Magazine article American Banker

Household Buys New Rate-Risk Software; Program from Treasury Services Corp. Will Replace Fiserv Product

Magazine article American Banker

Household Buys New Rate-Risk Software; Program from Treasury Services Corp. Will Replace Fiserv Product

Article excerpt

Joining a host of financial institutions that are beefing up their risk-management capabilities, Household International said this week it had purchased software for managing interest rate risk from Treasury Services Corp.

Household International, a $31 billion-asset consumer finance company based in Prospect Heights, Ill., plans to have the software completely installed by midyear to manage domestic exposure in its two subsidiaries.

Domestic exposure makes up about 80% of the loans and investments managed by Household Bank FSB, a $8.6 billion banking company, and Household Finance Corp., a $17 billion consumer finance company.

Volatility as Motivator

Household joins a number of financial institutions that have increased their scrutiny of interest rate risk as market volatility has risen.

"Bankers are realizing that while managing operating costs and fee income has yielded results up to now, they need to get better tactical control of interest rate risk if they want to improve their [profits] margins," said David R. McCarthy, a principal with Treasury Services, based in Santa Monica, Calif.

Household will use the computer programs, TSER Portfolio Manager and Treasury Manager, to model several hundred thousand loans among the firm's six million to seven million outstanding credits. "We will model at the detailed level . . . where there is a lot of interest rate risk, like mortgage portfolios," said Robert W. Mitchell, vice president of finance for Household International. …

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