Capability Statement Banking & Financial Services Practice

Transcription

1 2011 Capability Statement Banking & Financial Services Practice ICRA Management Consulting Services Limited 1

2 IMaCS - An introduction ICRA Management Consulting Services Limited (IMaCS) is a multi-line management consulting firm headquartered in India. It has an established track record of 17 years in management and development consulting across various sectors and countries. IMaCS has completed more than 1200 consulting assignments with about 600 clients and has worked in over 40 countries across the globe. IMaCS is a wholly-owned subsidiary of ICRA Limited (ICRA), one of India s leading credit rating agencies. IMaCS operated as an independent division of ICRA till March , when it was de-merged from ICRA and became a standalone company in its present form. About Group ICRA Launched in 1991, ICRA has been set up by a number of prominent Indian financial institutions, banks, and insurance companies. In September 2001, Moody s Investment Company India (Private) Limited, a 100% subsidiary of Moody s Investors Service, USA, became the single largest shareholder in ICRA. Post a successful IPO in 2007, ICRA is a publicly listed company. ICRA has subsidiaries in Indonesia and Sri Lanka. Group ICRA comprises four businesses, namely, Credit Rating, Management GROUP ICRA Consulting, Information Technology, and Outsourcing, offered by four different companies comprising ICRA Credit Rating Management Consulting IT (Software) BPO and its three subsidiaries, namely, IMaCS, ICRA Techno Analytics Ltd. (ICTEAS) and ICRA Online Limited. ICRA is listed on the National Stock Exchange ICRA Limited ICRA Management Consulting Services Limited ICRA Techno Analytics Ltd. ICRA Online Ltd. and the Bombay Stock Exchange in Mumbai, India. IMaCS Virtus Global Partners, Inc. ICRA Techno Analytics Inc. The main driver for IMaCS growth has been a growing need for unbiased professional views on adopting best business practices arising from economic deregulation, deepening of international trade and integration, increasing uncertainty in business due to advancement of technology and rising volatility in the market place, and the compelling need to be globally competitive. IMaCS began as a firm operating in India and has since worked in several parts of the world on its own 1 Under the name ICRA Advisory Services 2

3 and through strategic partners. Our clientele includes banks & financial service companies, private corporates (manufacturing and service organizations), governments, government-owned organizations, financial investors and fund managers, regulators, and multilateral agencies. Our New York based subsidiary, IMaCS Virtus Global Partners, Inc. ( offers Strategy and Transactional Advisory services to companies in North America and in India seeking to operate in the Indo-American corridor. Through the process of carrying out several assignments over the past 17 years, IMaCS has accumulated considerable analytical and consulting expertise, backed by the following organisational capabilities: An extensive and organised database on several sectors. Knowledge of key factors of success in different projects and program. An ability to research emerging global trends, both in specific countries as well as in different sectors, based on primary and secondary data. Performance benchmarking Quantitative and financial modelling Ability to identify the various types of risks and suggest appropriate strategies to mitigate the same Ability to work in different geographies on its own and through affiliate partners IMaCS Business Groups and Practice Areas IMaCS has six practice areas grouped under Strategy, Risk Management, Process Consulting, Transaction Advisory, Policy Advisory, and Capacity Building. The different business groups and practice areas within IMaCS form our matrix of service offerings. Multi-disciplinary teams are used on most assignments. The diversity of experience in IMaCS teams helps it to adopt a creative and cross-functional approach to problem solving, which has not only been very successful in practice, but has also been well appreciated by all our clients Strategy Risk Management Process Consulting Transaction Advisory Policy & Regulation Capacity Building Enhancing Competitiveness / Market Assessment / Product development/ Market Intelligence / Profit improvement Credit Risk / Market Risk/ Operational Risk / Enterprise wide Risk management/ Risk Analytics/ Risk Software Cost reduction / Process re-engineering / Organisation design / / Supply Chain Management / Outsourcing M&A / Due diligence / Project Advisory / Bid advisory / Financial restructuring Policy Advisory / Regulatory Economics / PPP Models/ Governance Investment Institutional Programme Sustainable Monitoring Climate Strengthening Management Development & Evaluation Most consultants at IMaCS have advanced academic degrees and also have experience in reputed firms before joining IMaCS. Both fresh graduates and experienced consultants undergo formal and informal training in IMaCS to deliver high quality solutions to clients. IMaCS clients also have the benefit of the considerable organisational expertise that IMaCS has built up over the past 15 years. 3

