Bank Counterparty Credit Risk Policies and Practice
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Silicon Valley Bank’s failure ignited a chain reaction, raising broad concerns about the health of the banking sector. It also triggered a reassessment of how corporate treasuries measure and manage counterparty credit risk. This survey explores treasuries’ immediate response and the long-term implications to their credit risk evaluation practices
Key Findings. The survey was launched on June 6, 2023, and we received responses from senior treasury executives at 90 Fortune 250 companies. Here are the three main takeaways:
Continued effects. SVB was a “small fish” as far as many large multinationals are concerned, but even as the market regained its composure, 69% of treasurers said they are considering making lasting changes to their credit risk management practices.
Shifting to forward-looking metrics. 75% of treasuries plan to expand the menu of metrics they monitor to keep track of banks’ creditworthiness and include leading indicators, especially after the dismal performance of rating agencies when it came to SVB.
Setting a limit. 40% of treasuries do not have fixed caps on per-bank exposure in their policies. While the reasons vary, many companies contend that not having a set limit runs counter to treasury’s risk-management mandate.
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