Working with specialist partners, ABL Risk helps banks and financial institutions optimise capital adequacy requirements through insurance-backed risk transfer mechanisms.
Basel IV introduces significant changes to capital requirements, with full compliance required by January 2030. For specialised lending portfolios—including invoice finance, asset-based lending, and asset finance—these changes mean substantially higher risk weights and increased capital requirements.
Under Basel IV's standardised approach, invoice finance now incurs a 100% risk weight, up from 50-75% under prior rules. Without mitigation, institutions may see return on equity fall below target rates and lending capacity contract by up to 25%.
Download Full Whitepaper| Aspect | Basel III | Basel IV |
|---|---|---|
| Output Floor | None | 72.5% |
| Invoice Finance Risk Weight | 50-75% | 100% |
| Internal Models | Widely permitted | Significantly restricted |
| UK Implementation | Complete | July 2025 – Jan 2030 |
We work with specialist partners to deliver capital relief solutions recognised under Basel IV as eligible credit risk mitigation.
Up to 80% RWA Reduction
Credit protection against loan losses provided by an insurer, delivering capital relief through probability of default substitution—replacing the borrower's default risk with the insurer's superior credit rating.
15-70% RWA Reduction
Standardised contracts enabling scalable credit risk transfer across portfolios. MRPAs allow multiple insurers to participate in risk-sharing arrangements on a disclosed or silent basis.
80-90% RWA Reduction
Bespoke structures where the bank retains assets but transfers credit risk through credit derivatives. Portfolios are divided into tranches with insurers covering first-loss positions.
Our comprehensive guide for senior banking leaders covers regulatory context, risk transfer mechanisms, case studies from leading institutions, and practical implementation strategies.
We guide institutions through every stage of structuring and implementing insurance-backed risk transfer solutions.
Quantify RWA impact under Basel IV standardised approach and identify optimal portfolios for risk transfer.
Determine optimal mechanism based on portfolio characteristics, cost considerations, and capital relief targets.
Engage with specialist insurers and investors to secure competitive terms and ensure regulatory compliance.
Execute documentation, establish monitoring systems, and ensure COREP/regulatory reporting alignment.
Important: ABL Risk Management Limited is not authorised or regulated by the FCA. We work with specialist regulated partners to deliver insurance-backed capital relief solutions.
Get in touch to discuss how insurance-backed risk transfer can help your institution meet Basel IV requirements while maintaining lending capacity.