4 Services offered by IMaCS IMaCS has executed assignments in several sectors of the Indian economy and its consulting activities are organised along five major functional groups: 1. The Banking and Finance Group focuses on assisting banks and financial service companies in the areas of Strategy, Risk management, Process improvement and Transaction advisory. Our services span the areas of M&A, purchase/sale of portfolios, setting up risk management systems across credit/ market/ operations, strategic and business planning, organisation design and restructuring, developing credit and portfolio risk models, derivatives strategy, corporate debt restructuring, developing risk control processes and profit improvement studies. Besides providing consulting services to banks, IMaCS also develops and installs software programmes in the areas of risk management and workflow automation related to credit management. IMaCS also designs and conducts a variety of training programmes in risk management for banks and other financial service organisations. 2. The Corporate Advisory Group focuses on enhancing the competitiveness of clients across the different constituents of its value chain. Its work has spanned multiple sectors and industries, with strong expertise and experience in certain sectors such as, metals, automotive and engineering, healthcare, hospitality and tourism, textile, retail, consumer goods and food processing. Specific areas of consulting include competitiveness studies at firm/industry/region/country levels, shareholder value maximisation, business process design and improvement, entry strategies and product positioning, enterprise-wide risk management, evaluation of acquisition or divestiture plans, and transaction assistance (e.g. partner search, valuation, due diligence, structuring deals and business and financial restructuring). 3. The Infrastructure Group focuses on policy and transactional projects in the areas of sector reform and restructuring, creating public private partnerships, and building capacity in government and public sector institutions. At the policy level, IMaCS seeks to serve regulators, governments and multilateral agencies in formulating or refining sector-wide policy issues such as licensing, regulation, business rules, competition, tariffs, service level obligations, and subsidies. At a transaction level, the Group has accumulated substantial experience and skills in handling engagements related to regulatory representations, financial modeling, structuring payment and security mechanisms, designing project contracts and concession agreements, and providing assistance in financial closure for various infrastructure projects. 4. The Energy Group focuses on strategy, policy and transactional issues related to the Electricity, Renewable energy, and the Oil and Gas sectors. The Group has garnered significant expertise in the restructuring and reform process in the electricity sector by having been associated with multiple entities such as the government, regulators, state owned and private power companies since the 4

5 beginning of the reforms process in the sector. Our services in the energy domain encompass regulatory assistance to utilities and regulatory commissions, restructuring and privatization, formulating strategies and business plans for utilities, conducting market assessment studies for investors/utilities, providing assistance to developers/project appraisal/project risk assessment, and investment and transaction assistance. IMaCS has also assisted Indian and international business groups in formulating strategies to enter the energy business. IMaCS has completed several projects in the renewable sector covering diverse technologies such as wind, hydro, co-generation, and biomass, and has also worked on policy level assignments. 5. IMaCS Development Consulting Group has emerged out of IMaCS experience in working with profit-seeking organisations and investors that the principles and practices that commercial enterprises follow are just as applicable for organizations working in the not-for-profit, government and social development. The significant difference between for-profit and not-for-profit organizations is essentially in how they are funded and/or in the expectations of returns of their respective sponsors. As far as operations or efficiency is concerned, there should not be too much difference between the ways they work, if they are to be successful. The quest for strategic clarity, operating efficiency, and financial sustainability remain the top priorities for senior management of all kinds of organizations, spanning from profit-seeking enterprises to not-for-profit organizations in the development sector. IMaCS works with governments at various levels national, state or local government - in a bid to help them become more effective in achieving their objectives. Our clients include Government institutions at central, state and local levels, bilateral and multilateral aid agencies in India and overseas. IMaCS Consulting Services in Banking & Financial Services IMaCS offers a wide suite of consulting services to the Banking and Financial sector, grouped under six themes as follows: 1. Risk Management Implementing good practices in Risk Management (Credit risk, Market risk, Operational risk and Risk Based Internal Audit) Designing and validating risk models for credit risk, market risk and operational risk in full compliance with the Basel II Accord. Implementing software solutions for Credit risk, Market risk, Operational risk and Risk Based Internal Audit 2. Strategy Formulating business strategies for entry or growth Profitability improvement studies 5

