Banks play an important role in the economy by acting as intermediaries between those who have surplus funds and those who need financing. They collect deposits from savers and use this money to issue loans to individuals and businesses, fueling economic growth. However, this activity exposes banks to various risks that must be carefully managed, such as credit risk from borrower defaults, interest rate risk, liquidity risk, and operational risks. Effective risk management is crucial to ensuring a bank's long-term survival and profitability.
Perspective: Needed, A Holistic Approach to Reputation Risk Management in Banks Infosys Finacle
This document discusses the need for banks to take a holistic approach to managing reputation risk. Currently, most banks silo each type of risk (e.g. credit, market, operational) without considering how they interconnect and impact reputation. The document advocates looking beyond individual risk departments to foster a culture where all employees understand how their actions can affect reputation risk. It also suggests learning from other industries' reputation risk practices and using new technologies like analytics and social media monitoring to proactively manage this critical intangible asset.
This document provides an overview and copyright information for the book "Risk Management in Banking" by Joel Bessis. It discusses the rationale for risk-based practices in banking, including the need for quantified risk measures to balance risk and return from a management perspective and comply with increasingly stringent regulations. It also notes that while quantitative models provide a foundation for risk modeling, bridging the gap between concepts and practical risk management tools and processes for banks remained a challenge. The document contains basic publication details such as the publisher, copyright, and cataloguing information.
This document discusses credit risk and credit ratings. It provides an overview of credit risk modeling, key determinants of credit risk like probability of default and loss given default, and the major credit rating agencies and their rating scales. It also describes the credit rating process, which involves both quantitative financial analysis and qualitative assessments, and results in an opinion on the issuer's ability to repay debt. Regulators require banks to measure and manage credit risk using models and capital requirements.
This document discusses credit risk modeling and provides an outline for a course on the topic. It introduces statistical, structural, and reduced form models for analyzing default probability. Key aspects covered include probability of default, loss given default, credit ratings, factors that affect default, and using logistic regression to estimate credit scores and map them to default probabilities and rating classes. The document also lists relevant textbooks and academic papers on credit risk modeling.
Microfinance institutions typically progress through four stages of development: start-up, initial growth, expansion, and maturity. In the start-up stage, MFIs are small and locally-focused with an informal structure, while relying on grants and public funding. As MFIs enter the growth stage, they develop basic management systems, gain market share, and work towards sustainability. During expansion, MFIs aggressively add new branches and services, take on more debt, and face conflicts between social and financial objectives. Finally, mature MFIs prioritize efficiency, maintain market share, and drift from their original social missions as they rely more on capital markets and focus on financial returns.
This document discusses over-indebtedness as a major risk for microfinance institutions (MFIs) that must be managed through an effective risk management framework. It outlines a common risk management feedback loop process that involves identifying, assessing, and prioritizing risks, developing strategies to measure and mitigate risks through operational policies, implementing policies, evaluating effectiveness, and revising policies as needed. Specifically for over-indebtedness, the document examines the drivers of over-indebtedness for MFIs and strategies they can use to mitigate this risk, such as controlling multiple borrowing, strengthening systems and lending discipline.
Banks play an important role in the economy by acting as intermediaries between those who have surplus funds and those who need financing. They collect deposits from savers and use this money to issue loans to individuals and businesses, fueling economic growth. However, this activity exposes banks to various risks that must be carefully managed, such as credit risk from borrower defaults, interest rate risk, liquidity risk, and operational risks. Effective risk management is crucial to ensuring a bank's long-term survival and profitability.
Perspective: Needed, A Holistic Approach to Reputation Risk Management in Banks Infosys Finacle
This document discusses the need for banks to take a holistic approach to managing reputation risk. Currently, most banks silo each type of risk (e.g. credit, market, operational) without considering how they interconnect and impact reputation. The document advocates looking beyond individual risk departments to foster a culture where all employees understand how their actions can affect reputation risk. It also suggests learning from other industries' reputation risk practices and using new technologies like analytics and social media monitoring to proactively manage this critical intangible asset.
This document provides an overview and copyright information for the book "Risk Management in Banking" by Joel Bessis. It discusses the rationale for risk-based practices in banking, including the need for quantified risk measures to balance risk and return from a management perspective and comply with increasingly stringent regulations. It also notes that while quantitative models provide a foundation for risk modeling, bridging the gap between concepts and practical risk management tools and processes for banks remained a challenge. The document contains basic publication details such as the publisher, copyright, and cataloguing information.
This document discusses credit risk and credit ratings. It provides an overview of credit risk modeling, key determinants of credit risk like probability of default and loss given default, and the major credit rating agencies and their rating scales. It also describes the credit rating process, which involves both quantitative financial analysis and qualitative assessments, and results in an opinion on the issuer's ability to repay debt. Regulators require banks to measure and manage credit risk using models and capital requirements.
This document discusses credit risk modeling and provides an outline for a course on the topic. It introduces statistical, structural, and reduced form models for analyzing default probability. Key aspects covered include probability of default, loss given default, credit ratings, factors that affect default, and using logistic regression to estimate credit scores and map them to default probabilities and rating classes. The document also lists relevant textbooks and academic papers on credit risk modeling.
