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Adapting to uncertainty: why agility is now a funding imperative for banks
How issuers are building resilience in fast‑moving markets.
Read time: 7 mins Added: 12/08/26
At the Lloyds 2026 Bank Issuer & Investor Conference in London, one theme came through with clarity: capital markets are no longer defined by discrete periods of volatility, but by continuous movement. Geopolitical tensions, shifting rate expectations and evolving supply dynamics mean that conditions can change quickly - and often without clear precedent.
As Miriam Scuka, Head of Funding at BayernLB, puts it, “We no longer have a predictable, ‘linear’ policy environment. Geopolitics and policy decisions can change direction very quickly, which makes forecasting spreads harder than ever.”
For issuers, this is not simply a more volatile market. It is a more complex one where flexibility, rather than timing, is becoming the defining feature of effective funding strategies.
From opportunistic to proactive
One of the clearest changes is the move towards earlier and more proactive execution. In a less predictable backdrop, waiting for ideal conditions is increasingly seen as a risk in itself.
Kris Middleton, Head of Term Funding and Capital Structuring at Lloyds, reflects this shift: “Given where spreads were towards the end of last year, it made sense to lock in funding early and front-load issuance, while extending the weighted average life of the book.”
This approach is increasingly common. As Bill Symington, Funding and Investor Relations at Íslandsbanki, notes, “The lesson from previous years is that smaller issuers can suffer disproportionately in periods of turmoil - so front-loading where possible makes clear sense.”
Kris Middleton Head of Term Funding and Capital Structuring, LloydsGiven where spreads were towards the end of last year, it made sense to lock in funding early and front-load issuance, while extending the weighted average life of the book.
Middleton emphasises that this goes beyond a short-term adjustment. “We don’t manage funding on a single-year view,” he explains. “We look at balance sheet evolution, refinancing needs, credit spreads and investor appetite over multiple years - and that will continue to guide our approach.”
Funding is therefore becoming less about precise timing, and more about reducing exposure to uncertainty.
Agility as infrastructure, not reaction
Front-loading alone, however, is only part of the picture. The defining capability is agility - specifically, the ability to access markets efficiently across different conditions.
For many issuers, that agility is rooted in diversification. As Duy Tran, Head of Medium/Long Term Funding at Crédit Agricole, explains, “Our diversified funding mix - across currencies, formats and tenors - allows us to adapt our strategy if conditions deteriorate. This might mean shortening duration, shifting into lower-beta formats, or focusing more on our home currency (EUR) or USD. At the same time, we remain positioned to seize opportunities in diversification markets when they arise, ultimately improving both funding quality and cost over the long run.”
He adds that diversification is not simply tactical, but structural: “Building and maintaining access to diversification markets through the implementation of different issuances programmes, regular bonds issuances and roadshows, allow us to broaden our investor base. This reduces our reliance on any single investor segment and enables us to navigate more volatile periods more effectively.”
Duy Tran Head of Medium/Long Term Funding at Crédit AgricoleOur diversified funding mix - across currencies, formats and tenors - allows us to adapt our strategy if conditions deteriorate.
For Lloyds, that flexibility is embedded within a consistent, through-the-cycle approach. As Middleton explains, “We continue to be a through-the-cycle issuer - using issuance windows and targeting currencies and structures that reflect both investor appetite and our own funding needs. Being nimble is essential in navigating markets like these, but that sits within a disciplined framework where we remain consistent in our overall approach.”
Alongside this, contingency planning is becoming more embedded. Issuers are increasingly preparing for a range of scenarios - from temporary dislocation to more prolonged periods of reduced liquidity - ensuring they can adjust issuance strategy as conditions evolve.
A group of senior colleagues from Lloyds at the Issuer Investor Conference 2026
Investor resilience and rising expectations
Despite the more complex backdrop, investor behaviour has remained relatively stable. There is little evidence of structural outflows or a breakdown in demand for bank credit.
That resilience is partly a function of how issuers have positioned themselves. As Symington notes, “We prefunded almost all of our FX requirements for 2026 in 2025, which means we entered this year in a position of relative tranquility.”
Investor expectations, however, are evolving. There is increasing focus on fundamentals - credit strength, clarity of strategy and transparency. As Scuka observes, investors have remained “disciplined… almost holding their breath,” reflecting a market that is cautious, but not retreating.
Access to capital remains strong, but it is increasingly contingent on credibility and consistency.
Diversification as a strategic discipline
If agility is the capability, diversification is the mechanism that enables it.
Among issuers, funding strategies continue to broaden - whether through expanding into new currencies and programmes or deepening access within existing markets.
For Lloyds, diversification remains central. “We issue across G3 currencies, but also have active programmes in AUD, CHF, SGD and JPY,” Middleton notes. “Maintaining diversification is - and will remain - critical to delivering the funding plan.”
Scuka highlights a similar focus on strengthening funding resilience: “We have further diversified our funding structure by distributing bonds to retail clients via partner banks. This expands our investor base and strengthens the resilience of our overall financing mix.”
For smaller issuers, the challenge is more structural. As Symington notes, “Diversification is always desirable, but not always straightforward for borrowers with more concentrated funding requirements.”
Even so, reliance on a narrow funding base is increasingly seen as a vulnerability.
Preparing for a multi-risk environment
Recent market volatility has been closely tied to geopolitical developments, with conflict-driven energy uncertainty and shifting inflation expectations feeding directly into credit spreads and issuance windows.
As Tran notes, “The current environment is characterised by heightened geopolitical risk, uncertainty around central bank policy and ongoing pressures on economic growth.” At the same time, he adds, “Technical factors remain strong, with the asset class continuing to attract inflows and absorb supply.”
Looking ahead, the challenge is not a single dominant risk, but the interaction of multiple uncertainties. As Scuka warns, the greater concern is “The possibility of several risks materialising at the same time and reinforcing each other - a potential domino effect across markets.”
In this context, forecasting becomes less reliable, placing greater emphasis on preparedness.
Agility within a disciplined framework
What is emerging is a more deliberate model of funding - one that prioritises preparedness over prediction.
Issuers are not being forced to choose between flexibility and consistency. Instead, the most effective approaches are those that embed both: the ability to respond to changing conditions, anchored in a clear and stable strategic framework.
In an environment defined by uncertainty, that combination is becoming a defining advantage. The issuers best positioned for what comes next will not be those attempting to anticipate every shift, but those structurally equipped to navigate them.
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