A leading North American bank wanted to improve the monitoring of their commercial loan portfolio to better mitigate risks and comply with regulations. Evalueserve partnered with the commercial banking team to manage covenants, interim and annual reviews, handling the most tedious, time-consuming tasks so the credit managers could focus on generating new revenue.
The Challenge
Increasing regulatory pressure and scrutiny on credit risk has created a need for banks to look at their portfolio monitoring and credit review processes more closely. The commercial banking division of a leading North American bank wanted to improve the monitoring of their loan book to meet regulatory needs and improve risk management.
As an existing partner to the bank’s corporate and investment banking teams, Evalueserve was introduced to the Head of US Commercial Banking to explore how we could help them enhance their monitoring. Given our expertise in commercial lending solutions, deep understanding of the organization, and data analytics and technological acumen, we were brought on to support the bank with their annual and interim reviews.
Our Solution
Diagnose
We started by conducting workshops with the commercial banking team to understand their current portfolio management activities. Through these workshops, we learned that the covenants monitoring, annual and interim review processes involved handling a vast amount of structured and unstructured data, from extracting the data to using it in models and inputting it into existing systems.
These processes were largely manual and very time consuming for the credit managers, who still needed to focus on generating new business while trying to manage this workload. To address these issues, the client needed not only to expand capacity, but to accelerate and streamline their existing processes.
Design
The credit managers needed support with the covenants, interim and annual reviews of their commercial banking borrowers. Evalueserve deployed a team of 50 FTEs to perform covenants and interim reviews for 10,000 connections spread across multiple sectors. In addition to this ongoing support, our team manages ad hoc projects for other portfolio management activities.
To address the issue of fluctuating workloads that peak during annual review periods, we implemented a flexible staffing model that would enable us to quickly ramp-up support when needed. With this structure, we can temporarily add an additional 10-20 FTEs to manage maximum review volumes.
Deliver
Evalueserve’s team executes the covenants monitoring and annual/interim review of the client’s commercial banking book, including:
- Financial spreading and risk rating
- Calculating covenants
- Performing due diligence (Insurance verification, Tax payments, Guarantor credit scores, LexisNexis etc.)
- Preparing interim review models and highlighting early warning triggers
- Preparing annual review pack and uploading on nCino and Credit Lens
The Evalueserve team manages around 2,000 interim reviews and 8,000 covenant calculations. Our analysts also provide support for additional portfolio management activities as they arise, including 30,000 collateral clean-ups, Stub BRR (risk rating methodology), OSFI data support, and more. This ad hoc support helps the clients manage data-heavy tasks that commonly occur in the lending lifecycle.
Impact
Evalueserve's collaboration has provided multiple advantages to the commercial banking team, including a 50% cost reduction on manual review tasks. Our commercial lending solutions provide assistance with both covenants and interim reviews, enhancing monitoring processes to ensure regulatory compliance. Our meticulous oversight of early warning indicators and covenant adherence aids the bank in risk mitigation.
By managing the labor-intensive review tasks, we free up credit managers to concentrate on new business opportunities. Furthermore, our flexible staffing approach allows us to efficiently ramp up support during peak periods, like annual reviews, and reduce it thereafter, achieving significant cost savings.
To learn more about our Commercial Lending solutions, visit our webpage.
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Overview & Impact
Evalueserve partnered with a leading North American bank to streamline commercial loan portfolio monitoring, enabling credit managers to focus on new revenue generation