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16 January 2017

How the Brazilian Development Bank centralized its credit risk tools

Alistair King

"We needed to find options to minimize our operational risk," says Victor Pina, a senior economist at the Brazilian Development Bank (BNDES). "FACT [from Bureau van Dijk] was the best option."

Minimizing risk is a universal aim in the world of credit, not least in banking, and BNDES is no exception.

The main financing agent for development in Brazil, BNDES has for decades played a fundamental role in stimulating the expansion of industry and infrastructure in the country. It offers several financial support mechanisms to Brazilian companies of all sizes, as well as public administration entities, enabling investments in all economic sectors.

Defining the problem

Before starting work with FACT a couple of years ago, BNDES's internal rating models had run in a dispersed, unsecured spreadsheet environment, meaning data input and financial calculations were time-consuming and error-prone.
To meet its steady business growth and stay compliant, the bank's credit department had been looking for software to support its rating system and implement its internal probability of default (PD) models. It needed a high level of flexibility so it could independently manage and update its models to meet current and future regulatory requirements and internal credit policies. And, to successfully complete the rating process, it needed a better spreading tool to support its financial analysis.

The solution and the view from BNDES

BNDES chose the FACT credit risk solution to centralize its credit risk operations into a seamless and powerful platform that would increase efficiency in its credit business processes. Did it succeed?

During the whole process of implementation – outlined in detail in this case study – Bureau van Dijk was able to adapt to BNDES's evolving needs and changing priorities, and accept the change of requirements the bank submitted.

Roberto Elias Afonso, Head of the Department of BNDES Credit Policies, explains: "The software has proven to be flexible enough to configure internal scorecards and integrate the process of credit risk analysis with other corporate systems."

The project plan was actively managed to provide the necessary scope. The execution of the project was transparent – BNDES and Bureau van Dijk's teams were constantly well informed and on track to meet schedules and ensuring expectations. This also allowed both teams to collaboratively manage each challenge, scope change and mitigate the risks by adapting the project goals and strategies.

"The FACT implementation project at BNDES was very successful and reached not only schedule but also budget goals," adds Roberto, who also praises Bureau van Dijk's support and training.

Healthy collaboration between Bureau van Dijk and BNDES was at the heart of the project's success. "The team responsible for the project at Bureau van Dijk has shown a high level of knowledge and commitment," says Roberto.

Manuela Lopes, an economist at BNDES, adds to the picture.

Before working with FACT, "we used spreadsheets, with templates saved on our department's file," she says. "Every analyst would make a copy and work on that, and once a week analysts reported their ratings to a committee via a big PDF that the secretary would compile."

This was all done manually and entered into an Access database, recalls Manuela, with "no control systems in place".

Things have changed dramatically for the better. And you can read the rest of the story by downloading the full case study, complete with timelines and technical specifications.

 

Full case study on the Brazilian Development Bank

This case study investigates how the bank met the various requirements listed above – and more – by working with Bureau van Dijk's FACT team.

It explores topics such as:

  • Why the bank chose FACT to centralise its credit risk operations, in the words of key personnel
  • A handy summary of the various phases in the project, from project charter through to the integration of a number of complex PD models
  • How the FACT solution is helping the bank's day-to-day credit risk assessment operations

Download the full white paper.

Alistair King

Alistair King, Content Manager

A member of the global marketing division, Alistair commissions, edits and writes stories and white papers on a wide range of topics.

A member of the global marketing division, Alistair commissions, edits and writes stories and white papers on a wide range of topics.

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