Macquarie Group (Macquarie) is a global provider of banking, financial, advisory, investment and funds management services.
Macquarie＊s main business focus is making returns by providing a diversified range of services to clients. Macquarie acts on behalf of institutional, corporate and retail clients and counterparties around the world.
Macquarie Group Limited is listed in Australia (ASX:MQG) and is regulated by APRA, the Australian banking regulator, as the owner of Macquarie Bank Limited, an authorised deposit taker. Macquarie also owns a bank in the UK, Macquarie Bank International, which is regulated by the FSA. Macquarie's activities are subject to scrutiny by other regulatory agencies around the world.
As an owner and manager of significant community assets, Macquarie works closely with governments around the world to deliver important services including transport, roads, airports and utilities. Specialist funds which manage these assets contributed approximately 11 per cent of Macquarie＊s total operating income, post provisions, for the six months to 30 September 2008.
Macquarie＊s approach to risk management is long-standing. Strong risk management practices are embedded in business unit management with central oversight of credit, market, funding, compliance and operational risk. These, together with committed, quality staff are key drivers of Macquarie＊s success.
Founded in 1969, Macquarie operates in more than 60 office locations in 27 countries. Macquarie employed approximately 12,800 people at 31 January 2009 and had assets under management of $A242 billion at 31 December 2008.
Macquarie＊s strength lies in its unique structure and management style which enables businesses to exercise significant operating freedom balanced by limits on risk and observance of professional standards. Macquarie＊s management approach fosters an entrepreneurial culture among staff. Strong prudential management is fundamental to this approach. The focus of central management is on risks to Macquarie arising from market and industry influences and issues of medium and long-term significance.
Other core elements of Macquarie＊s approach are:
Encouraging high ethical and professional standards
Commitment to clients
Commitment to growth
Recruiting, retaining and motivating quality staff
Aligning staff rewards with those of shareholders
Transparent and comprehensive reporting; including financial reporting and risk reporting.
Macquarie organises its activities into five operating groups and three divisions within which individual businesses operate.
- Macquarie Securities
- Treasury and Commodities Group
- Banking and Financial Services
- Macquarie Funds Group
- Corporate and Asset Finance
- Real Estate Structured Finance
- Real Estate Investments
Risk Management Approach
Risk is an integral part of Macquarie＊s businesses. Management of that risk is therefore critical. Strong independent prudential management has been a key to Macquarie＊s success over many years. Where risk is assumed, it is within a calculated and controlled framework.
The main risks faced by Macquarie are equity risk, credit risk, market risk, liquidity risk, operational risk and legal compliance and documentation risk. Responsibility for these risks lies with individual businesses. It is the responsibility of the Risk Management Group (RMG) to ensure appropriate assessment and management of these risks within Macquarie. RMG also ensures that these issues are quantified and that aggregated risk does not exceed Macquarie＊s economic capability to bear risk.
The risk management principles followed by Macquarie are:
Independence 每 RMG is independent of all other areas of Macquarie, reporting directly to the Managing Director and the Board. The Head of RMG is a member of Macquarie＊s Executive Committee. RMG authority is required for all material risk acceptance decisions. It identifies, quantifies and assesses all risks and sets prudential limits. Where appropriate, these limits are approved by the Executive Committee and the Board.
Centralised prudential management 每 RMG＊s responsibility covers the whole of Macquarie, meaning it can assess risks from a Macquarie-wide perspective and ensure a consistent approach across all areas.
Approval of all new business activities 每 Other areas of Macquarie cannot undertake new businesses or activities, offer new products or enter new markets without RMG＊s approval.
Continuous assessment 每 RMG continually reviews changes in risks brought about by both external developments and internal circumstances.
Frequent monitoring 每 Centralised systems allow RMG to monitor credit and market risks daily. RMG staff liaise closely with other areas of Macquarie to ensure that, should any limit breaches occur, they are immediately addressed, and escalated as necessary.