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Case Study

ECB's OSI CREDIT RISK Remediation plan design and implementation

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The client is a French Public Investment bank, which is active in three main business lines: support and financing for innovative projects (market oriented); Investment and Operational cycle financing alongside banking institutions; Bank financing guarantees and the involvement of equity investors.

THE CHALLENGE

Following the submission of the follow-up letter regarding the On-Site Inspection about Credit Risk management, the client asked Avantage Reply to set up an action plan. This plan had to remediate all the recommendations given by the ECB as well as to prioritise important deadlines. The following steps had to be performed:

  • Setting up a project governance mechanism to solve the recommendations to follow up the remediation process and keep the tracking files updated
  • Being the point of contact between the different stakeholders implicated in the process

APPROACH AND SOLUTION

To meet the client needs, Avantage Reply has adopted an approach based on four main steps:

  • Making an inventory of all the recommendations on the Credit Risk mission
  • Setting up and implementing a governance project: identify and implement the different committees which are responsible for the processing and supervision of the recommendations
  • Classifying the recommendations to be consistent with SREP elements
  • Identifying referrers in charge of the monitoring of a group of recommendations

After putting up the recommendations mechanism, the Avantage Reply team was responsible for both: preparation of the committees’ presentations and monitoring recommendations processing. During the assignment, the team was responsible for handling other different client requests related to the ECB recommendations.

RESULTS AND BENEFITS

The remediation plan and associated project governance has been implemented after its validation by the Executive Committee, allowing the client to actively work on the resolution of the recommendations. The new mechanism has been appreciated by the ECB and seen as a positive sign in terms of communication and transparency.