Investor Pulse: The Benefits Of BICRAs

Our Banking Industry Country Risk Assessment (BICRA) is an essential tool for understanding evolving industry risks. BICRAs evaluate macroeconomic factors, industry characteristics, and bank-specific factors, based on a structured, transparent, and country-specific methodology.

What We're Hearing

What investors like: Investors tell us they appreciate the comprehensive, detailed and comparative approach to assessing banking risks across different jurisdictions. In particular, the BICRAs' clarity, granularity, and consistency deepen their understanding of how systemic conditions influence bank creditworthiness.

Areas to improve: Investors would like us to consider emerging threats such as fintech and cryptocurrencies, that could affect financial stability. In particular, they want us to:

• Assess exposure to private credit and leveraged finance, particularly in the U.S.
• Integrate emerging risks into the assessment of system-wide funding, such as deposit stability and access to central bank facilities, including availability of collaterals.

The Strengths of the BICRA Framework

• Bank-system specificity: BICRA provides investors with insights into industry risk through the lens of banking-system-specific structural features, including regulation, funding, and competition.
• Balanced macro and structural risk: Our dual-pillar model (economic risk + industry risk) provides a more nuanced and holistic view than a purely macro-focused score.
• Forward-looking yet realistic: BICRA's methodology looks three to five years ahead, effectively capturing cyclical risks and long-term structural changes that could impact investment outcomes.
• Clear sub-factors and transparency: The sub-factors for industry risk are well-defined, better enabling investors to understand the rationale behind a country's BICRA rating.