Microfinance institutions typically progress through four stages of development: start-up, initial growth, expansion, and maturity. In the start-up stage, MFIs are small and locally-focused with an informal structure, while relying on grants and public funding. As MFIs enter the growth stage, they develop basic management systems, gain market share, and work towards sustainability. During expansion, MFIs aggressively add new branches and services, take on more debt, and face conflicts between social and financial objectives. Finally, mature MFIs prioritize efficiency, maintain market share, and drift from their original social missions as they rely more on capital markets and focus on financial returns.
This document discusses over-indebtedness as a major risk for microfinance institutions (MFIs) that must be managed through an effective risk management framework. It outlines a common risk management feedback loop process that involves identifying, assessing, and prioritizing risks, developing strategies to measure and mitigate risks through operational policies, implementing policies, evaluating effectiveness, and revising policies as needed. Specifically for over-indebtedness, the document examines the drivers of over-indebtedness for MFIs and strategies they can use to mitigate this risk, such as controlling multiple borrowing, strengthening systems and lending discipline.
Attheir creation, the rating agencies were like the news agencies because they published newsletters and were paying by contributions subscribers. That method of remuneration then evolved, and these are the debtors who have paid the agencies. Meanwhile, rating methods have gradually evolved to take into account the use of increasingly important to companies called sophisticated financial products such as structured products. Although the method of compensation has evolved, the activity of agencies has not changed and their responsibilities have remained for a long timethose news agencies, that is to say protected by freedom of expression. Thus, for years, they have enjoyed a special status allowing them to express opinions without any legal constraint weighs on them. Indeed, unlike, for example, an auditor who certified the accounts and give "reasonable assurance" of their quality based on professional standards of practice; no methodology stress weighs on agencies. However, their responsibilities have been initiated for the first time in the history of the rating, after the crisiss structured products. We see in this article how the agencies evaluate the risk of industrial and commercial companies (corporate) and financial institutions, as well as before ages and limitations of the current methodology used by credit rating agencies.
The sub-prime crisis highlighted issues with credit risk measurement in retail mortgage lending. Factors like plummeting interest rates pre-2005, lack of oversight on new risky products, and an active CDO market that enabled easy risk transfer contributed to the crisis. However, credit scoring approaches, which became prevalent during this period of innovation, also share some blame. Credit scoring focuses only on past payment history and does not fully capture borrowers' ability to repay, especially given changing macroeconomic conditions. This led to underestimation of risk. Going forward, credit risk measurement needs a more holistic approach that considers a borrower's full financial profile and macroeconomic factors. Outsourcing some aspects of the underwriting process could also
The document discusses the causes of the financial crisis and solutions to prevent future crises. It argues that the financial system is too important to leave unregulated and that mistakes were made during the crisis that went unpunished. It identifies three main challenges regulators face: 1) increasing capital requirements for financial institutions, 2) increasing regulation and transparency of credit derivative markets, and 3) regulating credit rating agencies to address conflicts of interest. Nationalizing credit rating agencies and increasing clearinghouse requirements are proposed as solutions.
The document discusses the financial services industry. It defines financial services as services provided by organizations in the finance industry that deal with money management. These organizations include banks, credit unions, credit card companies, insurance companies, stock brokerages, and investment funds. The financial services industry represents 20% of the US market. It became a more prevalent term in the US after the Gramm-Leach-Bliley Act of the late 1990s allowed different financial service companies to merge. The industry relies heavily on information technology and faces a constantly changing regulatory environment.
Fundamentals of financial_institutions_powerpointhe22_sinceforum
This document discusses why financial institutions exist and some of the key concepts in financial markets and institutions. It covers transaction costs, asymmetric information including adverse selection and moral hazard, and conflicts of interest. Financial institutions help address issues like transaction costs, information problems, and principal-agent problems. They provide services that help the financial system function more efficiently through economies of scale and scope in producing and applying financial information. However, conflicts can arise when institutions have multiple objectives and competing interests.
Threadneedle investments. inversión en bonos corporativos de mercados emerge...Observatorio-Inverco
Emerging market corporate bonds offer attractive opportunities for investors seeking higher yields. Demand for these bonds has grown as traditional fixed income investments offer very low returns and emerging market corporate fundamentals have strengthened. The asset class has experienced rapid growth, with new issuance reaching record levels in 2012. While offering relatively high yields, emerging market corporate bonds remain undervalued compared to developed market corporate bonds and sovereign emerging market bonds. The asset class is expected to continue growing as emerging market economies and corporations expand.
What are risks facing commercial banking institution sector by hamze dalhahamzedalha
Risks facing commercial banks include credit risk, market risk, operational risk, liquidity risk, and reputational risk. Credit risk is the potential failure of borrowers to repay loans. Market risk includes the possibility of losses from changes in interest rates, stock prices, and exchange rates. Operational risk arises from inadequate internal processes and people. Liquidity risk is the inability to meet short-term obligations. Reputational risk damages a bank's public image. Understanding and managing these risks is essential for banking institutions.
Financial stability, structure and credit enhancement mr. noranuarUmer Ahmed, CIFP
This document summarizes a presentation on financial stability structures and credit enhancement in Islamic finance. It discusses key aspects of financial stability such as monetary stability and confidence in financial institutions. It also examines case studies of financial crises and focuses on credit enhancement mechanisms in Islamic finance, including margin maintenance structures using Mudharabah, Wadi'ah and Qardh contracts. The presentation aims to understand how regulators, financial institutions and consumers can work towards financial stability.
