Page 28 - Banking Finance December 2018

NEW PERSPECTIVES

AND ALTERNATIVE

APPR AC ES IN

CREDIT ANAL TICS

Academic ec ica a d e i a i e a e i a . ntro tion
i e d e i e a ea c edi a a ic e e Ris is nderstood as the antifia e ncertaint a o t the
de a d e cie ce a d a e c edi i f t re o tco es. Ban s are considered inherent ris d e
mea eme a d ma a eme c e ide e to the in i t eopard re atin to hi h e era e at rit
i e e i e imi a i e adi i a a ac e is atches i idit transfor ation and the siness c c es.
c edi i mea eme a d e c e e e Besides other ris s the an s r n the f nda enta ris
a e a i e a ac e a d e e ec i e e e defined as credit ris that the ent f nds i ht not ret rn
e adi i a a d e a ac e a e ei at a or as e pected. o p t it si p the credit ris can e
c m eme a i ie a d i e de e de ce e e defined as the pro a i it that a an orro er or
a e a e da a a d a ica i e e a i a co nterpart i ht fai to eet its o i ations in accordance
dime i a e added e c e a d i i e ith the a reed ter s ith the an . redit ris in an in
c edi a a ic i a e ide a ad e ie a e in o ed in a n er of a s s ch as direct endin
i a ea i e e e i a i i i e a ci a i arantees etter of credit treas r operations sec rities
d e a e a i e a ac e i c edi a a ic tradin and cross order e pos res and has the potentia
to transfor into and ead to other ris s s ch as ar et
ris and i idit ris .

A he oa of credit ris ana e ent is to a i i e a an s
AGM/MoF
ris ad sted rate of ret rn aintainin credit ris
Colle e o A l l
e pos re ithin accepta e para eters. Ban s need to
e e e o
e ana e the credit ris inherent in their entire portfo io as
e as the ris in indi id a credits or transactions. he

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