Experian provides banks with loss forecasting models and stress-testing services for capital planning
Experian’s ability to emulate the Federal Reserve Board’s approach through its extensive stress-testing modeling experience and industry insight helps banks identify areas of risk
Costa Mesa, Calif., August 1, 2012 — Experian®, the leading global information services company, today announced that it is providing banks with consulting and loss forecasting models for bank stress-testing and capital planning. Experian’s stress-testing services will help banks meet the Federal Reserve’s Comprehensive Capital Analysis & Review by identifying and measuring material risks, setting and assessing capital adequacy goals related to risk, and ensuring the integrity of the capital planning process. Experian is working with major financial institutions to provide this service in anticipation of upcoming reviews with the Federal Reserve.
“Through our extensive industry knowledge, stress-testing modeling experience and breadth of data assets, Experian provides banks with modeling and data methodology that emulates the Federal Reserve’s approach,” said Stan Oliai, senior vice president and general manager of Experian’s Global Consulting Practice and Decision Sciences in North America. “Our unique ability to strategically partner with banks ranked within the top 19 as well as the institutions subject to CapPR requirements makes us a critical component in helping our clients pinpoint areas of weakness and prepare for the Federal Reserve’s supervisory stress test.”
The Federal Reserve’s capital plans final rule requires U.S. banks with total assets of $50 billion or more to submit a plan for an annual capital planning review process. The process includes the Federal Reserve’s supervisory stress test, which tests the capital adequacy of each firm to ensure that the institutions hold sufficient capital to continue operations throughout times of economic and financial stress. Banks are expected to submit by the January 2013 deadline, and their annual plans must cover a 25-month cycle.
“The Federal Reserve expects banks to have credible plans that are evaluated across a range of criteria that show they are well-prepared to meet regulatory capital standards under Basel III and can continue to lend to households and businesses even in adverse macroeconomic conditions,” said Oliai. “If a bank does not meet one or more of the minimum regulatory capital ratios, they cannot increase their dividends or will have to submit a revised capital plan.”
The Federal Reserve’s supervisory stress-test scenario depicts a severe recession in the U.S. economy and requires banks to meet the minimum Tier 1 common equity ratio benchmark at 5 percent under the following conditions: a peak unemployment rate of 13 percent, a 50 percent drop in equity prices and a 21 percent decline in housing prices.
To learn more about Experian’s stress-testing services for capital planning, go to http://www.experian.com/consulting-services/stress-testing-capital-assessment-page.html
Experian Public Relations
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Experian is the leading global information services company, providing data and analytical tools to clients around the world. The Group helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score, and protect against identity theft.
Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended March 31, 2012 was $4.5 billion. Experian employs approximately 17,000 people in 44 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil.
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