Financial Stability, Structures & Credit Enhancement in Islamic Financial...anuar_ceo
This document summarizes a presentation on financial stability structures and credit enhancement in Islamic finance. It discusses key aspects of financial stability such as monetary stability and confidence in financial institutions. It also examines case studies of financial crises and how regulators, financial institutions, and consumers can promote stability. Additionally, the document outlines various Shariah compliant credit enhancement mechanisms used in Islamic finance, such as margin maintenance structures based on Mudharabah, Wadi'ah, and Qardh contracts to mitigate risk.
The document discusses topics related to enterprise risk capital frameworks including modeling issues like correlation assumptions and stress testing. It addresses principles of capital framework development and management implications such as using the framework for strategic decisions and product development. Emerging issues like assessing systemic risk are also covered.
This document provides a summary and comparison of risk management theories from Hennie van Greuning, Joël Bessis, and Dennis Uyemura. It discusses the major categories of risk that banks face, including credit risk, country risk, performance risk, liquidity risk, interest rate risk, market risk, foreign exchange risk, solvency risk, and operational risk. While the theorists generally agree on the types of risks, there are some differences in how some risks are defined or categorized. The document will examine these risk management theories in the context of the current US mortgage crisis.
This document discusses how the global financial crisis has created new challenges for financial institutions and I.T. departments. It notes that the "new hard times" are characterized by tighter credit, declining property prices, and increased regulation. This has put pressure on financial institutions to focus on survival through compliance and risk management, but they still need to enable growth. The document argues that traditional I.T. systems are a barrier to addressing both survival and growth needs, as they are inflexible, create information silos, and slow product development.
Counterparty risk in a post Lehmans World -- January, 2010catelong
Results from joint Credit/FitchSolutions survey shows most buy-side firms do not hedge counterparty risk.
Those surveyed cited hedging as too expensive.
The presentation suggest using CDS as early market systems of increasing risk from counterparties.
1) Mission drift occurs when microfinance institutions (MFIs) prioritize profitability over their original social goals of alleviating poverty. This often happens as MFIs transform into regulated banks to attract more funding and scale up operations.
2) Many factors can contribute to mission drift, including pressure from profit-seeking investors, uncertainty around subsidy funding, and MFIs' own desire to cut costs and serve wealthier clients.
3) MFIs can avoid mission drift by implementing strong internal management systems, including clear social performance metrics, communication of social goals to employees, and governance to ensure priorities stay aligned with the original poverty-focused mission. External actors like donors and investors also must encourage MFI
The document provides an overview of risk management in the Indian banking sector. It discusses various types of risks banks face, including credit, market, liquidity, operational, and solvency risks. It describes the risk management process and approaches to capital allocation for operational risk under the Basel accords. The document aims to educate readers on identifying and mitigating risks to enhance efficiency and governance in Indian banks.
This document provides an overview of credit derivatives and their role in the 2008 financial crisis. It discusses how credit derivatives developed as a way for banks to transfer credit risk to meet capital requirements but spread risk to other entities. While intended as a risk management tool, credit derivatives contributed to the crisis by spreading counterparty risk without adequate understanding of the risks involved. The document outlines the key types of market participants in credit derivatives and how their roles changed over time.
The hymn discusses using faith in God as an anchor to remain steadfast during the storms of life. It asserts that faith is fastened to the rock of God's love, which cannot be moved, keeping one's soul secure even when faced with fear, death, or life's hardships until arriving at the heavenly city. The chorus reinforces that faith keeps the soul grounded in God's love amidst life's turbulent times.
1) A group of fishermen went out at sea but failed to catch any fish that night.
2) The next morning, Jesus told them to cast their nets on the other side of the boat, which resulted in a huge catch of fish.
3) The fishermen realized it was Jesus who had advised them, and they had great success following his guidance to try a different approach.
Murals were painted on the side of a school depicting pictures from atop a hill including the church in the center of town. Traditional dancing was shown along with some less traditional forms of dancing in the murals.
Attheir creation, the rating agencies were like the news agencies because they published newsletters and were paying by contributions subscribers. That method of remuneration then evolved, and these are the debtors who have paid the agencies. Meanwhile, rating methods have gradually evolved to take into account the use of increasingly important to companies called sophisticated financial products such as structured products. Although the method of compensation has evolved, the activity of agencies has not changed and their responsibilities have remained for a long timethose news agencies, that is to say protected by freedom of expression. Thus, for years, they have enjoyed a special status allowing them to express opinions without any legal constraint weighs on them. Indeed, unlike, for example, an auditor who certified the accounts and give "reasonable assurance" of their quality based on professional standards of practice; no methodology stress weighs on agencies. However, their responsibilities have been initiated for the first time in the history of the rating, after the crisiss structured products. We see in this article how the agencies evaluate the risk of industrial and commercial companies (corporate) and financial institutions, as well as before ages and limitations of the current methodology used by credit rating agencies.
