OakNorth, the next-generation credit and monitoring platform, announces the signing of a commercial agreement with PNC Bank, one of the leading credit providers to middle market companies across the country.
The unprecedented scale and rapid escalation of this crisis has created unimaginable impact on the economy. As a result, commercial lenders need to be able to:
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- Quickly determine the subsector-specific impact of COVID-19 on their portfolio using forward-looking scenarios;
- Follow through on stress scenarios on a granular, loan-by-loan basis, rather than just at the portfolio level;
- Re-underwrite loans to businesses that are vulnerable, and all loans at annual review; and
- Monitor all credits more closely as sectors have become more volatile post-COVID-19.
This assessment requires a fundamentally different approach to credit analysis and monitoring. So, to support these lenders, OakNorth has developed a “COVID Vulnerability Rating” (CVR) Framework, which integrates over 130 proprietary subsector-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.
PNC is deploying OakNorth across its C&I and CRE portfolio, mapping individual borrowers to 130 domains. PNC and OakNorth will run portfolio diagnostics on a periodic basis to factor the rapidly evolving scenarios of COVID-19 across subsectors and regions.
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