European Auto Finance Joint Venture

Summary

Avantage Reply supported a leading European auto-finance joint venture to optimise its RWA consumption, freeing up capital to support growth in commercial vehicle leasing and financing.

Customer Goals

• Ensure sustainable growth of financing volumes without breaching capital ratio constraints.
• Improve competitiveness in commercial vehicle financing by lowering cost of capital.
• Prepare for CRR (Basel) / ICAAP requirements while supporting business expansion.

Challenges

• High capital intensity of leasing portfolios.
• Sub-optimal classification of exposures (corporate vs. retail SME) leading to inflated RWAs.
• Inconsistent collateral capture and collateral eligibility under CRR (Basel) rules

Solution

• Conducted a diagnostic of credit processes, collateral management, and booking practices.
• Identified opportunities to reclassify SME clients and apply retail treatment where appropriate.
• Improved data quality and collateral recognition, ensuring CRR (Basel) eligibility.

Customer Description

• A pan-European joint venture between a universal bank and a commercial vehicle manufacturer, focused on providing leasing and financing solutions to SMEs and corporates across Europe.