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Progressive Credit Risk Management (CRM) Improving The Cost and Availability Of Corporate Credit

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Progressive Credit Risk Management (CRM) transparently presents “own credit risk” to improve Asset-Backed transaction terms. When the CRM output is combined with insurance and funding methodologies, the financial benefits are striking. This is because banks rarely offer funding terms based on a due diligence process as thorough as the company themselves can execute daily.

Policymakers are keen for banks to lend. However, the banking model is broken. Many of the methodologies developed to intermediate credit are no longer cost effective or trusted by investors. Banks have responded by tightening credit issuance and de-leveraging. Alongside tougher Basel and domestic regulation, fee-earning has been hit. Banks are using general de-leveraging to cleanse their exposure to individuals, companies, other banks/ Financial Institutions and sovereigns who they believe will not only be unable or unwilling to repay debt but also unable to afford the cost of re-priced risk.

 

Progressive CRM holistically reduces credit risk and therefore funding costs. It opens the door to investors seeking high quality disclosure and timely risk monitoring which eliminates a fundamental cause of the financial crisis, information asymmetry.

 

Dissatisfaction amongst companies expecting innovation from their relationship banks is growing. L & G CEO Tim Breedon’s report to the UK government released Friday should call time on opacity-generating banks control of credit creation in favour of investors keen to reward effective risk management and good corporate governance.

 

READ THE FULL PAPER HERE: http://www.asymptotix.eu/Progressive-CRM-paper.pdf

David McKibbin can be contacted at [email protected]

you can follow him @creditplumber

 

 

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