OakNorth powers PNC Bank credit analysis with Covid-19 tool

CVR integrates more than 130 proprietary sub-sector-specific Covid-19 stress scenarios with regional overlays

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OakNorth powers PNC Bank credit analysis with Covid-19 tool

OakNorth has signed a commercial agreement with PNC Bank, one of the leading credit providers to middle market companies across the US.

PNC is deploying OakNorth’s recently developed Covid Vulnerability Rating CVR across its commercial and industrial and commercial real estate portfolios, in a bid to better understand the coronavirus (Covid-19) pandemic risks that its customers might be facing.

CVR integrates more than 130 proprietary sub-sector-specific Covid-19 stress scenarios with regional overlays, incorporating assumptions for impacts on key financial metrics such as revenue, operating costs, working capital and capex.

The framework enables commercial lenders to re-underwrite loans and bring consistency to their credit approach through the crisis, running risk analysis on a consistent basis, according to OakNorth, which licenses its credit platform to banks and lenders outside of the UK.

Rishi Khosla, co-founder of OakNorth, commented: “Never has the need for enriched underwriting, credit science and a forward-looking approach been more important in commercial lending than it is right now with the ongoing challenges posed by Covid-19.”

“Instead of a playing for defence, spending time trying to figure out where their current books stand, running scenarios based on financial models that are no longer relevant, and trying to minimise the downside, we are working with lenders to enable them to get on the offensive, focusing on growing their business and orchestrating a consistent customer financing strategy.”