Credit Risk Management at ABN AMRO (Page 2)

Abstract

Holland’s leading bank, ABN AMRO operates more than 800 offices at home and another 2,600 in 75 other countries. In the US, ABN AMRO owns Chicago-based LaSalle Bank and Standard Federal Bank, one of Michigan's largest banks.

ABN AMRO’s comprehensive risk management framework aims at combining centralized policy setting with broad oversight, supported by risk execution and monitoring in the Group’s network. ABN AMRO’s goal is to identify and analyze risks at an early stage; to set and monitor prudent limits; and to learn and evolve continuously to help it face a volatile and rapidly-changing risk environment. The case discusses in detail how ABN manages credit risk.

GLOBAL STRATEGIC BUSINESS UNITS contd...

• Asset Management, which was one of the world's leading asset managers, operating from over 20 locations worldwide and managing EUR 161 billion worth of assets in 2004 for private investors and institutional clients.

• Transaction Banking Group, ABN’s product organization covering all payments and trade in the bank for its retail, private client, commercial and wholesale markets. • Group Shared Services, which was established to create cost savings through consolidation and standardization. GSS focused on further exploiting new market solutions for support services with the aim of achieving better products and services for its clients at lower costs. • Group Functions, whose basic functions were governance, which was facilitating the implementation of Managing Board policy throughout the bank; standard and policy setting, which was setting the parameters within which the business units work; and sharing its expertise with all SBUs.

RISK FRAMEWORK

ABN’s comprehensive risk management framework aimed at combining centralized policy setting with broad oversight, supported by risk execution and monitoring in the Group’s network. ABN’s goal was to identify and analyze risks at an early stage; to set and monitor prudent limits; and to learn and evolve continuously to help it face a volatile and rapidly-changing risk environment....

More...

RISK GOVERNANCE

ORGANIZATION OF GROUP ASSET AND LIABILITY MANAGEMENT

ORGANIZATION OF GROUP RISK MANAGEMENT

RISK MANAGEMENT AND INTERNAL CONTROLS

CREDIT RISK

MANAGEMENT OF COMMERCIAL CREDITS

CREDIT RATING SYSTEM, UCR, LGD CLASSIFICATION

MANAGEMENT OF PROGRAMME LENDING (FINANCING CONSUMERS AND SMES)

EXHIBIT 1 : REVENUES IN 2004 PER SBU IN %

EXHIBIT 2 : TOTAL REVENUE

EXHIBIT 3 : FINANCIAL HIGHLIGHTS

EXHIBIT 4 : RISK GOVERNANCE ORGANIZATIONAL STRUCTURE

EXHIBIT 5 : TOTAL LOANS ANALYZED BY SBU BREAKDOWN

EXHIBIT 6 : PROVISIONING AS A % OF AVERAGE RISK-WEIGHTED ASSETS

EXHIBIT 7 : NON-PERFORMING LOANS

EXHIBIT 8 : C&CC – TOTAL PRIVATE SECTOR LOANS BY BUSINESS UNIT

EXHIBIT 9 : SPECIFIC PROVISIONING BY SBU

EXHIBIT 10 : CROSS-BORDER RISK EXPOSURES

EXHIBIT 11 : SOVEREIGN RISK EXPOSURES

BIBLIOGRAPHY

        Case Code   FINA021
   Case Length    15 Pages
              Period    -
 Organization     -
        Pub Date     2005
Teaching Note    Not Available
     Countries    Netherlands
      Industry    -

Issues

• How Risk is being governed in ABN AMRO.
• How Credit Risk Management is done in ABN AMRO

ABN AMRO, Credit Risk at ABN AMRO, Risk Management & Internal Controls at ABN AMRO, Organization of Group Risk committee at ABN, Global Strategic Business Units at ABN AMRO, Risk Framework at ABN AMRO, Organization of Group Asset & Liability Management at ABN AMRO, Management of Commercial credits at ABN AMRO, Commercial Portfolios at ABN AMRO and Consumer Portfolios at ABN AMRO.

Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.