Compliance Monitoring – Monitoring Covenants

The Balenz Compliance Monitoring system all comes together in the portfolio view of the Items and Covenants across all customers. The significant added value is the ability to quickly see, monitor, and react to the exceptions in the portfolio. The portfolio view can quickly focus the attention of the credit analysts and managers on items that need immediate attention. As seen on this screen, the portfolio view highlights the following items:

• Items for Review – Items that have been submitted to Balenz Compliance Monitoring from external sources that need to be reviewed by an internal person.
• Items for Spread – For clients using Balenz Spreading Automation, this lists the financial statements that have been received that are ready for spreading.
• Items Due – Lists the Items for all customers that are currently due. If Ticklers have been created for these Items, messages will have been sent to internal and/or external persons to remind them of the due date of the Item.
• Items Overdue – Lists the Items for all customers that are currently past due. If Ticklers have been created for these Items, up to two messages will have been sent to internal and/or external persons to alert them about the past due Item.
• Covenants Pending – Highlights customer with Covenants that need to be reviewed by a credit analyst.
• Covenant Violations – Highlights customers with Covenants that have been violated that need attention by a credit analyst.

When there are Covenants Pending, the credit analyst can open the Covenant and enter a value to determine if the Covenant is in compliance or if a violation exists. And, if you are using Balenz Spreading Automation, we are developing a direct link to Moody’s KMV RiskAnalyst so that financial ratio Covenants can be automatically tested when a financial statement is submitted.

When Covenant Violations exist for a customer, the user must determine the appropriate action to take to resolve the violation. Available actions include items such as Waived, Not Waived, and Noted-No Action.

For each of the above actions, the user has the option to generate a letter to the counterparty detailing the action they are taking on the Covenant, such as a waiver of a Covenant violation. The Balenz Compliance Monitoring Administrator can create standard letter templates, but the user can modify the templates for each unique situation, if necessary. See the Covenants Letters topic for additional details.