Avantage Reply assisted a well-known Private Bank in the Eurozone to document the non-standard accounting and prudential treatment of structured finance transactions. The tailor- made structured finance solutions, e.g. asset-backed finance transactions, operating leases and export leases, do require special consideration regarding regulatory reporting and risk management.
The key objective of the project was to provide a comprehensive and complete documentation to reinforce the understanding of complex financial structures across support functions and to allow operational teams to better apprehend reporting obligations, e.g. correct allocation of exposures, guarantees received and impact in multiple regulatory reports. The secondary objective was to draw a parallel between the theoretical and operational treatments in both, accounting and prudential terms, to remediate imperfections in the reporting system.
Complex deals do not follow a standard operational treatment and engage multiple teams at each stage of the transaction lifecycle, i.e. the view on booking, follow-up and reporting is fractured across departments and limited to the responsibilities of each actor. Hence, collecting accurate and complete information was a primary challenge of the project. Additionally, the large number of manual corrections and adjustments made by various contributors at different levels of the reporting process was not formalized to fully assess the impact of these changes in the final reports.