The International Association of Credit Portfolio Managers last week issued a manual of Sound Practice in Credit Portfolio Management that offers a list of practices and principles by setting benchmarks in which portfolio managers can compare their own practices.
The guidelines were developed over the past 13-months by 22 members of the association. The 30 practices cover a number of areas, including identifying the role of a credit portfolio manager, explaining how to set limits and manage concentrations, and how to rebalance a portfolio to achieve strategic objectives.
Ivan Marcotte, a managing director at Bank of America and the new association chair, said the practices essentially present three choices that the IACPM would recommend and based on a specific business' operating model, the company can chose the sound practices that are in line with their methodology. Gene Guill, managing director in the loan exposure management group at Deutsche Bank and the IACPM's 2005 chair, said there has been a lot of enthusiasm amongst members, He explained that Deutsche Bank has come a long way, actively managing loan portfolios, reducing risk substantially and reducing concentrations. Based on that success, his group has been asked to take over short-term lending activites at the bank, managing loans 180-days and less in maturity.