6 3. Process improvement Business restructuring or re-engineering Designing organisation structure Designing MIS for regulatory and/or management reporting Detailing specifications for IT implementation 4. Transaction advisory Providing transaction assistance in mergers and acquisitions involving banks, companies or portfolios Providing transaction assistance in deal structuring in the context of securitisation, derivatives or financial restructuring Providing transaction assistance in evaluating and mitigating risks in project finance structures 5. Risk analytics Generation of yield matrices for bonds and money market instruments, calculation of security level prices and portfolio valuation of debt funds on daily basis Providing risk analytics and research to Banks on outsourced basis Construction of indices 6. Training Conducting training programmes for capacity building and change management. Focus areas include Risk management, derivatives, securitisation, project finance, and financial analysis IMaCS Clients in Banking and Finance Vertical Our clients span the entire spectrum of the Banking sector, as given below: 1. Multilateral Agencies such as World Bank, Asian Development Bank, International Finance Corporation, African Development Bank, KfW, JBIC, South Asia Enterprise Development Facility; 2. Regulatory Bodies, Supervisory bodies, and Industry Associations in India, including the Reserve Bank of India, National Housing Bank, NABARD, Association of Mutual Funds in India, Working Group on restructuring weak public sector banks, and industry associations such as the Indian Banks Association; Bangladesh Bank, Bank of Zambia and Bank of Tanzania; 3. Banks operating outside India: Examples would include National Development Bank, Commercial Bank of Ceylon, DFCC Bank (all in Sri Lanka); City Bank, Arab Bangladesh Bank, Dhaka Bank, United Leasing Company (all in Bangladesh); Chase Manhattan Bank, Credit Lyonnais, Credit Suisse First Boston, Bank Paribas, Bank of Nova Scotia, ING Bank, Development Bank of Seychelles (Africa), CAL Bank (Africa), PTA Bank (Africa), Union National Bank (U.A.E); 4. Indian Public Sector Banks and Financial Institutions such as the State Bank of India, Bank of India, The Industrial Development Bank of India, Union Bank of India, Indian Bank, Indian 6

7 Overseas Bank, Oriental Bank of Commerce, Dena Bank, Industrial Investment Bank of India, IFCI Limited, Power Finance Corporation, Central Bank of India, United Bank of India and Indian Bank; 5. Indian Private Sector Banks such as ICICI Bank, YES Bank, IDBI Bank, Karnataka Bank, The Lakshmi Vilas Bank Limited, The Dhanalakshmi Bank Limited, The Bank of Rajasthan Limited, Lord Krishna Bank, Development Credit Bank Limited, Tamilnad Mercantile Bank Limited, Jammu & Kashmir Bank, Bank of Madura, and Centurion Bank Limited; 6. Indian Housing finance and Non-banking Finance Companies such as HDFC, HUDCO, IL&FS, CanFin Homes, Sundaram Home Finance, PICUP, WBIDC, PFC, KSIIDC, ASIIDC, Peerless General Finance, SBI Capital Markets, SREI International, Shrachi Securities, Cholamandalam Finance; 7. Training institutions such as NIBSCOM, Indian Institute of Bankers, MDI, and IIEF Overview of Consulting Services offered to Banks/ FIs Select Case Vignettes We provide below select vignettes of projects carried out by IMaCS for Banks & Financial Institutions in the area of Strategy, Risk Management, Project Finance, Software Implementation, Training, and Capacity Building: 7

