There are not many software providers who can guarantee an IFRS-compliant solution that is reliable and precise yet avoids implementing a major project. Although FERNBACH had an extremely tight timeframe, they implemented our new Hedge Manager solution on time.

Darrell Colgan, Chief Financial Officer of Commerzbank Europe (Ireland)

About Commerzbank Europe (Ireland)

Commerzbank Europe (Ireland), a subsidiary of Commerzbank AG, was established in December 1994 in Dublin. Since taking over Eurohyp, Europe’s largest institution specialising in financial real-estate and public-sector projects, Commerzbank AG has become Germany’s second-largest bank and one of the leading banks in Europe.

Commerzbank Europe (Ireland) is a financial service provider for German corporate clients of Commerzbank AG who are operating in Ireland.

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Reference Story - Commerzbank Europe (Ireland) & FlexFinance Hedge Manager Ready to Go™

Commerzbank Europe (Ireland) opted for FERNBACH’s FlexFinance Hedge Manager Ready to Go™ to achieve lower costs, faster implementation and reliable results

As an Irish subsidiary, Commerzbank Europe (Ireland) prepared its accounts according to Irish GAAP. The bank was asked by its parent company Commerzbank AG to provide hedging results. Commerzbank AG requested assurances from the Management and Board of the bank that the hedging activities and strategy were working at a practical level.

In order to fulfil this request, as well as to comply with IFRS requirements, Commerzbank Europe (Ireland) needed a solution that ensured quick and easy calculation of hedge ratios for its portfolio of money market deals, securities, loans and the associated interest rate swaps.

The challenge for Commerzbank Europe (Ireland)

Commerzbank Europe (Ireland) was asked to comply with the standards imposed by the regulatory environment of their parent company which is a common problem for subsidiary banks. In this specific case, the bank was requested to adhere to the complex requirements of the new regulations for hedge management. These standards, issued by the IASB, give banks the possibility of equalising the effect of P&L volatility from economic hedge relationships by applying hedge accounting rules.

The most comprehensive way to cope with the challenge of the new requirements for Commerzbank Europe (Ireland) was to implement a workflow-based automated corporate hedge management solution for fair value hedges, portfolio hedges and cash flow hedges. The bank had a series of deals, which had had their interest rate risk hedged using identically matched interest rate swaps. The goal was to achieve perfect ratios and eliminate the potential mark-to-market volatility they would otherwise have been exposed to.

Furthermore, time was of the essence. The ideal software provider needed to be willing to accept the extremely tight timeframe and implement the solution quickly and efficiently.

Commerzbank Europe (Ireland) has now completely complied with its parent company’s requirements and is ready to implement the hedging standards under local GAAP.