Infrastructure Supporting Factor
Bank supervision - capital adequacy - Risk Weighted Assets (RWAs) - credit risk - infrastructure.
(ISF).
The Infrastructure Supporting Factor is a capital adequacy provision that reduces the regulatory risk weighting applied to lending for infrastructure projects.
This reduces the amount of regulatory capital required to be held by the lender, and - in turn - helps to reduce the cost of lending for infrastructure projects.
"In Europe, many banks consider the ISF a major contributor behind their backing for big projects.
When the European Banking Association questioned 39 banks on the continent, 27 said it has ‘incentivised’ their support for infrastructure projects, and 28 said it had ‘improved’ the availability and terms of infrastructure loans."
(Nala Worsfold, head of financial and risk policy at UK Finance, quoted in The Treasurer, Issue 4, December 2023, p15)