8 1) Strategy Formulated a strategy for entry into the banking sector for one of India s leading business houses Formulated an entry strategy into the leasing business for one of India s leading business houses Formulated a business plan for one of India s leading Non-Banking Finance Company Development of a plan for introducing credit enhancement products for a leading Non Banking Finance Company Developed a strategic blue print for India s largest Infrastructure lending institution Formulated an entry strategy and a business plan for a US monoline insurance company seeking to come to India Charted a business strategy for one of India s largest banks (then within the top six) Formulated a turnaround and business revival plan for a large Indian public sector bank with international operations Conducted a diagnostic study for financing the SME sector in India and formulated a growth strategy for one of the world s largest financial conglomerates Formulated a credit strategy for a regional bank based in Eastern India, which was to be revived by an infusion of equity from the Government of India Formulated an entry strategy for a leading global bank based in Europe to enter India - we partnered a global consulting firm in conducting this engagement Conducted a business feasibility and formulating an entry strategy for a leading North American Bank into the mortgage finance industry in India Conducted a turnaround business strategy for a leading non-banking finance company in India with over 75 years of operating history and substantial retail operations Assisted a city development council of a leading city in northern India in formulating a strategy to convert the city into a financial centre Formulated a vision, strategy and an organisation design for a nationally important infrastructure finance organisation in India Formulated a business strategy for a financial intermediary specialising in infrastructure finance in India - the financial intermediary in question is a pioneering experiment in Public Private Partnership, seeking to attract private capital into infrastructure financing Profiled the Indian asset securitisation market in India for emerging domestic and international ventures to make an entry Formulated a strategy and detailed business plan for an innovative mortgage finance company in India in partnering with a public sector bank with over 2000 branches for mutual value creation Formulated a business strategy for a non-banking finance company in India specialising in project finance seeking to grow into infrastructure development in a big way Participated in the Bank Symposium organised by IFC, Washington in Sri Lanka on funding strategies for the SME sector in the South Asian region Developed a business strategy for a bank in Africa including diagnostic review of existing systems and processes - the project was funded by African Development Bank 8

9 2) Transaction advisory (M&A, financial restructuring) Assisted the Reserve Bank in India in formulating turnaround strategy for several weak public sector banks Assisted one of India s leading mutual fund organisations in divesting a portfolio of investments comprising a mix of high and under-performing companies Assisted the leading financial institutions in India in negotiating a restructuring proposal of one India s largest companies (this has been one of India s landmark M&A transactions) Assisted a leading Indian Financial institution focussed on the corporate sector to diversify into retail finance by buying out a mortgage finance company Assisted an Indian Asset Management Company to acquire a controlling stake in a leading Mutual fund Assisted a Government owned organisation in the agriculture sector in India for conducting a due diligence and making a financial bid for acquiring a stake in a commercial bank Assisted a Financial institution in India focussed on lending to the energy sector to evaluate renewable energy projects Assisted an Indian commercial bank in evaluating investment options in equity offerings from corporate entities Assisted a private equity fund in formulating a strategy for fund allocation to the energy sector in India Assisted a leading mutual fund organisation in evaluating an investment in a joint venture with an IT company focussing on developing products for the cooperative banking sector in India Assisted a large North American bank in making a strategic investment in one of India s leading financial groups Assisted a leading international venture capital company in assessing the Gold industry in India Assisted a systemically important non-banking finance company in India in assessing the risks and structuring investments in infrastructure projects 3) Operational & Process consulting Reviewed the processes of a large PSU Bank in Western India, with an objective of identifying time taken at different levels and the commensurate value addition and advised on the businesses processes to improve customer service and reduce costs Reviewed the business processes relating to Trade Credit for a leading international bank, assessing the bank s growth strategies, and designed processes and risk-grading models for the Trade segment. Reviewed and benchmarking the credit appraisal systems for a large financial institution (focused on urban infrastructure projects) in India and made recommendations to bring them on a par with the best industry practices. Reviewed credit appraisal process for one of India s leading investment banks Wrote a manual for six banks for financing projects as part of a World Bank funded project Portfolio Diagnostic and Risk Management System Gap Analysis for three banks in Sri Lanka 9