The sub-prime crisis highlighted issues with credit risk measurement in retail mortgage lending. Factors like plummeting interest rates pre-2005, lack of oversight on new risky products, and an active CDO market that enabled easy risk transfer contributed to the crisis. However, credit scoring approaches, which became prevalent during this period of innovation, also share some blame. Credit scoring focuses only on past payment history and does not fully capture borrowers' ability to repay, especially given changing macroeconomic conditions. This led to underestimation of risk. Going forward, credit risk measurement needs a more holistic approach that considers a borrower's full financial profile and macroeconomic factors. Outsourcing some aspects of the underwriting process could also
The document discusses the causes of the financial crisis and solutions to prevent future crises. It argues that the financial system is too important to leave unregulated and that mistakes were made during the crisis that went unpunished. It identifies three main challenges regulators face: 1) increasing capital requirements for financial institutions, 2) increasing regulation and transparency of credit derivative markets, and 3) regulating credit rating agencies to address conflicts of interest. Nationalizing credit rating agencies and increasing clearinghouse requirements are proposed as solutions.
The document discusses the financial services industry. It defines financial services as services provided by organizations in the finance industry that deal with money management. These organizations include banks, credit unions, credit card companies, insurance companies, stock brokerages, and investment funds. The financial services industry represents 20% of the US market. It became a more prevalent term in the US after the Gramm-Leach-Bliley Act of the late 1990s allowed different financial service companies to merge. The industry relies heavily on information technology and faces a constantly changing regulatory environment.
Fundamentals of financial_institutions_powerpointhe22_sinceforum
This document discusses why financial institutions exist and some of the key concepts in financial markets and institutions. It covers transaction costs, asymmetric information including adverse selection and moral hazard, and conflicts of interest. Financial institutions help address issues like transaction costs, information problems, and principal-agent problems. They provide services that help the financial system function more efficiently through economies of scale and scope in producing and applying financial information. However, conflicts can arise when institutions have multiple objectives and competing interests.
Threadneedle investments. inversión en bonos corporativos de mercados emerge...Observatorio-Inverco
Emerging market corporate bonds offer attractive opportunities for investors seeking higher yields. Demand for these bonds has grown as traditional fixed income investments offer very low returns and emerging market corporate fundamentals have strengthened. The asset class has experienced rapid growth, with new issuance reaching record levels in 2012. While offering relatively high yields, emerging market corporate bonds remain undervalued compared to developed market corporate bonds and sovereign emerging market bonds. The asset class is expected to continue growing as emerging market economies and corporations expand.
What are risks facing commercial banking institution sector by hamze dalhahamzedalha
Risks facing commercial banks include credit risk, market risk, operational risk, liquidity risk, and reputational risk. Credit risk is the potential failure of borrowers to repay loans. Market risk includes the possibility of losses from changes in interest rates, stock prices, and exchange rates. Operational risk arises from inadequate internal processes and people. Liquidity risk is the inability to meet short-term obligations. Reputational risk damages a bank's public image. Understanding and managing these risks is essential for banking institutions.
Financial stability, structure and credit enhancement mr. noranuarUmer Ahmed, CIFP
This document summarizes a presentation on financial stability structures and credit enhancement in Islamic finance. It discusses key aspects of financial stability such as monetary stability and confidence in financial institutions. It also examines case studies of financial crises and focuses on credit enhancement mechanisms in Islamic finance, including margin maintenance structures using Mudharabah, Wadi'ah and Qardh contracts. The presentation aims to understand how regulators, financial institutions and consumers can work towards financial stability.
Financial Stability, Structures & Credit Enhancement in Islamic Financial...anuar_ceo
This document summarizes a presentation on financial stability structures and credit enhancement in Islamic finance. It discusses key aspects of financial stability such as monetary stability and confidence in financial institutions. It also examines case studies of financial crises and how regulators, financial institutions, and consumers can promote stability. Additionally, the document outlines various Shariah compliant credit enhancement mechanisms used in Islamic finance, such as margin maintenance structures based on Mudharabah, Wadi'ah, and Qardh contracts to mitigate risk.
The document discusses topics related to enterprise risk capital frameworks including modeling issues like correlation assumptions and stress testing. It addresses principles of capital framework development and management implications such as using the framework for strategic decisions and product development. Emerging issues like assessing systemic risk are also covered.
This document provides a summary and comparison of risk management theories from Hennie van Greuning, Joël Bessis, and Dennis Uyemura. It discusses the major categories of risk that banks face, including credit risk, country risk, performance risk, liquidity risk, interest rate risk, market risk, foreign exchange risk, solvency risk, and operational risk. While the theorists generally agree on the types of risks, there are some differences in how some risks are defined or categorized. The document will examine these risk management theories in the context of the current US mortgage crisis.
This document discusses how the global financial crisis has created new challenges for financial institutions and I.T. departments. It notes that the "new hard times" are characterized by tighter credit, declining property prices, and increased regulation. This has put pressure on financial institutions to focus on survival through compliance and risk management, but they still need to enable growth. The document argues that traditional I.T. systems are a barrier to addressing both survival and growth needs, as they are inflexible, create information silos, and slow product development.
Counterparty risk in a post Lehmans World -- January, 2010catelong
Results from joint Credit/FitchSolutions survey shows most buy-side firms do not hedge counterparty risk.
Those surveyed cited hedging as too expensive.
The presentation suggest using CDS as early market systems of increasing risk from counterparties.
1) Mission drift occurs when microfinance institutions (MFIs) prioritize profitability over their original social goals of alleviating poverty. This often happens as MFIs transform into regulated banks to attract more funding and scale up operations.
2) Many factors can contribute to mission drift, including pressure from profit-seeking investors, uncertainty around subsidy funding, and MFIs' own desire to cut costs and serve wealthier clients.
