Acuity Knowledge Partners is enabling financial institutions to meet regulatory deadline for implementation of new regulations on loan defaults in Europe
Global leader in outsourced compliance says time is ticking for banks and others to implement new definitions of obligor default across their lending books
14 September 2021, London – Acuity Knowledge Partners (“Acuity”), a leading provider of bespoke research, analytics and technology solutions to the financial services sector, observes that European financial institutions that adhere to the Capital Requirements Regulation are running out of time to complete the work required by the European Banking Authority (EBA) in respect of the new definition of default.
The amount of work required varies by institution, and while some regulated entities may have the internal capacity to conduct the work required, many do not. The scope of this work is also wide, and includes the following:
• Interpreting credit agreements and checking the data in credit models and covenant testing
• Evaluating borrowers’ past behaviour (accessing loan platforms and liaising with relationship managers, credit risk teams and other stakeholders)
• Validating data across platforms (including default categories, default start and end dates, periods of default, facility amounts, outstanding amounts, amounts in arrears and default triggers)
• Assessing the outcomes and providing data to the project team
With a deadline of end-2021 and the EBA’s expectation that banks’ and other regulated entities’ internal models be ready by 1 January 2022, there are only four months left for those impacted to analyse, assess, rework and adapt their models to meet the new regulatory requirements.
Commenting today, Subhrojyoti Mandal, Director, Commercial Lending said, “Many banks and other institutions are facing a cliff edge at the end of the year. Their options have narrowed in the past quarter, and they are now faced with missing the regulator’s deadline or tying up valuable internal staff resources in a year-end rush to comply.”
“At Acuity, we’ve been working extensively with clients to set up project teams to avoid creating those internal pressure points. This has empowered onshore teams to continue their focus on driving business growth. It’s not yet too late for those who are behind or who cannot do this work internally to secure the support necessary to avoid a delay in complying with the new regulations around the definition of obligor default.”
Damian Burleigh, Chief Revenue Officer, added, “Coupled with the substantive issuance in leveraged lending, high yield and structured finance, this is becoming the perfect storm for talent, and we expect this to continue into 2022-23. Our opinion at Acuity is that the war for talent is permanent and a major structural issue for many banks that have not adapted to assist their own business transformations. This is where Acuity is helping many organisations to challenge and transform their front-to-back processes and output to free up origination and underwriting teams and improve risk and compliance to deliver superior results faster.”
About Acuity Knowledge Partners
Acuity Knowledge Partners is a leading provider of bespoke research, analytics and business intelligence to the financial services sector. The company’s network of analysts and industry experts, combined with advanced data and technology, supports over 350 financial institutions and consulting companies worldwide to operate more efficiently and unlock their human capital, driving revenue higher and transforming operations. It specialises in investment banking, investment research, private equity and consulting and commercial lending. Acuity is headquartered in London and operates from 10 locations worldwide. In 2019, the company was established as a separate business from Moody’s Corporation, following a management buyout backed by Equistone Partners Europe. For more information, visit www.acuitykp.com.
Gyanendra N Pati Director,
Head of Marketing and Communications Gyanendra.Pati@acuitykp.com