Solution: Capital Relief Solutions (CRS)
A tailored capital relief solution (CRS) for banks operating under Basel regulation. With proper insurance contract wording that reflects the unfunded guarantee wording, banks can reduce RWA by transferring a portion of credit risk to a selected A-rated insurer. This approach delivers two key benefits: optimised capital allocation and an increased return on allocated capital (ROAC). By leveraging credit risk insurance, banks optimise capital efficiency while improving client relationships.
Main Characteristics:
Subject of Coverage: Credit risk linked to a certain lending activity (factoring, loans,...) or issued bank guarantees.
Losses Covered: Insolvency, protracted payment after a pre-agreed waiting period, and other credit-related risks.
Additional Coverage: Political risks can be added.
Self-Retention: Typically negotiated to balance premium, capital benefit, and the risk profile of a covered transaction.
Why Choose Capital Relief Solutions (CRS)?
Capital Optimisation: Improve RWA to support optimal capital allocation.
Securing Key Client Expansion: Support larger transactions and expansion into new markets with confidence.
Risk Transfer: Additional layer of credit risk transfer.