As we emerge, from the global pandemic, the good news is that we are not in the middle of a credit crisis, as some had foreseen. However, there are some cautionary signals for banks to heed as they manage their commercial credit portfolios.
Prudential bank regulators have made it clear that risk remains high as credit standards have become more relaxed. In another sign of the times, they have also restated the critical importance of the role of credit risk review systems in banks’ overall risk management programs. The upshot is that credit risk officers and heads of credit review need to put robust capabilities in place to head off potential risks while commercial portfolios continue to perform.