3) MFIs can avoid mission drift by implementing strong internal management systems, including clear social performance metrics, communication of social goals to employees, and governance to ensure priorities stay aligned with the original poverty-focused mission. External actors like donors and investors also must encourage MFI
The document provides an overview of risk management in the Indian banking sector. It discusses various types of risks banks face, including credit, market, liquidity, operational, and solvency risks. It describes the risk management process and approaches to capital allocation for operational risk under the Basel accords. The document aims to educate readers on identifying and mitigating risks to enhance efficiency and governance in Indian banks.
This document provides an overview of credit derivatives and their role in the 2008 financial crisis. It discusses how credit derivatives developed as a way for banks to transfer credit risk to meet capital requirements but spread risk to other entities. While intended as a risk management tool, credit derivatives contributed to the crisis by spreading counterparty risk without adequate understanding of the risks involved. The document outlines the key types of market participants in credit derivatives and how their roles changed over time.
The hymn discusses using faith in God as an anchor to remain steadfast during the storms of life. It asserts that faith is fastened to the rock of God's love, which cannot be moved, keeping one's soul secure even when faced with fear, death, or life's hardships until arriving at the heavenly city. The chorus reinforces that faith keeps the soul grounded in God's love amidst life's turbulent times.
1) A group of fishermen went out at sea but failed to catch any fish that night.
2) The next morning, Jesus told them to cast their nets on the other side of the boat, which resulted in a huge catch of fish.
3) The fishermen realized it was Jesus who had advised them, and they had great success following his guidance to try a different approach.
Murals were painted on the side of a school depicting pictures from atop a hill including the church in the center of town. Traditional dancing was shown along with some less traditional forms of dancing in the murals.
This summary provides the key details from the Aesop's Fables document in 3 sentences or less:
The document contains several short fables by Aesop, including stories about a horse complaining about its treatment compared to a lapdog, frogs asking Jupiter for a king and receiving increasingly worse rulers, and a mule refusing to help an overburdened donkey. The fables convey brief moral lessons about greed, vanity, and the consequences of refusing to help others in need.
[PDF] Press Release: Well-received: 500,000th Freightliner Truck Handed Over to Customer as It Rolls Off the Production Line
[http://www.lifepr.de?boxid=357467]
This document provides information on various fungal species. It describes where each species is commonly found, whether it should be considered an allergen, and if it has been associated with any toxic or invasive diseases. Many species are described as widespread in soils and plants outdoors or as common indoor contaminants. Several are noted as opportunistic pathogens that can cause infections in immunocompromised individuals. Some, such as Aspergillus flavus, produce mycotoxins that have been linked to disease in humans and animals.
All of creation, including earth, sea, sky, and creatures, are interconnected and part of one great family. We are all given life by our Creator to share in creation's glory and mystery. All who know and love creation witness the Maker's sacred plan that unites every person and creature.
This Ghanaian song praises God, whose soul rises up in praise. It calls the soul to praise God, the creator of all things, and asks the soul to proclaim God's goodness and greatness forevermore.
The song lyrics celebrate being part of everything in the natural world and encourage cherishing health, following one's deepest desires, seeking truth even when it's painful, knowing God, serving all creatures on Earth, and finding honor for every race. The chorus repeats that we are part of the seas, ground, sky, and the love that planted the Earth as part of the Spirit's reason.
AAP's Janlokpal is weaker than Central Govt's LokpalShivendra Chauhan
The document highlights key differences between the central Lokpal bill and the AAP's proposed Jan Lokpal bill for Delhi. Some key differences include:
1) The composition and experience requirements of the selection committees that appoint Lokpal members differ, with the AAP bill potentially favoring those with legal experience or ties to AAP.
2) The AAP bill excludes MLAs of Delhi and NGOs from the Lokpal's jurisdiction, while the central bill includes them.
3) Provisions around frivolous complaints, repeal of existing laws, reporting structures, and prosecution powers are less stringent or clear in the AAP bill compared to the central bill.
This hymn text from 1779 describes the amazing grace that saved the author's soul and brought them from being lost to being found. It expresses how grace taught them to fear God and relieved their fears when they first believed. Through dangers and trials, grace has brought the author safely this far and will lead them home, as God has promised goodness and will be their shield for as long as life endures. The hymn looks forward to singing God's praise in heaven for eternity.
The document is a song about a soul's desire to see God's face and rest in God's abode. It expresses the soul's wish to be free from gloom and find new life beyond doom. The soul desires to see God's face clearly like the sun after heaven's gate is won. It asks God to grant its soul's desire of deep cleansing sighs and to rise from earthly cares.
The poem discusses how the steps to tomorrow are not predetermined and may not seem clear at first. However, looking back allows one to see how the crooked lines of the past have shaped today. Moving forward, the steps are within one's control and by traveling together with friends, the path ahead will become clear. The poem encourages stepping into an unknown future with faith that a higher power will provide guidance.
The first sentence describes the river of God coming rushing from the mountains. The second sentence states that the river of God comes rolling to the sea. The third sentence explains that the river of God draws the waters of creation and is the life that flows through all people.
The song encourages rising with the rest and shining like a pearl to show love around the world. It tells of the earth turning and everyone waking to a new day with the morning sun breaking. Friends are waiting for work and play as the day is calling and it's time to rise and shine like a bluebird or the sun.
