Optimizes a parent bank’s risk-weighted assets by freeing capital tied to mandatory reserves in the central banks of emerging markets.
Ensures foreign and local banks are subject to the same reserve requirements.
Channels more funds from your global bank to local branches, enabling more lending and economic growth.
-
High Risk Weights Constrain Capital
Global retail banks are regulatory required to assign a higher risk weight to mandatory reserves in emerging-market central banks. As a result, risk-weighted assets increase and liquidity is constrained.
Risk weights of the local mandatory reserves vary based on the country risk - it can be as high as 150 percent.
-
MIGA Guarantee Secured
MIGA’s Capital Optimization coverage is enacted in the host country. This coverage is recognized by regulators and rating agencies.
-
Risk Weight Reduced
Because risk is reduced, a lower risk weight is assigned to the mandatory reserves in emerging-market central banks. Risk-weighted assets decrease and capital is available for new investments.
-
Loss Protection, If Needed
If the host member country central bank seizes or restricts the reserves, MIGA compensates the guarantee holder for up to 95% of the covered amount.
Fixed Fee Pricing Model
MIGA prices its guarantee premiums based on a calculation of both country and project risk. Fees average approximately one percent of the insured amount per year, but can be significantly lower or higher. Detailed information on premiums is available in Section VI of MIGA’s Operational Regulations.
Real Results from Capital Optimization
Combine MIGA guarantees and other services from the World Bank Group’s comprehensive portfolio to tailor the right coverage for your project. A Capital Optimization Guarantee is typically paired with one or more of the below products.
Case Study
Unlocking Capital for Growth: MIGA and Absa Group's Strategic Partnership
Story
Alpha Bank Stands by Albania’s Small Businesses Despite Pandemic
The MIGA guarantee is an important signal for us in terms of international support and is recognition of the performance and strength of our Ukrainian bank. It will support our operations in Ukraine, and we see ourselves very-well positioned to continue working with our clients now as well as during the reconstruction of the country.”
