Collateral: look, but don’t touch

Collateral: look, but don’t touch

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The global push by regulators to require a vast swath of the over-the counter derivatives market to be cleared has central counterparties (CCPs) rubbing their hands in anticipation. Not only will CCPs benefit from an enormous increase in revenue generated from clearing fees, but certain clearing houses will also look to generate additional revenue from the torrent of initial margin about to flow their way – estimated by Manmohan Singh, senior economist at the International Monetary Fund, to be

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Credit risk & modelling – Special report 2021

This Risk special report provides an insight on the challenges facing banks in measuring and mitigating credit risk in the current environment, and the strategies they are deploying to adapt to a more stringent regulatory approach.

The wild world of credit models

The Covid-19 pandemic has induced a kind of schizophrenia in loan-loss models. When the pandemic hit, banks overprovisioned for credit losses on the assumption that the economy would head south. But when government stimulus packages put wads of cash in…

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