March 31, 2005

To develop effective strategies, bank managers need an accurate picture of the business. When Atlanta-based SunTrust Banks acquired Crestar Bank (Richmond, Va.) in 1998, executives decided to upgrade the bank's asset/liability management software from Sendero that it used for interest rate risk management and balance sheet forecasting in order to obtain a consistent view across the enterprise.

"When it comes to balance sheet forecasting and asset/liability management, most banks are not synchronized," says David Green, asset/liability manager, SunTrust Banks ($159.1 billion in total assets). "In many banks, these two different views of the future often conflict, causing senior management to wonder which is correct," he continues. "SunTrust wanted to find a solution so that both of these functional areas could use the same tool and agree upon a single view of the pro forma balance sheet and earnings dynamic."

SunTrust needed a single risk modeling platform across the enterprise. The tool had to be powerful enough to evaluate balance sheet management strategies in addition to providing traditional earnings-at-risk and value-at-risk analysis. And, it had to be intuitive enough so the bank's forecasting group could use it.

Additionally, SunTrust wanted a technology provider that had a proven track record. Following an RFP in 1999 and discussions with Boston-based BancWare and Quantitative Risk Management (Chicago) - which Green contends are the only real choices for a large bank seeking a balance sheet management solution - SunTrust purchased an enterprisewide license for a software suite from BancWare, a unit of SunGard, in the first quarter of 2000.

The solution includes BancWare Data Management and Funds Transfer Pricing, and BancWare ALM and Planning. The programs are contained on CDs and are loaded onto individual workstations (dual-Xeon, 4GBs RAM, dual SCSI drives) by the risk modeling, forecasting and funds transfer pricing groups. Constructing data feeds from SunTrust's subsystems and the model's balance sheet hierarchy each took several months, according to Green, who also is chairman of BancWare's client advisory council. He adds that development of reporting packages is ongoing.

In 2005, SunTrust is transitioning from the PC-based product suite, which relies on a proprietary BancWare database, to the vendor's new SQL Server-based product. Green explains that the SQL database will reside on a dedicated server, but computational cycles still will take place on individual workstations. The solution, he continues, will be tied to 24 dual-processor machines running in parallel to increase computational efficiency. Simulations that now require days to complete will only take a couple of hours, Green notes, and the additional computing power also will allow SunTrust to slice its risk picture into finer levels of detail.

The BancWare software provides both asset/liability management and corporate forecasting with a clear, consistent picture of SunTrust's balance sheet dynamics and key drivers of earnings, relates Green. The information ensures that strategic decisions are made in light of their impact on the bank's interest rate risk exposure, he says, adding that the solution also has increased work efficiency since everyone uses the same core modeling technology.

"BancWare has also provided SunTrust with the ability to gain an increased understanding of its exposures to the multiple factors of interest rate risk," says Green. "All of this analysis is based on pro forma balance dynamics that are provided directly from the lines of business and are updated as part of their regular forecasting process."

Snapshot

Institution: SunTrust Banks (Atlanta).

Assets: $159.1 billion.

Business Challenge: Gain a consistent view of risk across the enterprise for asset/liability management and balance sheet forecasting.

Solution: BancWare's (Boston) balance sheet management software suite.