10 (Funded by IFC) Conducted a diagnostic analysis of Risk management systems for a bank in Africa, which has operations in 15 countries, and designed detailed policies and procedure manuals for credit, market and operational risks Assisted a leading non-banking finance company in India with over 75 years of operating history and substantial retail operations, in its business turnaround Conducted a due diligence on a financial institution for Asian Development Bank, who was considering a long term investment proposition 4) Integrated Risk Management - including focus on implementing Basel II recommendations Implemented enterprise wide risk management systems, including credit risk, market risk and operational risk, as per Basel guidelines for an Indian bank with asset base exceeding $16 billion and having business operations in nine countries - as a part of the exercise, IMaCS designed and validated risk models for different lending segments, designed MIS, conducted training programmes, and assisted the bank in implementing risk management software solutions Implemented enterprise wide risk management systems, including credit risk, market risk and operational risk, as per Basel guidelines for an Indian bank with asset base exceeding $8 billion and having business operations in 6 countries - as a part of the exercise, IMaCS designed processes for credit and treasury, integrated risk policy, designed MIS, conducted training programmes, and assisted the bank in implementing risk management software solutions Implemented enterprise wide risk management systems for the national regulator of Housing Finance companies in India, which also extends refinance Assisted a commercial bank in India in formulating a comprehensive risk management strategy, covering credit risk, market risk and operational risk, including implementing its credit risk management solution developed by an international software company. Implemented enterprise wide risk management systems as per Basel guidelines for an Indian bank with asset base exceeding US$ 6 billion having business operations in two countries - as a part of the exercise, IMaCS implemented a third party software solution for credit risk management at the bank and conducted several training programmes Assisted a Central bank in Africa in implementing risk management systems covering credit, market and operational risks A. Credit Risk Management Assisted a bank with an asset base of about US$80 billion in designing a model for calculating Economic Capital as per Basel II guidelines the study was arguably the first of its kind in India, and focused on validating risk rating models, estimating default risk, loss given default, and estimating expected and unexpected losses. Implemented Basel guidelines on credit risk management for a private sector bank in India - as part of the engagement we implemented models for generating risk grades, estimating probability of default, loss given default, economic capital and risk adjusted return on capital. 10

11 Assisted a Central bank in Africa in implementing financial risk management systems Implemented the Basel guidelines on credit risk management for three private sector banks in India - as part of the exercise, we developed risk grading models for different lending segments Developed a Transaction Risk Grading Model for several banks in India - the model considers security cover and its impact on reducing the Loss Given Default in the event of a default Assisted a leading development financial institution in India to develop a risk-grading model for large industrial credits, including brown-field projects, along with a transaction riskscoring model Assisted a large global bank headquartered in Western Europe in auditing its credit risk models for several borrower segments and across multiple countries Assisted a clearing house in India to develop a counterparty risk assessment system to assess the financial soundness of participating banks on the basis of data available in the public domain Developed credit risk scoring models for Large Corporate and SME Segments and streamlined the credit administration processes for a leading DFI in Sri Lanka Assisted a bank in India in developing a model for assessing sub-sovereign/federal Governments Conducted a study of risk management systems for several banks/ institutions in Asia as part of an IFC funded project B. Treasury / Market Risk Management Developed and installed models for Asset-Liability Management which measure liquidity and interest risks on the balance sheet across time buckets and take into account prepayments options, swap pricing and valuation of assets for several banks Developed VaR-based Treasury Decision Support tools for various banks which takes into account the non-normalities in pricing (typically observed in emerging markets) Implemented an Asset-Liability Management system for a premier financial institution in India Implemented Asset-Liability Management solution for two housing finance companies - the scope of work included installation of ALM models to capture interest rate risk, handle prepayments and price mortgage-backed securities, among others Conducted a review of the derivatives portfolio for a leading new generation private sector bank in India, including review of the derivatives process and strategies, creation of product manuals for regular and exotic products, and reviewing risk management systems Advised a large commercial bank in India on strengthening its credit and treasury functions, and the concomitant organisation structure. Advised a large India Non-Banking Finance Company in implementing Asset-Liability Management system - the scope of work included devising ALM policy, processes and risk quantification processes 11

