Credit Scoring Results and Challenges for SME Lending

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Credit Scoring Results and Challenges for SME
Lending

• Rogers LeBaron
• Director Bank Lending

European Bank for Reconstruction and Development
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Small Business can be Profitable BusinessEBRD EU
Phare Experience in 10 Accession Countries

• Participant banks 27
• Loans Granted to date 700 million
• Loans provide 30,0000
• Average loan size 25,000
• Arrears rate 1.7

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Financial Intermediation by Country vs EU (2003)
Estonia
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Banking Assets Ownership in Accession Countries
(2002)
Top 10 Foreign Banks KBC Erste HVB Unicredito Soc
. Gen. Citigroup RZB IntesaBCI ING Commerzbank
Local Owned Assets 28.61
54.29
Other Foreign Banks 17.11
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Total banking Assets in Central Europe (b)
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Risk Scoring Some Key Questions

• Product risk taking. Can risk scoring assist in
  prudent risk taking assessments?
• Data gathering. How much historical information
  is needed before we can start a program?
• Management overrides to what extent can
  management approve or decline transaction that do
  not make the grade?

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Risk Scoring Some Key Questions

• What loan volume is needed for risk scoring to be
  cost effective?
• Should/how should the micro, small and medium
  sized customers/markets be segmented for risk
  scoring?
• Risk scoring. Is it best developed internally or
  externally and/or what is the right combination?