Writing in The RMA Journal, Global Credit Data’s (GCD) Executive Director Richard Crecel and North American Executive Nathaniel Royal, along with Accenture’s Head of Quantitative Analytics, Finance,and Risk Services Soner Tunay, outline results from GCD’s latest benchmarking efforts on current expected credit loss (CECL) estimates.
Initial CECL estimates vary significantly, data gathered from 11 banks reveals. In turn, further benchmarking, enabling banks to see how their models stack up against those of their peers, will be crucial to bringing the industry’s CECL estimates into a natural alignment without the need for strict supervisory interference.
Read the full article in the latest edition of the RMA Journal, and on the Global Credit Data website here.
Speaking with The Corporate Treasurer, Global Credit Data’s Executive Director Richard Crecel discusses the company’s origins, its objectives and the importance of benchmarking credit losses.
Since the 2008 financial crisis, banks have had to adjust internal mechanisms and processes, such as
those for predicting losses, to align with regulators’ directives.
“That is why banks decided in 2004, because of the Basel Regulation, that they would pool their data together so that they would all have a larger dataset to contemplate and that was what led to the creation of GCD,” Crecel explains.
To read the article, please click here (paywall).
Speaking with Trade Finance Global, Global Credit Data’s (GCD) Executive Director, Richard Crecel and Membership and Methodology Executive, Daniela Thakkar, discuss IFRS 9 implementation, benchmarking, and how they collaborate and engage with regulators to ensure GCD’s data can be put to best use .
The IFRS 9 accounting standard, implemented following the financial crisis, requires a shift in the manner of assessing provisions by requiring that banks estimate their historic, current and projected losses – including a one-year and a life-time expected credit loss (ECL).
To read the article, please click here.
Speaking with Risk.net, Richard Crecel, Global Credit Data’s Executive Director, discusses variability in credit loss estimates for IFRS 9, following the release of their latest benchmarking study.
Crecel notes that, “when you test models against the same reference portfolio, you find a large distribution of outcomes – meaning two different institutions would treat expected losses differently on the same defaulted loan.”
Read the full article here. (paywall)
Read Global Credit Data’s IFRS 9 report here.
Global Credit Data, a not-for-profit data-collection initiative jointly owned by more than 50 leading global banks, has released its second IFRS 9 benchmarking report. Results from the study highlight a significant degree of variability in banks’ expected credit loss estimates of around factor 4, suggesting the IFRS 9 framework has yet to stabilise.
“We remain in the early stages, however, the high level of variability in ECL figures under IFRS 9 is something the industry will need to analyse and address,” says Richard Crecel, Executive Director of Global Credit Data. “If banks don’t act, they may find the regulator acts for them – and imposes more restrictive standards than many would like.”
Read the report here.
The news was covered by The Global Treasurer, Trade Finance Global, Business Money, Fintech Finance.
Global Credit Data (GCD) has welcomed its newest member, Standard Chartered, bringing its total number of member banks to 55 and expanding its international data coverage.
“We are pleased to welcome Standard Chartered to our growing membership base,” says Richard Crecel, Executive Director at GCD. “Increasing the geographical scope of our data is a primary objective of ours and banks such as Standard Chartered represent important buildings block in our international coverage.”
Fully onboarded, Standard Chartered is able to share its own data and leverage that of other member banks, allowing for instant comparisons across a range of model estimates, including probability of default (PD), exposure at default (EAD) and loss given default (LGD)
The news was covered by Treasury Today, Trade Finance Global, Fintech Finance, FinFeeds, FC Legal, Datamakery.
Writing for The Global Treasurer, Global Credit Data’s (GCD) Executive Director, Richard Crecel, explains that banks, in general, have adequate recovery strategies in place to deal with corporate defaults.
GCD data shows that banks recover, on average, 76% of debts owed by large corporate borrowers after default. What’s more, in most cases, banks will recover nearly all of the outstanding amount on a defaulted loan.
In turn, the article explores the reasons behind such high recovery rates and sheds some light on how long it actually takes for banks to recover defaulted loans.
Read the full article here