In Focus Risk


Non-bank finance continues to pave the way


Alternative lenders are becoming an established part of the industry, and must not shy away from the big questions


Emma Clark Head of business development UK and Europe, Falcon Group


Risk is a pervasive threat from which no corporate is immune: from collections and credit risk, to regulatory concerns, and from cyber-security to geopolitical instability.


Diverse risks Not only do corporates face an increasingly diverse set of risks, they must also do so in an era of curtailed bank lending that, for many, is having a significant impact on liquidity. It has been well documented that banks


are under pressure from stricter global capital and regulatory requirements. Basel III regulation is particularly now


significant, stipulating that banks must hold more capital on their balance sheets to cover lending. For the sake of the banking system’s risk


management, liquidity and transparency, that is great, but for corporates seeking funding, the picture is less positive.


Ebbing away Indeed, many are finding established bank relationships and credit lines slowly ebbing away. So, in such circumstances, where should they turn? As global banks continue to retrench and


downsize, a variety of players – including export credit agencies, multilateral development banks, and insurers – have emerged to fill the vacuum. Meanwhile, specialist financiers have


also been expanding geographically and broadening their product range. For instance, recent figures from Global Risk Insights report that non-bank lenders make up 85% of all corporate loans in the USA. Certainly, non-bank financing can no longer be considered a fringe activity.


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Indeed, mitigating risk wherever possible, and accessing adequate and flexible funding are key factors to sustainability and growth in the current global economic climate


Unfettered by the regulatory constraints


on global banks, specialist financiers, in particular, can display a greater level of flexibility – offering bespoke financing solutions, tailored to each company’s unique needs. An additional benefit is that these solutions can be used as either a stand-alone service, or in conjunction with existing financial services.


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A vulnerability? Of course, given the industry’s staggering growth in recent years, it is no surprise that some have questioned whether the sector is vulnerable to the same risks facing the traditional banking industry. These questions are not ones we shy away from. In our own case, this has meant enhancing


risk-management expertise and practices – developing dedicated teams and processes, as well as rigorous risk screening. Such measures ensure that clients can conduct business with confidence and certainty. Indeed, mitigating risk wherever possible,


and accessing adequate and flexible funding are key factors to sustainability and growth in the current global economic climate. Fortunately, in a time of restricted lending


and heightened risk, the landscape is also diversifying. Corporates do have somewhere to turn. CCR


January 2017


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