Standard & Poor's has formed a strategic alliance with The Risk Data Bank of Japan Limited (RDB) to jointly develop a scoring model for assessing the creditworthiness of Japanese small and medium-sized enterprises (SMEs).
The two companies say they will work together to provide a scoring model and implementation support to financial institutions seeking to upgrade their credit risk management systems for SMEs.
RDB currently aggregates SME data derived from its 38 member financial institutions. As part of the agreement, RDB will seek to expand bank membership to increase the quality of the data and the accuracy of the model in time for a scheduled roll-out of the new service in June 2002.
The two companies say Japanese banks will be able to use the model to supplement, customise and validate their rating systems in accordance with a direction set by the new Basel Capital Accord standards.
"This alliance delivers an analytical tool that will add considerable value to banks' risk management procedures and systems," says Yoshiyuki Mitsugi, director and head of risk solutions with Standard & Poor's. "By enhancing Japanese banks' ability to evaluate risk, SMEs could also potentially benefit by gaining access to capital, which is currently being denied."
The new database is additionally expected to add value to Standard & Poor's Structured Finance Ratings Group's analysis of securitisation transactions, particularly in the analysis of Collateralised Debt Obligations (CDO).
The new partnership will further expand the coverage and capabilities of Standard & Poor's Risk Solutions Group, which was established in Japan at the beginning of this year. The group provides financial institutions and corporations with analytic tools and services to assess and manage their credit risk.