital reversal of investing in troubled companies to put in place a recovery plan.

The variations in multi- channel strategy

The challenges of a multi-channel strategy are varied:

* Analyze the appetite canal of each client to use the appropriate channel.

* Update in real time all the information collected on the client and actions taken by the various channels.

* Provide a customer reference and not a contract or agency and reference different keys depending on the location of the system where you enter.

* Reorganize the network with the integration of multi-channel approach.

* To improve reception and increase the return rate to increase the effectiveness of campaigns.

* Controlling costs for greater profitability: to avoid cannibalization of a channel with one that would raise the cost of distribution for an identical volume of business.

The most delicate issue is to control the consistency of the channels. Indeed, the proliferation of channels only reinforces the risks associated with direct marketing campaigns: a campaign will generate even more inadequate for dissatisfaction it has been sent two or three times through multiple channels. Each pipe has its constraints that can undermine the effectiveness of a marketing campaign. The combination of more channels and interactivity allow them to circumvent these risks. To do this, the use of multi-channel increases the requirement on the supply, logistics, commercial pressure campaigns, performance monitoring and adjustments as well as organizational, process information system.

In conclusion, this multi-channel strategy, which appeared some years ago, remains in the crosshairs of the current issues. We have well established the online insurance cyber banking and have not had the desired penetration in the market. The trend can still be reversed and for the moment, many drivers have yet to be exploited:

* Messaging customized web portals of all institutions,

* The design of targeted advertising based on the behavior of the user,

* Improved tools subscriptions on the Internet and telephone (secure sites: electronic signature ...)

* Agency home with the setting up of terminals advisors.

A Vector of Innovation

The French are increasingly using more online banking with nearly 60% of Internet users who visit the website of their bank. Despite this, the agency remains the focus of customer relationship: 27,435 bank branches were recorded in France at the end of 2006, more than 1,000 additional branches in two years. Also, the banking and insurance from a distance, 100% online, limited for now to a few organizations: foreign banks, some credit institutions and insurance so it is important to link the distribution channels.

Personalize the communication and efficient use of distribution channels following the logic of process costs and customer value is the major axis of a multi-channel strategy. Depending on the objectives, policies can be differentiated.

In this logic, combinations client use x x channel are put forward to maintain the equivalence between the link type of transaction / channel and the link type of customer / channel.

Whatever the entry point used by the client, processes are implemented, depending on the task at hand to guide the client to the appropriate channel in terms of palatability and cost (programs incentives such as offers for online subscriptions).

In addition, indirect methods largely complete the distribution of offers and services such as the Broker (TV operators), the network affinity (automobile association for insurers) and the General Agent as an extension of networks of insurance agencies.

Current Status And Challenges of STP and Asset Managers Part.II

The new drivers of STP - the regulatory and standardization work at European level:
The Giovannini Report in 2003 pointed to weaknesses of the RL at European level concerning cross-border transactions. Regulatory works to address them are underway. They will lead to harmonization of cycles RL (and therefore a shortening of RL in some places), and impose a uniform technique, the different tax and legal depositories (CSD) Europe.

MiFID requires the tendering systems RL Europe, in the fall of 2007. The current model of a settlement made systematically at the CSD in the country of the title, lived. If they want to benefit from the introduction of competition, the players in the securities business (especially the trustees) will have to upset their traditional organization into streams.

Finally, Target 2 Securities project proposes the establishment of a European central depository, in 2012. Current European CSDs will have to focus primarily on the functions of overall conservation (settlement being provided by the system TS2), where they will find themselves in competition with the traditional custodians.

In other words, industrialization goes into high gear. For asset managers, the challenge is twofold: make the most of the opening to competition, and ensure the levels of STP always higher.

Set up middle office function common to different managements (conventional management, alternative investments) and various subsidiaries (foreign, for example) are, for large asset managers, an opportunity to reduce costs and increase operational efficiency. It is also a way to refocus the subsidiaries of their management activities.

Finally, some will choose outsourcing middle-office function. Bet that the trustees, in competition with the CSD in the field of conservation, will benefit from their proximity to the asset managers to develop the services of this type.

