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Industry roundup: 10 September

Surecomp affirms LIBOR transition readiness ahead of December 2021 deadline

Surecomp, a provider of global trade finance and treasury solutions for banks and corporations, has announced its readiness to support customers in their transition away from using LIBOR-based instruments by confirming its solutions are fully enabled with alternative reference rate (ARR) calculations.

Global banks have already started implementing the new capability to ensure their operations can now support the automatic upload of new daily risk-free rates (RFR) such SONIA (GBP), SOFR (USD), TONAR (JPY) and SARON (CHF). In their processing of trade finance loan agreements under letters of credit, standby letters of credit, collections and open accounts, Surecomp solutions can also - through the development of new functionality and a designated interest calculator engine - support the new reference rate calculation methods and the required changes to the customer accounting system feed.

While the official deadline of 31st December 2021 is still over one year away, it is strongly recommended that banks have put alternative measures in place by the interim deadline of 30 September 2020, and do not enter into any LIBOR-based agreements that will mature beyond 31 December 2020, by which time LIBOR will no longer be deemed a reliable index.

 

Payoneer solution helps banks support corporate cross-border payments

Payoneer, a digital payment platform, has announced Payoneer for Banks, a programme designed to help financial institutions provide businesses of all sizes with a seamless way to make or receive cross-border payments. The programme already includes partnerships with ten banks and eWallets in ten countries, with more in the works. Payoneer for Banks shares the fintech’s global capabilities with traditional financial institutions and eWallets via simple API integrations. 

Already in the programme are ANNA Money in the UK, Bank Asia in Bangladesh, BSB Bank in Belarus, EasyPay in Armenia, GCash, a mobile wallet in the Philippines, eZ Cash in Sri Lanka, Faysal Bank and JazzCash in Pakistan, Kuda Bank in Nigeria, Privatbank and Monobank in Ukraine, and Prex in Argentina.

Payoneer is also finalising additional partnerships with institutions like CashBaba in Bangladesh, IBK and KB Kookmin Bank in Korea, Ligo-La Mágica in Peru, ModulBank and QIWI Bank in Russia, and Open in India.

“By integrating with our APIs, banks can offer a seamless cross-border payments experience to their customers with low investment, which offers the potential for additional revenues, enriched offerings for customers and a competitive advantage,” commented Eyal Moldovan, general manager, SMBs at Payoneer.  

 

Italian bank moratorium extension delays loss recognition, raising uncertainties

Payment holidays implemented at the beginning of lockdown in Italy were essential to support borrower viability. But some losses seem unavoidable. Extending the schemes is just delaying loss recognition and lowering earnings and balance-sheet visibility, according to a report from Scope Ratings.

Moratorium requests in Italy since March have amounted to €301bn and 92% have been granted. Thanks partly to a pragmatic supervisory approach, most of these loans are classed as performing, although there was some migration from Stage 1 to Stage 2 in the second quarter. Once moratoriums expire, Scope believes some borrowers will be unable to resume regular payments.

Scope had initially expected the credit cycle to remain relatively benign, with Italian cost of risk peaking at 100bp-150bp and specific provisions starting to creep in towards the end of the year once legal moratoriums had expired. This was initially set for September.

“The recent extension to January 2021 has pushed back the day of reckoning," said Marco Troiano, deputy head of the financial institutions team at Scope Ratings. "We believe that a gradual pick-up in specific provisions is still on the cards for H2, but that most banks’ cost of risk will be at the lower end of that range. The relative stabilisation in macroeconomic forecasts will translate into lower macro-driven provisions in the second half of the year, coupled with only a modest rise in specific impairments. In other words, we now see a less turbulent end to this year but a worsened outlook for 2021 profitability.” 

While flagging the lower visibility on loan quality, analysis in the report of Q2 disclosures highlights significant differences in the classification of loans under moratorium, especially with respect to corporates. In some cases, up to 50% of business loans under moratorium have been classified as Stage 2, while in others there has not been any significant increase in Stage 2 loans, implying no significant increase in credit risk (SICR).

It is tough to gauge how much of these discrepancies can be put down to differences in loan-book quality and how much is representative of a more cautious approach to loan classification and provisioning. External investors will have a hard time judging the extent of balance-sheet decay until loans exit moratorium and an outcome is observed. Troiano points out in the report that extension to the beginning of 2021 extending this uncertainty is negative from a credit standpoint.

 

Institute of Risk Management launches revised international diploma 

The Institute of Risk Management (IRM) has announced the launch of its revised International Diploma in Risk Management, developed in conjunction with academics and risk management practitioners.

For 30 years, IRM's International Diploma in Risk Management has provided a route to certified status and Fellowship of the Institute. Being a GradIRM indicates the required knowledge and skills to advance careers and enhance earning potential – while protecting an organisation against threats and maximising on opportunities.

“The IRM has revised the syllabus for the International Diploma to ensure our students are informed of the best and latest practices in global risk management," said Trudi Mellon, specialist consultant - Qualifications Projects at IRM. "Students will benefit from our new online learning platform, the Virtual Learning Environment (VLE). The VLE supports students step-by-step through the modules and provides activities and quizzes to help master the subject matter. Students can submit their assignments when they are ready, with no more need to visit exam centres.”                                  

The revised International Diploma is a Master’s level equivalent qualification, and those that achieve the GradIRM designation have the option to apply for Certified Risk Professional (CMIRM) designation.

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