Large Bank Supervision Forum 2023

03. Disciplined Risk Management

For financial professional or qualified institutional investor use only. Not for inspection by, distribution or quotation to the general public.

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Best Practice Asset Selection and Credit Management Strategy

Best Practice Credit Management Objectives  Seek superior long-term risk-adjusted returns over a full market cycle  Loss mitigation: avoid realized losses related to defaults A Disciplined Selection Strategy for a Senior Loan Portfolio  Target higher quality non-investment grade loans that exhibit attractive relative value within the asset class  Target loans with greater relative liquidity (borrower level and market level)  Invest in a broadly diversified portfolio of senior secured bank loans  Consistently apply a disciplined, proven loan selection and risk management process  Manage by committee rather than a single portfolio manager  Use fundamental credit analysis to identify relative value opportunities  Maintain strong relationships with market leaders  Maintain access to deal flow  Maintain above average allocation to new loan syndications  The loan portfolio is carefully constructed over time to assure balance with funding sources, capital support, regulator communication

For financial professional or qualified institutional investor use only. Not for inspection by, distribution or quotation to the general public.

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