When conducting Comprehensive Capital Analysis and Review (CCAR) exercises, as large bank holding companies (BHCs) have done since 2011, providing financial adequacy is only part of the equation. The exercises also look at what BHCs are doing to make sure they will have sufficient capital. This includes building models, such as modeling wholesale credit loss.
A host of banks participate in CCAR exercises every year, including retail-centric firms, global investment banks and regional banks. All of them focus on wholesale or retail banking activities to at least some degree—and so, CCAR stress testing examines BHCs’ models for retail and wholesale lending, as well as trading.
Accenture’s newest paper, Top Considerations in Wholesale Credit Loss, explores trends and best practices around wholesale lending and CCAR credit loss modeling.