What is the RIGHT INTEREST MARGIN you should pay on your credit facilities?
The Open Box of Interest Margin
The interest margin you pay depends on your credit risk, on the Basel Rules for regulatory capital requirement and on the return on equity the bank wants to achieve for its shareholders. Recent developments in financial technology (Fintech) make it now possible to have the specific interest margin benchmarks for your company within the hour with help of the new Vallstein Interest Margin solution.
Basel 3 introduced amongst others stricter capital requirements and made banks safer. These post-crisis reforms have been comprehensive and wide-ranging. As the Basel Committee pointed out, the associated costs could be shared fairly over the bank itself (reduce operating expenses, improve business models), its shareholders (reduce return on equity because banks have better capital buffers) and clients (pricing).
To determine the fair contribution made through pricing, or interest margin for bank credit facilities, it is important to analyze this objectively and independently from your bank.
This interest margin will provide a sufficient but not excessive return for the bank on its regulatory capital (Return on Solvency) and will provide sufficient room for the bank to achieve a reasonable 10% return on equity for its shareholders, if and when the bank is positioned to run its operations efficiently.
This is what the Vallstein Interest Margin provides. Decades of banking experience and extensive benchmark databases are combined into an innovative technology solution with immediate valuable insight. Vallstein provides you with a solid and objective interest margin benchmark to determine a fair pricing for your bank credit facilities. Using latest big data technology you will be able to get all of this at your fingertips.