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} Target portfolio
defined as part of
credit risk strategy
Risk Office
The Risk Office bundles together activities for the analysis of single borrowers, credit
administration, management of loans in need of restructuring, risk management and
risk controlling.
It is divided up as follows. The Corporates / Financial Institutions Division and the Real
Estate / Structured Financing Division are responsible for analysis. The systematic sec-
tor-oriented approach employed in these divisions has proved successful. The main
tasks of the Credit & Collateral Services Division comprise the drafting of agreements,
uniform monitoring of risk-relevant credit business as well as transaction- and service-
oriented portfolio management. In Credit Consulting, the chief feature is a greater
focus on workouts. The Risk Controlling & Procedures Division is entrusted with the
design, implementation and monitoring of management systems, in addition to the
implementation of more accurate methods for risk measurement and reporting.
The Credit Committee, delegated the highest level of responsibility below the Board of
Management, is the Bank’s central credit competence unit. It also provides the Board
with support on all issues of credit risk management. The comprehensive credit policy,
on which all credit-related decisions are based, provides a solid framework for this.
Risk management
Refining and elaborating risk management processes and methods represented a key
focus of the Risk Office’s activities in the 2004 financial year. As part of reorganisation,
credit administration activities were brought together under the Credit and Collateral
Services unit of the Risk Office. Meanwhile, Risk Offices abroad – in New York, London
and Hong Kong – were annexed to the Corporates / Financial Institutions Division.
Thus, their organisation is now in harmony with the structures and task allocation of
the Munich Risk Office.
For capital controlling purposes, the target portfolio was defined as part of the ongo-
ing development of the bank-wide credit risk strategy. Consistent implementation of
cluster management led to a further improved diversification.
The rating system developed jointly with nine other landesbanks has already proved
to be of value. Using the DSGV (German Savings Bank Association) corporate customer
rating and establishing a shared credit process with the savings banks reinforces coop-
eration with the Bavarian savings banks in the area of underwriting business. More-
over, it supports the ongoing development of a uniform approach to risk, as well as
boosting the efficiency of collaborative work.
In covering the portfolio to the greatest degree possible by powerful, cutting-edge rat-
ing procedures, the Bank has achieved a further milestone on the way to meeting the
requirements of Basel II.