Starling Bank appoints Jaywing to create model IFRS 9 framework for Covid-19 loans

Starling Bank has partnered with Jaywing to support the development of an IFRS 9 modeling framework for calculating expected credit losses under IFRS 9 on the coronavirus business interruption loan portfolio.

The Coronavirus Business Interruption Loan Scheme (CBILS) provides financial support to small businesses affected by the coronavirus (Covid-19). The initiative aims to provide government guaranteed loans to support small businesses in immediate need of cash during this difficult time. In response, commercial lenders must adjust impairment models to account for CBILS while continuing to meet the requirement of IFRS 9 to incorporate forward-looking information in the estimate of losses.

As models built on historical data are unlikely to produce meaningful projections in an ever-changing economic landscape, it is imperative to create a pragmatic modeling solution, which combines quantitative methods with expert judgment to deliver results. sensitive and defensible.

By working with Jaywing, Starling Bank will be able to have a depreciation modeling framework that incorporates the key elements that distinguish CBILS from traditional commercial loans, and flexible enough to be able to produce updated results as it grows. new information becomes available.

Ben O Brien, Managing Director of Jaywing, said: “We are delighted to have been appointed by Starling Bank to support them in the development of their IFRS 9 business models during a difficult time. By pairing their analysts with our dedicated team, we will complete this work by June 30, 2020 and to our usual very high standards. ”

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