January 19, 2015

RECOVERY Centralized Collateral Management

Centralized Collateral Management

Dodd-Frank and other regulations have placed a renewed emphasis on reserve positions, and institutions are seeking new ways to better understand and evaluate pledged positions. [gs Collateral]Collateral[/gs] optimization stems from a need for better liquidity management and fee generation perspective rather than as merely risk mitigation and follow-up tracking. 

In the past few years, most financial services organizations have focused their efforts on P&L generation, resulting in a secondary focus on the collateral management. Managing collateral was frequently seen as a related but autonomous and departmentalized back office operation. 

Collateral management allows users to address all aspects of surety relationships across multiple departments and lines of business, illuminate risks, and identify collateral and liquidity surpluses and shortfalls at a company level. With up-to-the-minute information on all cross-collateralized assets, personnel can then act well in advance and prevent problems rather than fixing them. Lien perfection requirements are rigorous and must be performed correctly to be valid. UCC and other filings must be reviewed and updated regularly in order to preserve lien position. All these needs are addressed by the system’s exception handling and event monitoring within the collateral product. 

In this respect, the centralized collateral administration is effectively acting as the single interface for the entire organization. By providing full support for all types of hard and associated collateral, the collateral application provides a 360 degree view into the collateral universe. Support for full and partial legal interests and management of negotiable securities valuations ensures accurate and timely information for originations and restructuring of renewed credit facilities.