Bank of Nanjing’s compliance risk technology implementation supports operational business strategies and efficiency

• Bank of Nanjing leverages compliance-driven technology to implement standardised approach for counterparty credit risk and large exposure 
• The new system is capable of automated data sourcing, calculation, and report generation
• The system provides better risk insights at the enterprise level and improves the bank’s ability to expand its SMEs business lines

Beijing, 22 July 2021 — Bank of Nanjing and its technology partner Moody’s Analytics were awarded the Best Compliance Risk Technology Implementation of the Year at The Asian Banker Risk Management Awards 2021.

The focus on compliance risk technology aligns with the heightened regulatory requirements brought by the finalised Basel III.

Preliminary Steps for the finalised Basel III: Bank of Nanjing’s compliance-driven technology implementation keeps to the schedule of the finalised Basel III

With the forthcoming implementation of the finalised Basel III, the Bank for International Settlements (BIS) established several new regulations in the framework. Bank of Nanjing prioritised the implementation of the standardised approach for counterparty credit risk (SA-CCR) and the large exposure (LE) regulations, as the preliminary steps of the whole roadmap.

The bank is an active participant in the over-the-counter (OTC) market, with trade volume reaching RMB 2.8 trillion ($430 billion). According to the criteria set by China Banking and Insurance Regulatory Commission (CBIRC), banks that hold the OTC trading above the threshold of RMB 500 billion ($77 billion) must comply with the SA-CCR regulation.

Process of Implementation: The technology implementation resulted in automation of calculation processes and improved risk insights

For banks, the SA-CCR and LE regulations bring additional data requirements, calculation complexities, and reporting obligations that may be resolved by the advanced systems.

Bank of Nanjing partnered with Moody’s Analytics for the implementation of RiskAuthority^TM which fulfils the requirements of both SA-CCR and LE regulations. The system relies on automated data sourcing, calculations, and report generation. 

The project implementation started with retrieving information from a data warehouse for the purpose of calculations. It then required out-of-box CBIRC regulation ruleset of  RiskAuthority^TM with respect to Bank of Nanjing’s existing infrastructure. For the bank, the new system has resulted in reduced workloads and enhanced regulatory compliance which is an improvement from the previous systems that involved time-consuming and manual processes.

Business Impact: The system provided additional risk insights beyond regulatory requirements

The system’s SA-CCR functions not only serve regulatory reporting, but also business performance analysis. The system can allocate the EAD at counterparty level to deal level, which enables the bank to understand performance and set up trading strategies in a more delicate approach. 

RiskAuthority^TM includes 125 products in EAD calculation to better address concentration risk. With the system, Bank of Nanjing can monitor limit indicators on a daily basis and quantify credit risk exposures at individual and group level. 

After its successful implementation, the bank was in a better position to lower the concentration level of large enterprises, and save more capacity and funds to support the recovery of small and medium-sized enterprises during the COVID-19 pandemic, contributing to regional economic stability and long-term growth. 

About The Asian Banker Risk Management Awards

The Asian Banker Risk Management Awards is a landmark recognition programme designed to identify emerging best practices and outstanding achievements of the best run risk management teams in financial institutions across Asia Pacific, the Middle East and Africa, participating on international and country-level. Recipients of these awards are honoured in a gala event that recognises their efforts in executing sound operational processes which participants can both learn and benefit from. A stringent and comprehensive evaluation process determines the awardees. 

About The Asian Banker International

The Asian Banker is the region’s most authoritative provider of strategic business intelligence to the financial services community. The global research company has offices in Singapore, Malaysia, Manila, Hong Kong, Beijing and Dubai, as well as representatives in London, New York and San Francisco. It has a business model that revolves around three core business lines: publications, research services and forums. The company’s website is www.theasianbanker.com.

You may visit the Asian Banker Risk Management Awards page at https://www.asianbankerawards.com/riskmanagement/index.

For further information, you may get in touch with:

Mobasher Zein Kazmi 

Head of Research

Tel: (+61) 452 514 145

mkazmi@theasianbanker.com