S&P and Saudi banks to establish credit data consortium

S&P and Saudi banks to establish credit data consortium

Standard & Poor's has teamed with the Saudi Arabian credit information bureau (Simah) to develop a commercial and corporate credit information service for banks in the Kingdom.

The move will see default and recovery data from 12 local banks collected and assessed in a bid to strengthen the industry's risk management standards.

Participating member banks will provide information on their mid-market and large corporate defaults, both historically and on an ongoing basis. This information will follow criteria established by Standard & Poor's Risk Solutions and will be held on Simah's secure database in Riyadh.

In addition, information on a significant sample of performing commercial loans will be assembled, enabling S&P to develop a probability of default model for Saudi corporate debt, as well as provide industry-wide statistics on historic recovery and default trends in the Kingdom.

"There is a scarcity of data in some commercial lending asset classes in KSA and in many other countries, as historically defaults have been rare." says Bernard O'Sullivan, MD, head, risk solutions, Emea, S&P. "This has been a significant challenge to overcome for many banks. The data consortium initiative will address this by rapidly building a robust dataset reflecting the underlying factors that drive credit risk."

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