Loan Portfolio Mapping
Credit portfolios exist in various systems within financial institutions. These can be loan books, margin finding facilities, or a host of other credit-based representations. Loan portfolio analysis and mapping to platforms that can calculate risk capital against those facilities can represent a difficult and cumbersome task for risk managers within banks.
GreenCap aims to support the loan portfolio risk management by mapping these portfolios through a variety of services.
- Finastra core systems have been pre-mapped using GreenCap’s loan portfolio services, meaning that for these systems there is no further implementation required for the loan portfolio itself
- Non-Finastra cores are supported by a dedicated loan portfolio services team whose aim is the full inclusion of portfolios within the climate change risk measurement
The mapping of the portfolio itself is just the start of the process. For a full picture of the climate-related risks and opportunities, the bank also needs to capture and report its ‘Scope 3’ disclosures.
Scope 3 disclosures are effectively the results of a balance sheet audit that tracks the amount of carbon in the atmosphere that is financed by the bank’s lending. These are collated and calculated by examining:
- Industrial sector definitions of ‘Carbon Intensity’ or the amount of carbon produced per preset unit of the sector under consideration
- Borrower by borrower ‘Carbon Intensity’
- Adaptations to business processes that reduce the amount of carbon in each specific instance
- Carbon produced by the underlying borrower
- Amount of the carbon produced that can be attributed to the bank funding
GreenCap’s team works with clients to ensure that the Scope 3 disclosures are reasonable and logical and most importantly can be reported next to the loan portfolio resiliency, one of the results of the GreenCap calculation that specifically highlights the stark difference between regulatory disclosures and loan portfolio risk management.