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Collateral management: An enterprising solution
19 January 2012
Regulation is nudging firms towards enterprise collateral management, but do the benefits outweigh the costs? Blake Evans-Pritchard reports
Read more:
securities lending
CCP
Robert Fiedler
Jane Milner
Raj Shah
The months immediately after the financial crisis began in 2008 were an unsettling time for banks.
With liquidity stretched to a premium, many ran out of cash and had to be bailed out by national governments. Those that managed to escape this fate struggled to restore confidence among investors and persuade the markets that they did have sufficient capital to meet current obligations.
Robert Fiedler, who at the time was working as a consultant for Deutsche Bank, saw firsthand the effect that a sudden evaporation of liquidity could have on the capital position of a bank when Belgium’s largest banking group, Fortis, collapsed in September 2008.
Although the general turbulence in the markets was a significant factor in the bank’s collapse, Fiedler believes that Fortis would have been better off if management had had a better overview of the company’s position.
“I saw that the collateral management...
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