According to Intrum Justitia, bad debts of more than € 350 billion were written off in Europe in 2013, which is around three percent of all outstanding transactions. Internal research into Dutch companies with debtor portfolios in excess of € 250 million reveals that some companies have had to write off up to 10 percent of their net result on their customers. According to some estimates, around 25 percent of companies actually go bankrupt due to bad debt losses alone. It is with good reason that many annual reports state that credit risks are often the biggest threat to business continuity. In this article, we explain our approach to credit risk management for corporates.
Since the Enron scandal and the resulting introduction of Sarbanes Oxley (SOX), the pace of regulatory change has never lost momentum. On the back of the financial crises of 2008, more new regulations were introduced. The main objectives are to reduce (counterparty) risk and to increase (system) transparency. How can treasury use the necessary compliance process as an opportunity to increase corporate efficiency and reduce cost?
Compared with only a few years ago, today’s corporate treasurers are exposed to a much greater variety of counterparty risks within both their supply chains and financial institutions. To create clearness in the increased complexity of managing counterparty risk, the following article provides guidance on how these counterparty risks can be effectively monitored and managed.
Compared with only a few years ago, today’s corporate treasurers are exposed to a much greater variety of counterparty risks within both their supply chains and financial institutions. This article provides guidance on how these counterparty risks can be effectively monitored and managed.
Under the Basel III regulation, banks must maintain additional capital to cover against the risk of deterioration in the counterparty’s creditworthiness. The effects of the capital charge on the trade in over-the-counter (OTC) derivatives are discussed below.