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NEWSLETTER  Issue  #8  ⎟  December  2015  

(¯ˉ`*•.  (¯ˉ`*•.  WE  WISH  YOU  A  WONDERFUL  NEW  YEAR.  MAY  2016  BE  YOUR  BEST  YEAR  YET  .•*´¯ˉ)  .•*´¯ˉ)    

Our  selection  this  month:  

Risk  Analytics  Market  Expected  to  Worth  USD  9.2bln  in  2020⎟  The  Basel  Committee  Restores  the  Rating  Role  in  Banks’  Credit  Risk  Assessment⎟  Trade  Finance  Presents  a  Low  Risk  Profile  ⎟  New  Mortgage  Rules   in  Canada  to  Deal  with  a  Higher  Housing  Risk ⎟  Bloomberg  Acquires  the  Barclays’  Risk  Analytics  and  Index  Unit.    Risk  Analytics  Market  Expected  to  Worth  USD  9.2bln  in   2020:   A   recent   research   report   from  MarketsandMarkets   predicts   the   global   analytics  market   to   grow   from   USD   2.74bln   in   2015   to   USD  9.2bln   by   2020.   The   report   relies   on   extensive  interviews   of   key   people   such   as   CEOs,   VPs,  Directors   and   Executives.   This   growth   will   be  fostered   by   the   increasing   use   of   cloud   platform.  According   to   the   report   “The   rapid   transformation  from  traditional  Business  Intelligence  (BI)  techniques  to  advanced  analytics  techniques  and  massive  amount  of   unstructured   data   is   compelling   organizations   to  use   predictive   analytics   techniques”.   The   North  America  region  is  expected  to  be  the  largest  revenue  generator  region  for  predictive  analytics  vendors  for  the  next  five  years.    The   Basel   Committee   Restores   the   Rating   Role   in  Banks’  Credit  Risk  Assessment:  A  second  and  revised  December   draft   from   the   Basel   Committee   on  Banking   Supervision   reintroduces   the   use   of  external   ratings   in   a   “non-­‐mechanical  manner”   into  the   Banks’   Credit   Risk   capital   framework.   The   US  banking  agencies   claimed   that   the  propose   revision  would   apply   “primarily   to   large,   internationally  active   banking   organizations   and   not   to   community  banking   organizations”.   In   addition,   the   regulator  also   eased   proposals   that   would   force   banks   to  consider  borrowers’  ability  to  pay  back  their  loans  to  set   mortgage   Risk   weights.   This   method   was  considered  has  problematic  as  property  value  could  decline  sharply  and  Banks  in  some  jurisdictions  may  have  problems  seizing  properties.    Trade   Finance   Presents   a   Low   Risk   Profile:  According   to   a   recent   ICC   trade   register   survey,  export  letters  of  credit  are  80%  less  likely  to  default  than   the   Moody’s   average   for   all   investment   grade  transactions.   The   survey   indeed   shows   that   export  letters   have   an   exposure-­‐weighted   default   rate   of  0.02%  compared  to  0.11%  default  rate  calculated  by  Moody’s   for   the   investment   grade   universe.  According   to   ICC,   this   “strongly   reinforces   the  

hypothesis   that   trade   finance   products   have   a  relatively  low  likelihood  of  default”.  

   New  Mortgage  Rules  in  Canada  to  Deal  with  a  Higher  Housing   Risk:   The   New   Liberal   Canadian   party  announced   that   lending   rules   for   residential  mortgage   will   tightening   setting   a   minimum   down  payment  of  10%  on  the  portion  of  home  prices  over  USD  500k.  Years  of  surging  prices,  combined  with  a  boom  in  construction  and  low  borrowing  costs  have  drawn   the   attention   of   the   IMF   and   the   Canadian  Housing   Agency.   The   federal   government   is  particularly   concerned   about   soaring   real   estate  prices  in  Vancouver  and  Toronto.    Bloomberg  Acquires  the  Barclays’  Risk  Analytics  and  Index  Unit:   In  order  to   focus  on   its  core  businesses,  Barclays   agreed   to   sell   its   Risk  Analytics   and   Index  Solutions  to  Bloomberg  for  about  GBP  520mios.  The  deal   is   expected   to   be   completed   mid-­‐2016.   A   co-­‐branding   arrangement   has   been   agreed   for   5   years  between  Bloomberg  and  Barclays  on  the  benchmark  indices.   According   to   Mr.   Michael   Bloomberg  “Combining   the  market-­‐leading   Barclays   indices   and  their   superb   team   with   our   data   management,  analytics   and   distribution   will   provide   more  independence,   liquidity   and   transparency   to   the  marketplace,  improve  industry  innovation  and  further  meet  the  diverse  needs  of  our  global  client  base”.