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A European Bank Turns to S&P Global to Handle a Large Backlog of Counterparty Credit Reviews

Large banks have thousands of counterparties, and often struggle to complete credit risk assessments in a timely fashion given the extensive volume of scheduled reviews. In addition, regulators are looking for banks to follow a standardized approach when assessing counterparty credit risk to support comparability across portfolios.

  • About
    • Members of the credit risk team at this large European bank reviewed the financial strength of their corporate and financial institution counterparties on an annual basis and had an extensive backlog that needed to be completed. They asked for help to accelerate this review process, manage peak workloads, and standardize the approach to meet regulatory requirements.
  • Challenge
    • The bank had a substantial number of publicly listed and privately held counterparties across Europe, the U.S., and APAC that needed to be reviewed. The credit risk team was resource constrained but had a goal to complete credit review assessments for at least 200 counterparties every month.
  • Solution

    • The bank engaged S&P Global Market Intelligence (“Market Intelligence”) to deploy a team of 25 credit analysts within a month to manage the heavy volumes and ensure timely delivery during a six-month long pilot phase. The analysts:

      • Automatically spread financial statement information into financial analysis templates using Market Intelligence’s ProSpread™ that facilitates the extraction and spreading of data from documents.
      • Developed financial projections for the bank’s corporate borrowers.
      • Drafted credit memos leveraging the bank’s internal platform for assessing credit risk of counterparties , a Completed peer comparison analyses, evaluated ESG / Climate risks and scores, and provided credit outlook for each counterparty based on the bank’s internal methodology.
      • Updated the bank’s internal qualitative scoring model, providing an enhanced scoring framework for financial institutions that assigns scores based on new information and developments. The update included documenting details on the rationale for the scores.

      The deliverables were exchanged through a secured ‘e-share’ platform to maintain confidentiality and comply with data protection laws.

  • Outcome
    • Drawing on productivity-enhancing data and tools from Market Intelligence, our experienced credit analyst team delivered the desired 200 credit assessments per month throughout the pilot period. The approach was standardized to meet regulatory requirements and increased the bank’s senior risk stakeholders’ confidence in the review process. It also enhanced bank’s ability to mitigate unwanted risk exposures. The bank has decided to continue to use Market Intelligence’s team after the six-month pilot period.
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