A critical study of credit risk management in the First Bank of Dissertation - 1

A critical study of credit essay attention in the First argot of Nigeria PLC - Dissertation ExampleIn designing the credit policies, due considerations argon wedded to the commitment of the cashbox which involves Creating, monitoring and managing credit assay in a way that complies with all the applicable laws and bank regulations (Basel III A global regulatory framework for more resilient banks and banking systems, 2010) Identifying the credit risk in every investment, loan or in otherwise activities of the Bank (Risk vigilance disclosure, 2011). Utilizing appropriate, accurate as well as timely tools to measure the credit risk in every department (Risk management disclosure, 2011). Adopting a risk-based approach in determining the appropriate pricing strategy while lending products and table service offerings (Risk management disclosure, 2010). Setting an acceptable risk parameter. Maintaining an acceptable level of credit risk for the existing psyche credit exposures. Ma intaining acceptable levels in the overall credit risks for the portfolio of the bank. Coordinating the credit risk management and other risks that are inherent within the Banks business activities. Setting remedial and recovery measures and actions (Risk management disclosure, 2012). To effectively handle its credit policies and practices in the first bank of Nigeria, five departments have been formed that reign over and manage credit processing functions. This are- 1. Credit Analysis & Processing (CAP) which is responsible in developing the estimation of non-specialized credit requests and processing in order to obtain requisite approvals that are in line with the Banks policies (Credit Risk Management, 2009). 2. Specialized Lending Department (SLD) is responsible for the appraisals of credit requests and processing till its terminal decision to sanction specialized types of credit which are peculiar because of the size and complexity involved in such transactions (Transformati on, 2010). It handles departments like power, oil and gas both upstream and downstream, utilities such as wet projects, etc, transportation like mass transit, aviation, commercial real estate business projects which are the business proposals that are conceived for commercial gain, infrastructure that would also include concessions in public assets. 3. Credit Risk Management (CRM) which is touch on with the planning, monitoring and the reporting of the credit portfolios (Principles for the Management of Credit Risk, 2012) 4. Remedial Management Unit (RMU) that would have a bias for the proactive work-out of accounts that would show early signs of weaknesses and 5. Classified Assets Management (CAM) that would be concerned with for the recovery of the separate retail loans which are 90 days past their due date, wholesale accounts that are classified as lost with days past their due period (DPD) by over 540 days and accounts that are scripted off from the on-balance sheet into thei r CAM SOL (Risk management disclosure, 2012). 4.2 Internal ratings scale In measuring the credit risk of loans and advances to their customers and to the banks at a counterparty level, the Group considers the following features. The first feature concentrates on the character and the capacity to profit payments by the client or the counterparty on their contractual obligations. The second feature surrounds the current exposure of the bank to the counterparty and its likely development in future. The third and the last feature center around the credit tale analysis of the counterparty and its likely recovery ratio in the cases of default obligations (Risk management disclosure, 2012). The Group also has intragroup credit limits for approval for various levels in the credit process. The levels are shown in the following table. Approval levels investment grade