Algorithmics has received a patent for technology that enables financial institutions to derive fair market values for their loans and other credit related instruments using techniques designed to improve accuracy and transparency relative to current industry approaches. The technology will help banks structure, price, value, simulate and subsequently risk manage their complex loan portfolios in a manner consistent with current capital markets concepts.
Ben De Prisco, senior vice president of research and financial engineering at Algorithmics, said: “Algorithmics developed this technology to achieve better accuracy and transparency in loan valuation. This patented technology is innovative in that it applies capital market valuation concepts to the loan book for the purpose of obtaining market consistent fair pricing for credit related transactions. The patent not only facilitates the structuring and pricing of complex features and options offered in loans, but also allows financial institutions to risk manage their loan portfolios to understand the key drivers and sources of risks. Being able to assess the inherent riskiness of various transactions at the time of origination is critical in today’s market environment.”
Michael Zerbs, president and COO, Algorithmics, added: “This technology is a significant step forward in the area of risk managing the majority of banks’ assets. Combining this technology with our credit limits and credit administration tools ensures appropriate oversight at every step of the loan lifecycle. This patent demonstrates Algorithmics’ continuing commitment to product innovation that is driven by our deep understanding of our clients’ and the market’s current needs.”
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