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Cutting Edge Moody’s KMV Credit Risk Solutions to Aid in Global Economic Capital Calculations

Moody's KMV, the world's leading provider of quantitative credit risk solutions to lenders, today announced that it will provide HSBC with Moody’s KMV Portfolio Manager™, a comprehensive solution that provides a methodology for rapid, accurate measurement and benchmarking of credit portfolio risk.

HSBC serves over 125 million customers worldwide and is one of the world’s largest banking and financial services organizations. HSBC can use Portfolio Manager to evaluate portfolio credit risk economic capital through rigorous measurement of portfolio and benchmark volatility, concentrations and tail risk in support of its global Economic Capital initiative and its Basel II program.

“Moody’s KMV 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,” said Andrew Huddart, President of Moody’s KMV. “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.”

“Portfolio Manager can benefit our company on a global level, by helping us understand the risk based capital requirement of our credit portfolios, thereby allowing us to better serve our customers and other stakeholders,” said Alan Smith, Group Head of Economic Capital, HSBC. “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.”

Portfolio Manager’s power stems from its ability to leverage the deep empirical credit migration data in Moody's KMV EDF™ (Expected Default Frequency) credit measures and detailed data on corporate asset correlations through two business cycles.

Along with Portfolio Manager, HSBC utilizes additional Moody’s KMV products: Credit Monitor®, RiskCalc® North America and Risk Advisor™. Credit Monitor is a desktop solution that allows risk managers to assess and manage credit risk for both public and private companies; RiskCalc enables the evaluation of private firm credit risk by combining financial statement and equity market- based information; and Risk Advisor provides internal ratings framework specifically designed to facilitate Basel II compliance.