Moody's will provide HSBC with its Portfolio Manager tool to offer assistance with the measurement and benchmarking of credit portfolio risk.
Moody’s says HSBC can use Portfolio Manager to evaluate portfolio credit risk economic capital through precise measurement of portfolio and benchmark volatility, concentrations and tail risk in support of its global economic capital initiative and its Basel II program.
According to Alan Smith, group head of economic capital at HSBC, the new system will assist the company on a global level, by helping it understand the risk based capital requirement of its credit portfolios.
This solution is amongst the most effective in the industry and should enable us to efficiently and successfully evaluate the economic capital of our credit portfolios, said Mr Smith.
Moody’s has a proven track record in successfully partnering with financial institutions to enable them to more effectively and actively assess and consequently manage credit portfolios on an economic capital basis, added Andrew Huddart, president of Moody’s.
With Portfolio Manager, HSBC will be able to better examine the economic capital drivers of portfolio credit risk which can feed into the firm’s Basel II Pillar 2 regulatory requirements.