DEG and FMO arrange ALM competition
Promoting risk management in developing countries
Finals in Cologne: from 20 to 22 January, the final round of a competition on Asset Liability Management (ALM) was held at DEG. To train the staff of banks in developing and emerging-market countries, DEG, in cooperation with the Dutch development finance institution FMO, had organised this competition. It was carried out by SimArch, a company which has developed a simulation programme for ALM training measures. The Federal Ministry for Economic Cooperation and Development (BMZ) co-financed the competition from Technical Assistance (TA) funds.
The competition aims at training banks from partner countries, enabling exchange of experience and network building between the institutions and thereby improving know-how on risk management. Twenty-six banks with teams of four persons each participated in the first phase of the competition. The simulation programme allowed them to control a “virtual bank” for which they had to take decisions. They were, for instance, able of taking influence on risk management, portfolio design, refinancing sources and marketing strategy. The six teams who had managed to achieve the best share price for their bank during the first 3-month training phase were invited to Cologne to attend the second phase of the competition.
The participants of the six winner banks: Banca Promerica, Banco Sofisa, Banco Supervielle, BRAC Bank Limited, DFCU Group and Khan Bank.
An intensive, 3-day training awaited the winners from Argentina, Bangladesh, Brazil, Costa Rica, Mongolia and Uganda at DEG. Once more they had to control ”their” bank, this time under a new scenario and different, challenging financial and economic circumstances. The competition was complemented by lectures on different aspects of risk management presented by experts from DEG, FMO and the participating banks. After an enthralling final round, two winner teams were elected after the end of the intensive training. The winner was the bank which had succeeded in achieving the highest stock value: Banco Supervielle from Argentina. Moreover, the jury nominated the company with the most sustainable risk management: Banco Sofisa from Brazil.
ALM is a risk model to steer assets and liabilities in balance sheets. In a continuous process, assets and liabilities are monitored and controlled. The management system assures that the profitability and the risk structure of assets and liabilities match the risk and return objectives.