Current Status And Challenges of STP and Asset Managers Part.I

In recent years asset managers have conducted I their sites, both led to major changes at the organizational level:

* Changing the middle-office business, which has become a business expert responsible for dealing with exceptions STP
* Streamlining and sometimes processing service contracts vis-à-vis external actors (including custodians), and between internal stakeholders (empowerment of front-office concerning the seizure of deals)

If:

* Increased importance of reference for the automation and control requires reliable baseline data (third values, standard instructions and settlement)
* Formalization of business processes and streamlining the distribution of transactions within the information system.

Regarding the matching of transactions and settlement, patterns emerge and process to standardize.

Solutions and centralized automatic matching have emerged as solutions that provide the best rates of STP: 85% of the deals are confirmed on the day when the confirmation is done via a solution centralized matching, only 18% when the confirmation is done by back and forth between asset manager and broker.

ISO 15022 (and ISO 20022, which complements it by adding the XML syntax) makes Swift and fill rules SMPG as a standard interface for the exchange. The standard requires disclosure of such details of RL brokers in the IRL messages sent to custodians.
That said the levels of STP are highly variable, depending on the types of instruments.
For classical instruments (equities, fixed income, forex), the rate of STP is good and almost exclusive breaks STP cross-border transactions and are often caused by contact settlement brokers. The improvement involves the emergence of a global repository recognized by all and a standardization of data exchange between partners. Meanwhile, asset managers shall have in place reference coordinate RL brokers, administered manually.
On the other hand, the level of industrialization is low for complex instruments (derivatives futures, credit derivatives, OTC instruments, etc.). Several obstacles: the lack of standards and "market practices" in terms of formats and exchange protocols; gaps in modeling and benchmarks in information systems, the pace of innovation in front office. The STP is not always possible or appropriate, it requires as a prerequisite to the emergence of standards for external trade, and urbanization work and standardization of trade and in-house repositories.

Opportunities for Custodians

We have watched the race in critical mass which was played at major conservative fund.
And later, we make the following observations:

* the trend towards concentration is more than ever in progress, especially for cross-border acquisitions. As such giants seek the conservation targets of all sizes very small (e.g. BPSS acquisition activities Exel bank ,Spain)
* Most major conservatives have seen their assets under management grow by 50% due to acquisitions of domestic and border ..
* The stability of the classification of the great conservative movement despite the concentration
* the gradual disappearance of the small conservative (a few billion Euros of assets under management). As such, it is clear that the deployment of value-added offers (MO Outsourcing, Pricing OTC ...) but also the increasing complexity of financial instruments makes it difficult to maintain small structures.

The last major change is semantic; we do not talk anymore but preservation of securities services to investors...

Micro Insurance, Natural Complement of Microcredit Part.III

The combination takes advantage of this special role to provide support (including legal) in the Proceedings of the insured. Conversely, insurance products are best developed on the basis of specifications drawn up according to the needs and financial capacities of micro entrepreneurs by insurers who have the expertise and capital required.

It is clear that the design of the two products presented above are based on models of traditional products of insurance (liability, property and casualty business,) well understood by insurers and distribution models have proven otherwise.
The innovation of this type of product then essentially comes from the mix design "optimized" (an insurance policy and a simplified marketing price equal to the cost of production) and distribution of "proximity" (accompanied by networks of initiative Economic and associations).

The need for micro-entrepreneurs in terms of insurance is not new and one wonders why such offers micro insurance was not developed earlier. According to Mr. Schinzler, Chairman of the Supervisory Board of Munich Re, "the premium income is low administrative costs are relatively high and the infrastructure is lacking, as many arguments justifying the lack of interest of professional insurance for this market".
Micro insurance, such as microfinance as a whole, should not be seen as the broad market of tomorrow huge future profits (insurers partners do not mark-up on products and distribution fees are zero). Today, it should rather be seen as an activity to meet the challenges of sustainable development in Financial Services, a theme which is too often accused professionals of this sector of disinterest. The many recent initiatives in this area show the contrary a real desire...