Asset liability management-in_the_indian_banks_issues_and_implicationsVikas Patro
This document discusses asset-liability management (ALM) in Indian banks. It provides background on the evolution of risk management practices in Indian banks over time in response to deregulation and other changes. It describes various types of risks banks face, such as interest rate risk, liquidity risk, and credit risk. Effective ALM is important for banks to manage these risks and balance risks with profits. The document outlines objectives to study the current status and impact of ALM practices in Indian banks.
Basel iii a comprehensive regulatory response february 2011Maan Barazi
dr Amine Awad in the UAB conference - february 2011 presents views on Reasons behind the International Financial Crisis
Major Components of Basel III
Lebanon’s Action Plan to fully implement Basel III
1) The document discusses Regulation 28 which sets limits on the percentage of debt instruments that retirement funds can invest in based on the issuer and whether the instrument is listed or unlisted.
2) It examines whether being listed provides additional protections and benefits for debt instruments. There is a view that listing brings more regulatory requirements and oversight.
3) The document questions whether being listed truly adds value given disclaimers around accuracy of information. There is a proposal for different rules around placement processes.
4) It provides the specific debt instrument limits for banks under Reg 28, with higher limits for larger listed banks.
The document discusses credit risk management at a bank. It defines credit risk and outlines the bank's credit risk management framework, including having a credit risk policy, preferred organizational structure, and procedural guidelines. It emphasizes the importance of credit risk grading, monitoring, and mitigation. Key areas of responsibility for the investment risk management, relationship management, and credit administration teams are also outlined.
The document discusses financial intermediaries and their role in facilitating transactions between lenders and borrowers. It defines a financial intermediary as an entity that acts as a middleman in financial transactions. Banks are a key type of financial intermediary, as they accept deposits and provide loans. Other financial intermediaries mentioned include non-banking financial companies, mutual funds, insurance companies, and development financial institutions. The document outlines the various risks that financial intermediaries must manage, such as credit risk, liquidity risk, and systemic risk.
How do you monitor your Basel III compliance? Pactera_US
This document discusses Basel III compliance and operational risk measurement and reporting requirements for banks. It summarizes the key principles for effective risk data aggregation and reporting established by the Basel Committee on Banking Supervision. These include governance, data accuracy and integrity, completeness, timeliness, and adaptability of risk reporting. The document also provides examples of operational risk activity and business reporting, highlighting the largest losses come from retail banking and external fraud. It concludes with best practices for a pragmatic approach to risk detection and transparent, understandable reporting to improve risk management.
Based on the cash flow analysis, the company may face difficulties in servicing its debt obligations going forward as its net cash after operations is negative in 2009-10 and cash interest coverage is declining. More information would be needed to make a definitive decision on lending.
SC Credit Advisors Middle Market Capital Edge 2013 Q1Greg Porto
SC Credit Advisors published its first quarterly Middle Market Capital Edge report, which provides observations and insights on debt and equity capital markets for private middle market companies. The report discusses statistics on senior cash flow and asset-based loans, financing from business development companies, private equity buyout valuations and terms, and pricing trends for various capital options. Despite economic uncertainty, the financing environment for middle market companies is currently favorable due to competition among lenders, low borrowing costs, flexible financing from business development companies, and high purchase multiples from private equity firms seeking deals.
SC Credit Advisors published its first quarterly Middle Market Capital Edge report, which provides observations and insights on debt and equity capital markets for private middle market companies. The report discusses statistics on senior cash flow and asset-based loans, financing from business development companies, private equity buyout valuations and capitalization, as well as pricing trends, leverage, and capital options. Despite economic uncertainty, the financing environment for middle market private companies is currently favorable due to competition among traditional and non-traditional lenders, low borrowing costs, flexible financing from business development companies, and high purchase multiples from private equity firms seeking to deploy capital.
This document provides an overview of the banking industry and Anggi Ratna's background in banking risk management. It discusses the basic principles of banking including the three lines of defense model for risk management. It also outlines the key functions within a bank such as consumer banking, corporate banking, risk management, finance and others. Finally, it describes the types of risks banks face and processes for controlling risks.
The document discusses operational risk and provides guidance on defining, identifying, measuring, monitoring, controlling, and mitigating operational risk according to the Basel Committee on Banking Supervision. It addresses issues with operational risk loss data and outlines principles for developing an appropriate operational risk management environment, process, and framework. The document also examines challenges with using internal and external loss data for quantifying operational risk capital requirements.
AMI Perspective On Current Economic Crisis March 09jbenedict3
The document provides an overview of the current economic crisis from the perspective of AMI Investment Management. It discusses [1] how the crisis developed from the boom brought on by low interest rates and easy credit conditions, leading to overindebtedness; [2] the state of overindebtedness among households, firms, and governments; and [3] how the crisis unfolded as default rates rose and asset prices fell, destabilizing the financial system. It examines events like the Bear Stearns and AIG bailouts and the passage of TARP. The document considers where the economy and markets may be headed as the massive deleveraging process continues.
A Systematic Literature Review On The Effects Of Risk Management Practices On...Claire Webber
This document summarizes a systematic literature review on the effects of risk management practices (RMPs) on the performance of Islamic banking institutions (IBIs). The review identified 16 themes and 17 sub-themes related to RMPs and IBI performance from analyzing 39 primary studies. Key findings included that IBIs with good risk mitigation practices, strong risk management environments, clear policies and procedures, and effective risk monitoring tended to have better financial performance. The review concluded RMPs are important for IBIs' financial stability and performance, so IBIs must make RMPs a priority.
