S&P sets templates for German banks

The risk management services arm of Standard & Poor's, Risk Solutions, has completed a major internal ratings system project for the Association of German Pfandbrief banks (Verband deutscher Pfandbriefbanken, vdp). Vdp members provide capital for commercial and residential properties as well as for the public sector and its institutions.

The solution was needed because of the low default sectors where banks
typically lack enough observed defaults to build and validate their own
model, says Stuart Shipperlee, the managing director of risk solutions.

The project developed credit risk assessment templates that aim to replicate the analytical process of S&P ratings in a standardised and transparent way for these sectors, characterised by a lack of historical defaults and typically low sample size. This prevents a purely statistical