Scotiabank is the wholesale banking arm of the Scotiabank Group, with 29 offices and more than 300 relationship managers organized around industry specialties. It offers a wide variety of investment and corporate banking products and services to government, corporate, and institutional clients. In 2010, Global Finance magazine named Scotiabank as the Best Investment Bank in Canada, Best Foreign Exchange Bank in Canada, and Best Infrastructure Bank globally.
For Scotiabank and many others, the credit crisis demonstrated the speed at which market conditions can impact counterparty credit risk. "The credit crisis highlights the importance of having a clear consolidated view of counterparty credit risk. In fact, it propelled us to consider how we could measure counterparty credit risk better in order to have more efficient use of our limits," explains Alyson Bailey, Director of Global Analytics and Financial Engineering for Scotiabank.
This case study looks at the counterparty risk systems that Scotiabank had in place that provided overly conservative measures, and could not support a consolidated view of counterparty credit risk (CCR). Scotiabank wanted to efficiently manage capital and credit so that it could conduct more business without increasing overall risk.