Financial institutions face evolving challenges
Banks operate under higher scrutiny from regulatory bodies in comparison to most other corporations, due to their role in managing customer funds and their potential effect on the stability of the broader economy.
One of the key challenges facing financial institutions is the requirement to maintain certain levels of capital in reserve to mitigate their risk exposure. This aims to ensure that financial institutions maintain solvency and can withstand economic downturns or financial shocks: as banks take on more risk, they are required to hold greater amounts of capital to safeguard against financial strain. However, this capital requirement can tie up valuable resources, limiting a bank’s ability to take on additional business or invest in other opportunities.
For example, in some jurisdictions or with regards to certain types of transactions, a bank may be required to hold $1 million in reserve for every $10 million of risk it assumes. This would effectively limit the amount of funds available for other business activities.
In order to capture more opportunities without the need to hold such high levels of capital in reserve, banks can leverage a partnership with a reliable, solidly rated and agile insurance partner capable of providing them with adequate capital relief solutions. In this way, insurance can play a pivotal role in driving a financial institution’s growth.
We’ve got you covered – in more ways than one
To help financial institutions mitigate risk and enhance financing capacity, Allianz Trade offers a comprehensive suite of credit insurance and risk transfer solutions tailored to support our clients in the banking sector.
Our offerings span a wide array of traditional and specialized structures, including:
- Short-term trade credit insurance (TCI) that provides coverage for B2B trade receivables to protect against customer non-payment while offering insight to support informed credit decisions.
- Specialty Credit offering customized protection for complex trade, structured and corporate finance transactions. No two specialty credit programs are the same, with each solution tailored to the individual needs of our clients. We also offer mid-term credit insurance and leasing coverage for non-payment of lease installments.
- Surety and guarantee participations, including through Master Risk Participation Agreements
- Securitization credit insurance supporting securitization structures and enabling greater financing capacity
Our products provide coverage tailored to the relevant asset category, helping financial institutions manage credit risk with a trusted, AA-rated market leader while optimizing capital requirements more efficiently.
Unlike traditional models, our specialty solutions offer flexible structuring options that support short- and medium- or long-term financing horizons ranging from 12 months up to 15 years. This range of forward-looking, bespoke solutions reflects how Allianz Trade goes beyond insurance to helping banks unlock capital and enable growth.
How we’re embracing the changes ahead
As financial institutions adapt to meet evolving global challenges, insurers must also adapt to continue meeting their needs. Allianz Trade is not only ready to help our partners navigate these challenges, but well-positioned to support financial institutions in seizing new opportunities shaping the future of banking.
A new installment of the Basel regulations, a set of international banking standards established by the Basel Committee on Banking Supervision (BCBS), will soon introduce updates for risk management and capital reserve requirements. Aimed at enhancing the stability of global banking systems, these changes will make capital relief and risk management support a more valuable resource than ever for financial institutions.
Another key development is the shift of more transactions into the e-commerce space. To ensure our customers are well-equipped to capitalize on this shift, Allianz Trade has been enhancing its technological capacities. In addition to our payment solution dedicated to B2B e-commerce, Allianz Trade pay , we have been building our offerings over several years to anticipate growing demand in this space, , for example by building partnerships with global financial institutions.
Here to shape tomorrow’s opportunities
In anticipation of oncoming changes, we are expanding our solutions even further based on new areas of interest for banks. With potential upcoming regulatory changes, access to flexible capital relief and risk management solutions will become even more critical. Allianz Trade is continuously building on its range of products for financial institutions in close collaboration with major banking clients and broker partners, ensuring that we are prepared to support emerging needs in this area.
Thanks to our extensive teams of product, credit and legal experts, we are committed to protecting financial institutions and enabling them to grow with confidence.
