Service overview

Credit portfolio stress-testing

With emerging stress testing rules from the Federal Reserve, OCC and other regulatory bodies around the globe, lenders are subject to new guidelines which require more sophisticated analytical tools, efficient data infrastructure and experience analytical resources. Smaller lenders (less than $10 Billion in total assets) will soon be subject to similar regulations as the larger banks above $10 Billion that are already subject to the Comprehensive Capital Analysis and Review (CCAR) guidelines. The same thing is coming to other markets – the rules will become only stricter.

The Advantage of Business Systems ConsultTM Portfolio Stress Testing

• Provide stress testing platforms through Roll Rate Analytic System (RRAS), service and custom consulting services for all retail lending portfolios
• Employ our sophisticated portfolio modelling approach to stress test for PD, LGD and EAD, roll rates, attrition (prepayment), delinquency and charge-off, balances and recovery
• Using comprehensive industry data for different regions all over the world
• Analytics experts with decades of experience delivering to banks worldwide
• Cost effective solutions for lenders of any size

Aside from meeting regulatory requirements, stress testing is a key tool to ensuring lenders can weather a severe economic downturn.

Better planning avoids reactionary management, one of the highest possible costs in a business with high fixed costs and long resource lead times. In addition, there is immediate payoff from using your stress testing results to guide product pricing, consider new product features, and develop contingency plans.

The point of capital assessment standards is to make sure a company has enough capital “for a rainy day”. To establish this we must know which of its processes are deterministic and which are not. This is to say, we must weed out uncontrollable volatilities.

Because available capital is a measure of loan product efficiency and investor appeal, a powerful analytic tool that can assess capital is itself a plus in investors’ eyes. It also helps to justify management bonuses and strategies.

Back

Service

• Scenario analysis and forecasting
• Stress-testing
• Risk factors determination and analysis
• Scoring cards calibration
• Credit risks assessment
• Market and liquidity risk assessment
• Hedging
• Funding plan
• Reserves forecasting
• Pricing
• Capital adequacy
• Basel
• Model validation