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RMPG Learning Series CRM Workshop Day 1 Session 1
1. Agenda for Day 1
Introduction of Participants
Introduction to Credit Risk
Overview of Basel Guidelines
Lunch Break
Framework for Credit Risk Management
Open Session/ Q&A
IM aCS 2010
Printed 11-M ay-11
For Classroom discussion only Page 1
2. What is you Bank’s most important risk?
Type of Business Biggest Risk
Commercial Banking Credit Risk
Investment Banking & Market Risk
Trading
Asset Management Operational Risk
IM aCS 2010
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3. Art of Credit - Managing Loan Losses
“Credit Losses have, historically, been the single largest cause of bank
failures” - Economist
“Bankers are in the business of taking and managing risk… that is the
business of banking.” - Walter Wriston, ex-Chairman, Citicorp
“Volatility forms the link between risk and reward – the trick is for banks to
reduce that observation to workable propositions.” - George Vojta, Vice
Chairman, Bankers Trust
IM aCS 2010
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4. What is at stake for banks who cannot balance the
risk/reward relationship?
Their own survival! - Illustrative Example
%
Net Interest Revenues 3.00
Plus: Other Income (Fee/FX) 1.00
Net Customer Revenues 4.00
Less: Direct + Allocated Costs -2.50
Net Margin Before Credit Costs 1.50
Less: Expected Credit Costs -1.25*
Net Income 0.25
Required Return on Risk Adjusted Assets 1.60**
Premium Shareholder Income/Loss -1.35
(* Based on assumed portfolio quality)
(** Assumes 8% Risk Adjusted Capital allocation and required ROA (Return on
Risk Adjusted assets) of 20%)
IM aCS 2010
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5. The Message
A business must generate
Premium Shareholder Income
of at least 1.60%
(i.e. a 20% ROA on 8% capital)
in order
not to erode
Economic Value of Capital
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6. How?
To produce
Premium Shareholder Income
&
long term shareholder value,
banks must ensure
Superior
CREDIT RISK MANAGEMENT
IM aCS 2010
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7. How does your bank currently manage its Credit Risks?
Is your focus on managing:
> individual credit exposures?
or
> a portfolio of credit exposures?
IM aCS 2010
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8. There are 3 opposing forces that challenge credit risk
management …..
Greater
Higher Risks
Returns
Credit risk
management
Regulators
More Capital
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9. Why is Credit Risk Management important for Banks?
RoE for banks worldwide has been below 10% and declining after 1960 if
one excludes non-interest income
Suggests that loans have been “loss leaders” - inducing customers to buy into
other products offered by banks
9 out of 10 banking failures attributable to poor credit risk management
New forms of financial transactions emerging
Asset backed securities
Derivatives
IM aCS 2010
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10. Several factors are changing the face of the Banking
industry across the globe
Highly intense
Liberalisation level
Time 1990 2005 2010
Low Medium High
Competition for
Banks Capital Adequacy pressure
Pressure on
customers
in the future
1990 2005 2010
Profits
None Medium High
Banks today
Relatively Competition for business
manageable
1990 2005 2010
Low Medium High
Medium Intense
Pressures due to
Capital adequacy norms
IM aCS 2010
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11. The Changing Marketplace for Credit
New kinds of lenders / investors coming into the financial intermediation
business
Different approach to credit risk management
Different investment horizons
Different risk aptitudes and risk tolerances
“Relationship based lending” changing from “art” to “science”
IM aCS 2010
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12. The different compartments of Financial Intermediation
have coalesced...
Yesterday Liberalised Market “Must” capabilities for banks
Banking Banking Implications Focus on well-defined
target customer groups
Term
Term Lending Ability to offer a variety of
Lending financial products
(including new products)
Insurance Insurance Sophisticated risk
management
Ability to use Technology
as a competitive weapon
NBFCs NBFCs
IM aCS 2010
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13. How are different banks preparing themselves to face
increasing competition?
• Move towards consolidation/ alliances
• Banks are increasingly focusing on niche segments for growth
• Technology is playing a key role in deciding the competitive position
of banks
• Introduction of new products & delivery mechanism to meet the
customer requirements
• Risk management has become “mantra” to the banking sector
IM aCS 2010
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14. The competition in the banking sector is getting intense
Number of entities
Large corporates Fiercely competitive
SMEs Under served
Intensifying competition
Retail in select segments
In USA, SMEs became of interest to banks after a recent focus on
segmentation showed their profit contribution
IM aCS 2010
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15. Different credit segments generate different market
returns - a key driver for portfolio management
U.S. Market Size and Profitability
800
Insurance
Consumer
200 Finance
Small
Revenues
Business
($BN)
100
Mortgages
Credit
50 Cards
Mutual
Funds
5 10 15 20 25 30 35 40
ROE (%)
Source: IFC Symposium, China
IM aCS 2010
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16. A bank should have a three-fold objective to implement
Credit Risk Management systems
Manage the credit risk inherent in individual credits or
1
transactions as well as the risk in the entire portfolio
Maximise the risk-adjusted return on capital by maintaining
2
credit risk exposure within acceptable parameters
3 Manage the relationship between credit risk and other risks
IM aCS 2010
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17. Conventional credit management practice - (Originate
and Hold)
Largely restricted to developing
/procuring obligor assessment models
and laying down loan policy
Hold Till Maturity
Monitoring
Risk Management
AA
SS /Client
Borrower
Obligor Loan Origination / SS Management
Credit Group
EE
/Servicing
TT
Recovery
Obligor evaluation, /Recovery
pricing,
management &
monitoring Involved
post
default
IM aCS 2010
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18. How Risk Builds in the Portfolio
Ineffective
monitoring due to
incorrect risk
perception
(Tools/process
Inadequate issue
obligor risk
assessment
Monitoring
Risk Management
tools
A
S /Client
Borrower
Obligor Loan Origination / S Management
Credit Group
E
/Servicing
T
Recovery
/Recovery
Imperfect Loan
Structuring
Correlation between
assets. Asset
displaying cyclical
characteristics not
tracked adequately
IM aCS 2010
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For Classroom discussion only Page 18
19. How Risk Builds in the Portfolio
Fallen Angels
Assets whose marginal risk
contribution was low when the
exposure was taken and risk
on which has increased with
passage of time but not
tracked adequately
Risk
Exposure
IM aCS 2010
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For Classroom discussion only Page 19
20. So, what is driving banks to look at credit risk
management?
