Preparing the budget for fiscal year 2026 is a pivotal moment for your bank. Beyond financial projections, it is an opportunity to strengthen your balance sheet, optimize your capital, and accelerate your growth.
In a demanding regulatory environment, integrating risk guarantees is no longer just an option; it has become an essential lever for profitability.
According to the IMF (Global Financial Stability Report, April 2024), the resilience of the banking sector depends on proactive risk management and efficient capital allocation. This is particularly relevant for African banks, which must navigate compliance requirements (Basel III) while financing sustained economic growth.
Why integrate guarantees into your 2026 budget?
Don’t just react to risks—budget them proactively.
By anticipating the use of guarantees, your bank can:
- Optimize Capital Allocation: Guarantees reduce Risk-Weighted Assets (RWA), a key indicator of financial strength. This reduction frees up regulatory capital that would otherwise be locked. Freed capital can then be reinvested in new projects, significantly improving your Return on Equity (ROE).
- Strengthen Financing Capacity: Risk concentration limits can hinder your ability to finance large-scale projects. Guarantees enable you to exceed these thresholds while remaining fully compliant. This allows you to support more strategic projects for the economy without exposing your balance sheet to excessive risk.
- Facilitate Regulatory Compliance: Integrating guarantees from the budgeting process makes it easier to meet Basel III requirements, particularly regarding the large exposure ratio. This demonstrates transparency and credibility during annual audits.
ETC’s Concentration Risk Bond (CRB): A Tool for 2026 Budget Optimization
The Concentration Risk Bond (CRB), a risk diversification guarantee instrument, is ETC’s solution to your budgeting challenges. Its key advantages include:
- Risk Exposure Reduction: The CRB lowers your Exposure at Default (EAD) in case of default by a large client or across an entire portfolio. This reduction protects your balance sheet and secures your revenue forecasts.
- Leverage ETC’s Public Rating: By using ETC’s public rating (A3-/A-), your bank can adjust the risk weighting of its exposures. This frees up capital and allows you to allocate more resources toward financing the African economy.
- Flexibility and Relevance: The CRB is a flexible tool, tailored to the specific needs of African markets. It can be used to cover infrastructure financing, support SMEs through a portfolio guarantee, or assist leading companies in their expansion.
About ETC
ETC is a European guarantee institution working with banks and institutions operating in Africa. ETC provides technical and financial services to support investment and international trade projects.
ETC holds a public rating of A3- (risk category 2 under the EU prudential framework) issued by an OEEC and published with the European Securities and Markets Authority (ESMA), as well as a AA long-term and A1 short-term rating issued by Bloomfield Investment Corporation, valid in the AMF-UMOA zone and other African markets.
As an active SWIFT member under the code ETCGIT2T, ETC is able to issue guarantee instruments such as standby letters of credit (SBLC) in compliance with International Chamber of Commerce (ICC) rules.
By putting its expertise and ratings at the service of African banks, ETC positions itself as a strategic partner to strengthen your balance sheet and secure your growth trajectory.
Our objective is clear: to support you in optimizing your capital, proactively managing risks, and sustainably financing your projects.
The Concentration Risk Bond (CRB) fully embodies this vision.
It enables you to integrate risk management right from the budgeting stage, turning regulatory constraints into drivers of performance and profitability.
