Shadow banks eye accounts receivable as lenders retreat

Providing loans against unpaid invoices is an old business that is being done in some very new ways. Facing increased capital costs, banks are retreating into a distribution and structuring role, with hedge funds and other investors taking the credit risk

A different approach: shadow banks are less affected by regulation

Hedge funds are getting into the accounts receivable game – lending to companies against their unpaid invoices – as capital-constrained banks retreat. It is the latest example of non-banks replacing banks as risk-takers but, here, it is often happening via partnership, rather than competition. Banks are continuing to arrange and structure the financing, as well as stumping up some of the funding.

Large, publicly traded US companies have an average of $1.8 billion of working capital tied up in

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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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