First Gulf Bank selects Standard & Poor's Risk Solution's for Basel II-compliant credit risk model validation

London - 11 November 2010

First Gulf Bank (FGB) has selected S&P Risk Solutions to validate its probability of default (PD) ratings models.

As part of the UAE-based bank’s strategy of moving towards the Basel II IRB (Internal Ratings Based) Approach, it is using obligor risk rating models across a number of asset classes within FGB’s portfolio.

The external validation requirements being conducted by S&P Risk Solutions extend across FGB’s risk rating framework. They apply to the bank’s rating system design, rating system operations, risk quantification, corporate governance, and the use of internal ratings. The external validation process also includes both qualitative and quantitative assessment of FGB’s risk rating models.

Arif Shaikh, Chief Risk Officer for First Gulf Bank, says: "S&P Risk Solutions was selected for its extensive experience in evaluating banks’ credit risk rating models and the ability to work with the bank across a variety of models used by the bank. By providing validation recommendations and enhancements, S&P Risk Solutions will help us prepare and meet the IRB requirements of the Basel accord."

First Gulf Bank will also use the Risk Solutions Analytical Services in developing a “Risk Appetite” overview for the bank.

Having been adopted by several global financial institutions, the recommendations and enhancements offered by Risk Solutions’ validation framework have a proven track record of winning regulatory approval.

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