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Moody's KMV Launches Credit Risk Software For Basel II
Source: Dow Jones
Date: April 20, 2004
Author: Tom Marshall
LONDON, April 20, 2004 - Moody's KMV has launched a computerized system to help banks measure the credit risk of their lending, the company said Tuesday. The software aims to let them cut unproductive capital reserves, price loans more accurately and ultimately boost profits.
Moody's KMV, a provider of credit risk analytics, said this is the first system that can take account of both hard financial data and of more qualitative analyst judgments about a company's management and strategy.
John Winter, head of risk management at Lloyds TSB (LYG), said the software could help lenders comply with the forthcoming Basel II accord on bank capital adequacy.
"It goes a long way to hitting the Basel buttons, with its combination of financial and subjective data, forward-looking rating, use of peer data, standardization, controlled data environment and accurate view of customer quality. It is transparent, so you can see where the weak and strong points of the analysis are," he said in a statement.
The Basel II accord, which is due to be phased in from 2006, will set new international standards for the capital banks have to set aside to cover potential losses in their loan books.
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