Balance Sheet Optimization

Balance Sheet OptimizationBalance Sheet Optimization helps financial institutions determine what to do with their assets in order to better meet regulatory requirements and achieve higher profitability.

Typical users include investment banks with large derivatives portfolios.


Basel III, EMIR, and Dodd-Frank regulations have imposed higher capital ratios and reduced the risks that banks are allowed to take.  But reducing the number of assets and the risk that banks take reduces the return on equity, putting pressure on profits and the ability to deliver returns to shareholders.  In order to meet these capital requirements, banks must determine which trades to clear, crush, offset, or exit.  They must also decide where to hold the assets that serve as hedges for a trade.


Balance Sheet Optimization determines what to do with existing trades and where to hold the hedges in order to meet regulatory requirements and maintain profitability.

Resources on Balance Sheet Optimization :