How Much Risk Lurks in Your Loan Portfolio?
A new, eBay-style electronic marketplace for troubled loans tries
to give bankers a clear sense of what their distressed debt is worth.
By Penny Crosman
February 25, 2010
Although risk analytics tools are improving in terms of estimating the potential risk of loans, one element they often lack is precise calibration — a reasonably accurate estimate of what the loans are worth today and what a bank could sell them for if it had to lower its risk exposure or meet regulatory demands. “One thing bankers really need right now … is pricing expectations from the buy and sell side that they can take back to their risk models and their board of directors and know the way they should be thinking about write-downs,” says Mike Sheridan, CEO and president of DebtMarket, an online marketplace for buying and selling whole loan portfolios. READ MORE