Korean banks face fresh pressure after Moody's downgrade

US dollar funding challenges have eased but default risks from SMEs on the rise


Moody's Investors Service lowered the bank financial strength ratings (BFSR) of South Korea's big four banks - Kookmin, Woori, Shinhan Bank and Hana Bank - to 'C-' from 'C' last month due to concerns about small-to medium-size enterprise (SME) exposures. "The financial difficulties of SMEs represent a threat to the banks. Delinquencies in this segment - which account for between 25% and 45% of loan books - are rising," said Moody's in its May review, adding non-performing loan (NPL) ratios more

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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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