Article

What is Credit Treasury?

A definition

Credit Treasury relates to structuring loans, receivables or credit risks to make them transferable and tradeable. It is used by banks and corporates with the aim of collateralisation, refinancing, balance sheet/regulatory capital relief or as an investment.

This sector has evolved in the last 20 years intensively and has largely contributed to the efficiency and flexibility of the financial system. It is expected that the regulatory environment and initiatives like the Capital Markets Union (CMU) will further boost the topic Credit Treasury in Europe in the near future.

In the banks‘ process of adjusting their business models to new regulations, Credit Treasury is one part of the answer.

But increasingly also non-financial corporations use such instruments. Through asset-based finance, for example, corporates strive to gain financing independently from banks or to improve the conditions of their bank borrowings.

Credit Treasury Instruments:

  • securitisations, (structured) covered bonds, structured finance 
  • asset based finance, factoring, supply chain finance
  • loan portfolio transactions
  • debt funds
  • promissory notes (Schuldscheine)
  • loan syndications, co-lending programs
  • fintech, direct lending, lending platforms
  • credit insurance, credit default swaps, guarantees
  • strategic alliances in the lending business (e.g., between banks and insurers).