Credit Risk Measures of Banks
Added on 2020-02-24
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Running head: FINANCIAL INSTITUTION Financial InstitutionName of the Student: Name of the University: Author’s Note:
1FINANCIAL INSTITUTIONQuestion: Credit Risk Measures of J.P Morgan Chase Bank and PNC Bank Credit risk management functions in association with the business sections inrecognising and evaluating the exposures across every line of business. J.P Morgan Chase Bank The measurement of credit in J.P Morgan Chase Bank is based on the potentiality ofdefault of counterparty; the loss in the severity provided an event that is default. There arevarious measures that are undertaken by the company in order to mitigate the credit risk thatwould be beneficial for the development of the organization in the global economy. Thevarious credit risk measures that have been undertaken by J.P Morgan Chase have been givenbelow: Scored exposure The scored portfolio is specifically kept in CCB and is inclusive of the residential realestate loans along with the loans related to credit cards, various business banking and autoloans and student loans. In this kind of portfolio, the estimates of credit loss is based on thestatistical evaluation of the credit losses over the period of 2012 to 2015 and are computedwith the help of the portfolio modelling, decision support mechanism, credit scoring whichlooks in to loan extent factors like the credit scores, collateral values and various other risks(Read.uberflip.com. 2017). The credit loss factors and the evaluation are upgraded on aquarterly basis and with respect to the situations as the market dictates. Risk-rated exposure These kind of portfolios are generally held in CIB, AM and CB and are even inclusiveof the auto dealer loans and the business banking loans that are kept in CCB which are riskrelated as they have the features that are identical to the commercial loans. In this kind of
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