Lloyds TSB Selects SAS to Manage Risk and Collect Rewards; Bank Expects Risk Management to Deliver Wide Business Benefits.

Business Editors/High-Tech Writers

CARY, N.C.--(BUSINESS WIRE)--Sept. 1, 2003

Lloyds TSB, a leading UK financial services group, has selected SAS(R) Risk Management for Banking software to provide a foundation for risk management that goes beyond Basel II compliance. The SAS application is enabling Lloyds TSB to satisfy all the requirements of Basel II, as well as to improve capital allocation, provide financial transparency, increase profitability and maximize the return for shareholders.

Under Basel II requirements, banks must consider the amount of capital (known as the capital charge) they need to hold to mitigate risk. Because SAS enables complex analyses of customers' ability to default, Lloyds TSB can gain even deeper insight into the cost of making certain decisions. This improved risk segmentation has already resulted in significant reductions in the credit risk capital charge for Lloyds TSB of up to 20% for unsecured loans and up to 50% for mortgages.

In addition, SAS is enabling Lloyds TSB to automate many manual processes such as risk reporting, performance monitoring and credit scoring, thereby enabling the bank to improve its interaction with customers.

"Over the last 15 years, Lloyds TSB has developed an IT infrastructure that provides the basic foundations to address risk. We have been using SAS throughout this time and have never seen the need to use anything else. SAS moves with the times, remains competitive and is constantly bringing new products to market, all of which makes SAS a reliable partner," said Shahram Sharifi, credit risk director at Lloyds TSB.

Sharifi continues, "By identifying the business benefits of risk management at an early stage, Lloyds TSB will enjoy a competitive advantage in the lead up to the Basel II deadline."

A key issue for effectively managing risk is not only the quality of historical data but also the speed with which it can be analyzed. Improved data capture at the point of sale enables the bank to monitor the performance of scorecards much faster. SAS is also being used to manage the data warehouse and to analyze and segment the data.

"With so many software vendors jumping on the Basel II band-wagon, successful vendors have to demonstrate not only their experience and knowledge of the risk market, but also their ability to ensure that organizations receive a clear return on their investment, which goes beyond just the compliance issues," said Peyman Mestchian, head of risk management at SAS UK. "We are therefore particularly delighted that Lloyds TSB's decision to select SAS was part of a competitive tender as this illustrates that risk management is not just the flavor of the month."

A recent report by Forrester Research supports the need for risk management programs that look beyond compliance and that cover all the data management issues as well as analysis and reporting requirements. According to Forrester Research, "SAS provides the most comprehensive offering beyond pure Basel II compliance. The current offering of other applications focuses on how to become Basel II compliant - instead of improving visibility into risk exposure." (Source: Forrester Research, Inc., Turning Chaotic Apps Into An Opportunity, Forrester brief Basel II, May 2003)

SAS Risk Management for Banking is a flexible application that provides a consistent, coherent approach to managing credit, market and operational risk throughout an organization whilst maintaining Basel II compliance. The solution incorporates credit scoring, which helps banks perform application and behavioral scoring to assess the credit worthiness of their customer base.

About SAS

SAS is the market leader in providing a new generation of business intelligence software and services that create true enterprise intelligence. SAS solutions are used at more than 40,000 sites - including 90 percent of the Fortune 500 - to develop more profitable relationships with customers and suppliers; to enable better, more accurate and informed decisions; and to drive organizations forward. SAS is the only vendor that completely integrates leading data warehousing, analytics and traditional BI applications to create intelligence from massive amounts of data. For more than 25 years, SAS has been giving customers around the world The Power to Know(R). Visit us at www.sas.com.

SAS and all other SAS Institute Inc. product or service names are registered trademarks or trademarks of SAS Institute Inc. in the USA and other countries. (R) indicates USA registration. Copyright (C) 2003 SAS Institute Inc. Cary, NC, USA. Other brand and product names are trademarks of their respective companies.