Non-Core Business Migration

Non-Core Business Migration

Case Study

Non-Core Business Migration

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Customer Challenge

The capital markets business of a major UK bank needed to separate the most illiquid, long dated and/or high risk client trades from the core business, to meet increasingly strict capital requirements. A transfer strategy was required, followed by a programme of work to coordinate the global front to back delivery of the target state. As part of the strategy, Risk Weighted Assets (RWA) and Third Party Assets (TPA) savings had to be identified and delivered in order to meet board commitments around reducing risk.

How Citihub Helped

Citihub engaged key stakeholders from multiple business functions, including trading, sales, market risk, credit risk, finance, middle office, operations, and IT to define the transfer strategy and instantiate a front to back programme. We then built a golden source trade catalogue of trades to be separated into the non-core business, which was then updated and managed daily within a tactical database tool. The tool was used to generate simulations and impact assessments of the various business options available through the decision-making process, including the validation of impact to Risk and PV of various risk engine and model changes.

Alongside this, a target operating model was defined, ensuring that all traders were matched to trade type, and that every trade type was mapped to an appropriate support model post-migration.

In the run-up to migration, we performed migration impact testing, demonstrating the pre- and post-migration P&L of the core and non-core business. We dealt with Dealing Authority updates, book set up, risk flattening and back to back trade bookings, as well as implementing new Sales and Trader tools. Migration planning and migration day execution were managed by Citihub, including the post-Go Live stabilisation period of high alert in readiness for any post-migration issues.

Results

  • The business achieved £22bn of RWA and £35bn of TPA savings and the long “tail” was significantly de-risked.
  • The results of the programme were used in Board level presentations to investors, referring to strengthened balance sheet and restoration of capital strength.
  • There was minimal impact post-migration, with the planned stabilisation period being closed down successfully earlier than planned.
  • The target operating model was successfully implemented, allowing all core- and non-core trades to be serviced post-migration.
  • The tooling created during the delivery programme was re-used on subsequent client projects to provide impact analysis and simulation of future regulatory- and business-led changes, such as more aggressive disposal of high risk assets.

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