Discover the Benefits of Actively Managed Certificates (AMCs) for Banks

Actively Managed Certificates (AMCs) are an innovative financial tool that offer numerous advantages and opportunities for banks in asset management. With AMCs, banks can diversify their risk, convert illiquid assets into liquid ones, and enhance their product and service offerings. In this article, we'll explore the key advantages of AMCs for banks.

Diversification and Risk Management

AMCs allow banks to offer a greater number of strategies and asset classes, enabling clients to diversify their portfolios with assets that are not traditionally traded on a financial market. For example, art, previously an asset with very restricted accessibility, can now be incorporated. Additionally, by issuing AMCs through unconsolidated Special Purpose Vehicles (SPVs), investors have no issuer risk from the bank, protecting both the financial institution and the investors.

Flexibility and Customization

AMCs offer banks great flexibility in the creation and structuring of financial products, allowing customized and differentiated solutions for various customer segments. This customization can lead to greater customer satisfaction and loyalty.

Cost Reduction and Operational Efficiency

Compared to traditional investment funds, AMCs are more cost-efficient financial instruments. By issuing an AMC without the need to create and manage a separate legal entity, banks can significantly reduce administrative and regulatory costs.

Converting Illiquid Assets into Liquid Assets

AMCs allow banks to convert illiquid assets, such as real estate, private companies, and art, into liquid financial instruments. This conversion improves asset liquidity, facilitates investor entry and exit, and helps banks manage their balance sheets and meet regulatory capital and liquidity requirements.

Increased Net Assets Under Custody and Customer Retention

Offering AMCs to External Asset Managers can be an effective strategy to increase net assets under custody and retain clients. By doing so, banks can maintain and strengthen their market position, increase revenues, and ensure long-term sustainable growth.

In summary, AMCs enable banks to address multiple challenges, from risk diversification to customer retention, and provide a solid foundation for long-term success in the financial industry. By investing in the implementation of Actively Managed Certificates, banks can secure an advantageous position in an ever-evolving financial environment and maintain a solid foundation for long-term success.