Capitolis Sees Increasing Capital Optimisation Interest Amongst Banks

Capital optimisation solution provider Capitolis says two-thirds of the largest banks in the world have participated in balance sheet compression exercises leveraging Capitolis’ technology in the first quarter.

These exercises have included optimisations with respect to the rollout of SA-CCR, or the Standardised Approach for Counterparty Credit Risk, as well as a reduction in exposure to Russian roubles. “As we demonstrate our success, we have welcomed new bank participants in each exercise,” the firm says.

Capitolis started offering solutions for client to prepare for the rollout of SA-CCR in mid-2020. The regulation requires banks to take a new approach to calculating counterparty credit exposure and will have a significant impact on regulatory capital calculations.

SA-CCR has been phased in globally over the last few years to provide a single, standardised method by which financial institutions will be required to measure and ultimately manage and capitalise against. It went into effect in the US and UK in January 2022 and since then Capitolis says it has successfully reduced nearly a trillion dollars of notional exposure for financial institutions through a series of four multi-lateral optimisation exercises.

“We are focused on helping our clients adjust to the regulatory impacts of SA-CCR while maximising efficiencies in balance sheet optimization,” says Gil Mandelzis, CEO and founder of Capitolis. “SA-CCR is something we have been innovating towards for years to better prepare financial institutions for success in multi-lateral optimisation in line with the letter and spirit of the rule. Our vision is to reimagine how capital markets operate, and we look forward to continuing this work to enable a healthier, safer capital marketplace aligned with regulations including SA-CCR.”