12 C. Operational Risk Assisted a leading public sector bank in India in profiling their key risks, reviewing internal audit and control systems, and recommending a framework for operational risk measurement and management Assisted a leading public sector bank in India in setting up a Risk Based Internal Audit Department, including conducting several training programmes for the Internal Audit and Inspection Department Installing a tool for estimating regulatory capital for Operational Risk for a leading Government-owned bank in India 5) Software Implementation for Credit Risk Management IMaCS has developed a sophisticated software system (comprising several modules) that enables banks to manage the Credit function, including origination, risk rating, credit appraisal, work flow, loan structuring and pricing, credit monitoring, portfolio management, capital computation, collateral management, internal/external reporting, and performance management. Our software products assist the bank in the following: Measure borrower risk for various segments (including computing PD) Automate the credit rating workflow process through an in-built Credit information system Collateral management system Collecting data for computing LGD Loan structuring / pricing Compute capital requirements as per Standardised/ IRB approaches Compute RAROC for individual loans and for portfolio slices Generate MIS as per requirements Some of IMaCS case vignettes that involved software implementation are as follows: Implementing a proprietary Basel II compliant software solution for credit risk evaluation, risk scoring, and portfolio management - IMaCS has undertaken several engagements for banks in India and abroad on the above Developing credit scoring software for several borrower segments, such as large corporate, small and medium scale enterprises, small businesses, housing loans, consumer loans, and revolving credit for various banks and institutions in and outside India - IMaCS has developed risk rating models that can be used as per the Internal Ratings Based Approach under Basel II for over 20 borrower segments Implementing third party software solutions on credit risk management at several banks and financial institutions in India IMaCS has been conducting installations, software support and training assignments for several Indian banks and financial institutions since

13 6) Project Finance The World Bank appointed IMaCS for developing process manuals for appraising energy efficient projects in India - the assignment involved assessment of the existing project appraisal capabilities of participating Banks/ Financial Institutions for identifying gaps in existing methodologies, and designing an appropriate project appraisal mechanism. Empanelled with the Ministry of Heavy Industries, Government of India for conducting an independent risk assessment of project investments made by select public sector entities in India - as part of this, we have appraised over a dozen projects in the area of Gas, pipelines, electrical components, and power generation equipment Appointed by the Asian Development Bank in assisting them to identify, appraise, and structure infrastructure projects by way of PPP mechanisms Appointed by an international consortium that was bidding to become the Project developer for a very large Water Supply & Sewerage Project for a municipality in Western India for financial structuring and optimising project costs - IMaCS used its proprietary project finance model to reduce the project cost and the client was declared as the lowest cost bidder, while being successful in meeting the hurdle rates of all financiers Assisted a leading equipment manufacturer contemplating an equity investment in a large hydroelectric power project to assess the financial viability for the same Designed investment framework for a leading domestic supplier of energy related equipment for investing in the equity of power projects where it was an equipment supplier Assisted a leading multi-lateral financial agency in evaluating a foreign currency loan to a leading financial sector entity in India focussing on the infrastructure sector 7) Training Conducted training programmes on credit, market and operational risk management for banks in Bangladesh under the aegis of IFC Conducted a series of training programmes for financing affordable housing projects in partnership with IFC for housing finance companies in India Conducted training programmes for several banks/ institutions in India and abroad (including open house sessions) in Financial Analysis, Credit Risk, Market Risk, Risk Scoring models, Operations Risk and Risk Based Internal Audit Conducted workshops to ensure knowledge and technology transfer in course of our various assignments on Integrated Risk Management and Credit Risk Management and Software installations Conducted Credit Risk Culture assessment programmes for several banks and financial institutions to help credit executives identify their strengths and weaknesses and helping banks and institutions in identifying impediments and accordingly designing training programmes for capacity building Conducted several training workshops in partnership with IFC for banks and FIs 13

14 ICRA Management Consulting Services Limited Contact: Mr. V Sriram Chief General Manager & Head Banking & Finance IMaCS 5th Floor, Karumuttu Centre 634 Anna Salai, Nandanam Chennai Tel: / Mobile: Fax: sriram.v@imacs.in Mr. Bhaskar Som Deputy General Manager & Head Risk Management IMaCS FMC Fortuna, A-10 & 11, 3 rd Floor, 234/3A, AJC Bose Road, Kolkata Tel: Fax: bhaskar.som@imacs.in I M a C S Corporate Office: Logix Park, First Floor, Tower A4 & A5, Sector - 16, Noida Tel: Fax: Registered Office: 1105, Kailash Building, 11th Floor 26 Kasturba Gandhi Marg New Delhi Tel: Fax: Shalini Gupta Manager IMaCS Building No. 8, 2nd Floor, Tower - A, DLF Cyber City, Phase - II, Gurgaon Tel : Fax: shalini.gupta@imacs.in Sanjay Phanse Manager IMaCS 4 th Floor, ElectricMansion Appasaheb Marathe Marg, Prabhadevi Mumbai Ph: Fax: sanjay.phanse@imacs.in 14