Maintain growth and improve
IMPERATIVE profitability to sustain capital Need to grow
adequacy
Any growth strategy has
Profits inherent risks
•+ Need for striking a
balance between growth,
risks, and profits
Understand the source of
profits and risks
Growth Risks
Need the following :
Understand risk
Understand profits
IM aCS 2010
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For Classroom discussion only Page 20
21. Traditional Credit Analysis
Credit analysis - the process of making inquiries prior to committing funds
Based on two distinct issues:
Willingness of borrower to repay
Ability of borrower to repay
To this day, banks are far ahead of other players in the core expertise of
analysing credit risk
Classic credit analysis remains the preserve of banks
IM aCS 2010
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22. Key Highlights of a Classic Credit Analysis Process
Based on both subjective and objective elements
Highly dependent on the quality of persons involved
Usually a high variance in the quality of documentation of observations and
analysis across time and persons
It is rather expensive to maintain high standards (read consistency, objectivity,
and accuracy of risk analysis)
The final judgement is often determined by one or a few dominating parameters
and / or officers
IM aCS 2010
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For Classroom discussion only Page 22
23. Drawbacks of Classic Credit Analysis
Too expensive to maintain - training and retention costs of several
experts getting out of hand
The general approach was to hold loans to maturity - therefore,
reasonable chance of loans going bad
Increasing competition for lending has forced banks to duplicate skills
and systems
As banks become large, management of complex and subjective
processes is extremely difficult
Limitations of handling concentration risk
IM aCS 2010
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For Classroom discussion only Page 23
24. What is the Quantitative Approach to Credit Analysis?
Use of a quantitative model for measuring credit risk of a particular account
Use of a numerical scoring system to indicate degree of risk
Components of overall risk may be broken down and separately captured
Usually works best with objective data
Advanced techniques used for capturing subjective data
Amenable to further mathematical analysis for use in
Trend analysis
Default prediction
Risk pricing
Securitisation
Leading banks moving towards increased use of quantitative models
IM aCS 2010
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For Classroom discussion only Page 24
25. Positives and Negatives of Quantitative Models
Advantages Disadvantages
High consistency - everyone speaks the Results are only as good as the
same language of risk underlying algorithms
High objectivity - result not influenced
by individual persons Calibration and validation of model
is essential to make it work - this
Can capture trends indicating needs in-depth expertise
deterioration or improvement in risk
profile over time Users tend to substitute their
judgements with such models - this is
Gives insights into components of risk not the intended use of the models
Can compare risks across different
accounts more easily and objectively
Can be used for pricing and portfolio
management
IM aCS 2010
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For Classroom discussion only Page 25
26. Credit – Emerging Value Chain (Originate/Buy and
Manage)
Risk Management Credit
Secondary Market
Derivatives
Issuers/ Portfolio
Borrowers Investment
Product
Loan Origination / Structuring /
Client Management Securitisation
Servicing
IM aCS 2010
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For Classroom discussion only Page 26
27. Migration Path for Credit Management
Most banks are at the early stages of credit risk management
Stage 1 Stage 2 Stage 3 Stage 4
Passive Active Semi- advanced Advanced
traditionalists traditionalists practitioners practitioners
Banks that Banks that manage Banks that manage Banks that use
originate and their credit portfolio their credit portfolio very sophisticated
typically hold to by RoE through finer pricing of models for
maturity risks and have greater portfolio
ability in managing management
portfolio wide risk
IM aCS 2010
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For Classroom discussion only Page 27
28. Key Drivers of change in Credit Risk Practice
Regulatory issues
Capital adequacy
Income recognition and provisioning norms
Disclosure norms
Increasing pressure to enhance shareholder returns
Banking is also a commercial business that competes for equity
Not amongst the top bracket growth sector businesses
Emergence of markets for loans
Securitisation
Structured finance
Derivatives
IM aCS 2010
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For Classroom discussion only Page 28
29. DISCUSSIONS
IM aCS 2010
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For Classroom discussion only Page 29
30. All the contents of the presentation are confidential and
should not be published, reproduced or circulated without the
written consent of IFC, Bangladesh Bank and IMaCS.
IM aCS 2010
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For Classroom discussion only Page 30