Three major European banks, Banco Santander, BBVA, and Deutsche Bank, are negotiating significant risk transfer deals covering at least $17.5 billion in loans. These synthetic securitization operations allow banks to offload the riskiest slice of potential losses to investors who receive elevated yields often exceeding 10%, while banks free up regulatory capital without selling the underlying assets. Santander is reportedly evaluating five separate transactions targeting UK commercial real estate and Brazilian SME financing, while Deutsche Bank has prior experience with a similar operation tied to a $500 million trade-finance portfolio. Regulators including the ECB, IMF, and Bank for International Settlements have raised concerns about the opacity of these instruments. The European SRT market reached approximately €320 billion by mid-2025.
Source: Read the original article
