US and Canadian bank balance sheets face increasing challenges from both cyclical and structural headwinds.
North American banks are increasingly tapping external capital pools to manage credit portfolios, and Credit Risk Transfer (CRT) solutions are emerging as an essential tool for strengthening banks’ credit portfolio management.
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The evolution of the Significant Risk Transfer (SRT) market globally is a template for CRT growth in North America.
Although North American banks are in the early stages of CRT adoption relative to Europe, the North American CRT market is gaining momentum. Maturing CRT operating models and increasing regulatory clarity have helped enable this shift.
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Â鶹ÊÓ´«Ã½ÔÚÏßÈë¿Ú, with the combined expertise of Marsh, Guy Carpenter, and Oliver Wyman, presents an illuminating joint report.
Expanding the portfolio management toolkit: A primer on Credit Risk Transfer (CRT) solutions for North American banks provides a detailed overview of the process, benefits, and strategic considerations involved in establishing CRT programs, structuring and distributing CRT solutions, and assessing the financial impacts.
Expanding the portfolio management toolkit
Use this report to:
- Learn how CRTs are expanding the portfolio management toolkits of banks.
- Discover why the North American CRT solutions market has a strong growth trajectory.
- See how banks, insurers, and private capital managers each play a critical role in facilitating CRT transactions.
- Understand the fundamental enablers of successful CRT solutions programs.
Report FAQs
What are CRT solutions?
CRT solutions are financial mechanisms that allow banks to effectively transfer their credit risks to third-party investors or insurers. These transactions — including Non-Payment Insurance (NPI), Funded CRTs, and Unfunded CRTs — can result in a reduction in credit risk, lower limit utilization, and varying degrees of capital benefit depending on the product and jurisdiction.
What are the key features of successful CRT solutions programs?
- Clear strategy: Articulation of CRT objectives and role within a broader CPM toolkit.
- Refined operating model: Clear roles and responsibilities across groups, detailed knowledge of regulatory requirements, and a single buying point within the organization.
- Flexible analytics: Approaches used to estimate the potential capital impact of various CRT structures.
- Robust governance and risk management: Ownership and accountability clearly assigned across three lines of defense.
How can Â鶹ÊÓ´«Ã½ÔÚÏßÈë¿Ú help organizations with CRT solutions?
With the combined capabilities of Marsh, Guy Carpenter, and Oliver Wyman, Â鶹ÊÓ´«Ã½ÔÚÏßÈë¿Ú has established itself as a leading provider of CRT solutions, helping the largest banks in North America and Europe execute NPI and CRT/SRT transactions. We bring unparalleled credit risk expertise, strong distribution capabilities to insurers and reinsurers, and a proven track record of successful execution of CRT solutions.Ìý
Please contact us to learn more.
Authors and Contributors
Oliver Wyman:
- Julian Gorski, Partner, Corporate and Institutional Banking
- Randy Lampert, Principal, Finance and Risk
- Paulina Symala, Associate, Corporate and Institutional Banking
- Roshannah Gaur, Consultant
Guy Carpenter:
- Michael Shemi, Managing Director, North America Structured Credit Leader
- Jeffrey Krohn, Managing Director,ÌýMortgage and Structured Credit Segment Leader
- Timothy Armstrong, Managing Director, Mortgage & Structured Credit
- Andrew Feachem, Managing Director, EMEA Structured Credit Leader
Marsh:
- Azzizza Larsen, Senior Vice President, Lenders Solutions Group Leader for US & Canada
- Mark McLeod, Managing Director, US Structured Credit & Political Risk Practice Leader, Credit Specialties
- Marcus Miller, Managing Director,ÌýGlobal Lenders Solutions Group Leader, Credit Specialties