MSTAR BANK
OPERATIONAL RISK EXPOSURES REPORT

Introduction

What is mstar bank?

MSTAR BANK is a fictitious bank used to illustrate MSTAR Structured Scenarios for Operational Risks.

OVERVIEW OF MSTAR BANK

MSTAR BANK is a universal global bank headquartered in New York, NY, and operating in 4 regions. MSTAR BANK generates approximately $25bn revenue per year and has 50,000 employees.

REVENUE BREAKDOWN

MSTAR BANK activity is decomposed into 4 main business lines and 4 regions. The business lines are :

• AM: Asset and Wealth Management
• CB: Commercial Banking
• PB: Personal Banking
• IB: Investment Banking

The regions are:

• NAM: North America
• EMEA: Europe, Middle East, Africa, with operations mainly in UK and continental Europe
• LAM: Latin America, with operations mainly in Brazil
• APAC: Asia Pacific, with operations in India, Hong-Kong and Singapore

The following table presents the revenue breakdown for MSTAR Bank at the Region, Business Line level (in $bn).

NAMEMEALAMAPACTOTAL
AM2,500,250,250,253,50
CB2,500,000,000,002,50
PB7,501,250,001,2510,00
IB3,753,750,251,259,00
TOTAL16,255,500,502,7525,00

The following table shows a more detailed revenue breakdown (in $bn).

NAMEMEALAMAPAC
AM2,500,500,250,25
Asset Management2,000,000,000,00
Wealth Management0,500,500,250,25
CB2,500,000,000,00
Business Banking1,500,000,000,00
Loans0,600,000,000,00
Deposits0,450,000,000,00
Savings0,450,000,000,00
Card Acquirer1,000,000,000,00
PB7,501,250,001,25
Personal Banking5,000,250,000,25
Loans2,000,100,000,10
Deposits1,500,080,000,08
Savings1,500,080,000,08
Card Issuer2,501,000,001,00
IB3,753,750,251,25
Banking2,251,500,250,25
Markets1,502,250,001,00

PERSONNEL

MSTAR Bank has 50,000 employees

REGIONAL HEADQUARTERS

The main regional locations of MSTAR Bank are shown on the table and map below.

NAMEMEALAMAPAC
HeadquartersNew York
San Francisco
London
Frankfurt
Sao PauloSingapore
Hong Kong
Data CentersWilmingtonDublinSao PauloChennai

RETAIL BUSINESS

MSTAR Bank serves 12 million retail clients worldwide, with the following repartition:

NAMEMEALAMAPAC
#Retail Clients10 million1 million01 million
#Card Issued18 million1 million01 million
#Card Issuer Market Share2%0,4%00,4%

ASSET MANAGEMENT

MSTAR Bank has $1tn assets under management in approximately 350 funds, of the following sizes:

AUM#Funds
<1bn100
$1bn-5bn200
$5bn-10bn50

Approximately 200 funds can be considered to have an aggressive risk profile (exposure to stock markets above 50%).

In addition, MSTAR Bank administers 100 funds from third parties. The AUM of these administered funds is as follows:

AUM#Funds
<1bn25
$1bn-5bn50
$5bn-10bn25

The revenue MSTAR Bank draws annually from asset management is $3bn, which is a ratio Revenue/AUM of 0.3%. This can be considered average, as PWC reports in 2018 (1) that:
• Fees for active management is around 0.5%
• Fees for passive management is around 0.15%

(1) https://www.pwc.com/gx/en/asset-management/asset-management-insights/assets/pwc-awm-revolution-pressure-on-profitability.pdf

IT AND SERVICES

CRITICAL SERVICES

The main services MSTAR BANK is providing to its clients are listed below

ServiceDescription
Merchant CardsAcquirer services for merchants
Customer CardsAuthorization services for cardholders
PaymentsTransfers and payment for all clients
TradingTrading orders for IB and individual clients
Consumer LoansLoan application service for retail clients
Internet BankingOnline and mobile banking for retail and corporate clients

DEPENDENCY TO DATA CENTERS

Data Center DescriptionDaily dependent revenue
WilmingtonServes 90% of the EMEA Business$50m
Sao PaoloServes approximately 80% of the NAM Business$20m
ChennaiServes the LAM Business, and a fraction of the NAM business$15m
DublinServes the APAC business and a fraction of the EMEA business$15m

DETAILS ON PAYMENTS

The following table provides the details of payments processed by MSTAR Bank in the different regions daily (in $bn).

NAMEMEALAMAPAC
Payment
Settlement
System
FEDWIRE: $100bn
CHIPS: $60bn
BACS : $10bn
CHAPS : $40bn
TARGET2 :$10bn
SWIFT : $5bnFPS : $25bn
TOTAL$160bn$60bn$5bn$25bn

End of MSTAR BANK - OPERATIONAL RISK EXPOSURES REPORT