Latest news with #SRTs
Mint
04-07-2025
- Business
- Mint
Commerzbank Plans to Sell SRT Tied to €2 Billion of Loans
(Bloomberg) -- Commerzbank AG plans to sell a significant risk transfer tied to a portfolio of corporate loans, according to people familiar with the matter, as the German lender moves to free up capital to fend off a potential takeover bid from UniCredit SpA. Frankfurt-based Commerzbank aims to issue an SRT tied to €2 billion ($2.4 billion) of loans, according to the people, who asked not to be named. The size of the SRT would be around 6.9% of the reference portfolio or about €140 million, they added. A representative for Commerzbank declined to comment. While Commerzbank has used SRTs for years, such transactions are now part of a wider plan by Chief Executive Officer Bettina Orlopp to keep the lender independent. Moody's Ratings on Thursday raised Commerzbank's credit rating, citing strengthened capitalization and improved profitability. UniCredit, led by Chief Executive Officer Andrea Orcel, bought a stake in Commerzbank from Germany's government in September and subsequently increased its holding. Orcel has renewed his push for a deal that he says would create a European banking champion, sending a letter last month to top German officials including Chancellor Friedrich Merz. Orlopp is seeking to unlock more capital, partly by using more significant risk transfers. Commerzbank's corporate clients unit expects SRTs to help it cut €10 billion in so-called risk-weighted assets in the years through 2028, division head Michael Kotzbauer said in a presentation on Thursday. Global sales of SRTs are expected to grow 11% on average over the next two years, according to a recent Bloomberg Intelligence survey. Aareal Bank AG, Erste Group Bank AG, Standard Chartered Plc and ING Groep NV are currently discussing or finalizing such deals. More stories like this are available on
Mint
30-06-2025
- Business
- Mint
Europe Seeking Data on Bank Lending to SRT Buyers, Campa Says
(Bloomberg) -- European authorities are pushing banks to disclose more data on loans to investors who turn around and use the funds to help peers offload credit risk, according to a top regulator. Regulators want to ensure that risk is actually leaving the system when banks use significant risk transfers, or SRTs, to free up capital while keeping the assets on their balance sheets. 'We've been asking for more transparency, more reporting information,' Jose Manuel Campa, who leads the European Banking Authority, said in a Bloomberg TV interview on Monday in London. 'Potentially you get a vicious circle by which a bank sells protection to somebody that's been financed by another bank.' SRTs allow banks to insure loans against default by selling credit-linked notes to pension, sovereign wealth and hedge funds. SRTs have been growing in popularity in recent years, particularly among European lenders. BNP Paribas SA, Intesa Sanpaolo SpA, Standard Chartered Plc and ING Groep NV are currently discussing or finalizing such deals, Bloomberg has reported. The EBA said on Friday that some 20% of European banks that have never engaged in SRTs plan to do so, while around three quarters of those that have plan to keep doing so. The authority is working on the issue of leverage in SRTs with the European Securities and Markets Authority and the European Systemic Risk Board, Campa said. On a global level, the Financial Stability Board has also asked more transparency, he added. --With assistance from Guy Johnson and Valerie Tytel. More stories like this are available on
Business Times
23-05-2025
- Business
- Business Times
Deutsche Bank plans SRT deal tied to US$3 billion corporate loans
[BERLIN] Deutsche Bank is selling a significant risk transfer (SRT) linked to a portfolio of US$3 billion in corporate loans, according to people with knowledge of the matter, the latest deal to drive this market toward record volumes this year. The size of the SRT is around 8 per cent of the portfolio, or about US$240 million, with the loans in both North America and Europe, the people said. The notes will form part of the lender's Craft programme, they added, asking not to be identified because the deal is private. A representative for Deutsche Bank declined to comment. SRTs allow banks to essentially buy insurance on debt, freeing up capital, while still keeping the assets on their balance sheets. The transactions involve selling notes to funds in exchange for yields that can frequently top 10 per cent, with the investors agreeing to absorb some losses if the loans go bad. Other European banks currently discussing SRT deals include Banco Santander, BNP Paribas and UniCredit. Demand for such instruments remains largely unaffected by the recent bout of volatility in public financial markets. In March, Deutsche Bank priced a US$560 million SRT deal out of its Craft programme at a spread of 750 basis points over the secured overnight financing rate, data compiled by Bloomberg show. The lender also priced an SRT deal tied to a portfolio of loans to German mid-cap companies, chief executive officer Christian Sewing said on an April 29 earnings call. 'There was also no noticeable repricing required. So, actually, there is a lot of demand,' said Sewing on the call, replying to a question about the potential impact of economic uncertainties on demand for SRTs. SRT are among the tools Deutsche Bank is using for its plan to reduce its risk weighted assets by 25 billion euros (S$36.4 billion) to 30 billion euros by the end of the year, a goal the lender may 'overachieve,' Sewing told analysts. The rising popularity of SRTs means deals may hit record volumes this year. Chorus Capital Management, which invests in SRTs, projects global issuance to grow to as much as US$35 billion, compared with an estimated US$29 billion last year, with the lion's share taking place in Europe. UniCredit is working on at least three SRTs tied to loan portfolios totalling around 4.2 billion euros, while Santander is discussing another three to offload risk from its loan portfolios in Spain, Denmark and the UK. BNP Paribas is also in talks to sell an SRT linked to a portfolio of about 10 billion euros in corporate loans. BLOOMBERG
Yahoo
28-02-2025
- Business
- Yahoo
NatWest Plans SRT Tied to Almost £1 Billion of Leverage Loans
(Bloomberg) -- NatWest Group Plc is working on a significant risk transfer linked to a portfolio of leveraged loans, according to people with knowledge of the matter. The Trump Administration Takes Aim at Transportation Research NYC's Congestion Pricing Pulls In $48.6 Million in First Month Shelters Await Billions in Federal Money for Homelessness Providers New York's Congestion Pricing Plan Faces Another Legal Showdown NYC to Shut Migrant Center in Former Hotel as Crisis Eases The size of the reference portfolio is almost £1 billion ($1.3 billion), said the people, who asked not to be identified because the potential transaction is private. The size of the SRT is around £90 million, they added. SRTs are an increasingly popular tool for banks to manage risk. Lenders can insure loans against default by selling these notes to pension, sovereign wealth and hedge funds. That enables them to tie up less of their own capital to meet regulatory requirements, while investors can pick up yields frequently above 10%. The terms, including size, are still subject to discussions with investors, said the people. Separately, the bank is on Wednesday marketing a pound-denominated Additional Tier 1 bond, a kind of debt that lenders use to bolster capital buffers. A representative for NatWest declined to comment. The rising popularity of SRTs means such deals are on track to hit a record high this year. Chorus Capital Management, which invests in SRTs, projects global issuance to grow to as much as $35 billion, compared with an estimated $29 billion last year, with the lion's share taking place in Europe. Last year NatWest added bankers to its SRT desk and marketed a risk transfer tied to £1.4 billion of loans. Other recent deals out of British banks include a Standard Chartered Plc transaction linked to a portfolio of $1.5 billion of loans. The UK government is close to existing its stake in NatWest, acquired in a bailout during the 2008 financial crisis. This month it sold down more and now owns less than 7%, with the bank's Chief Executive Officer Paul Thwaite saying that the second quarter would be a reasonable timetable for a full exit. Trump's SALT Tax Promise Hinges on an Obscure Loophole Warner Bros. Movie Heads Are Burning Cash, and Their Boss Is Losing Patience Walmart Wants to Be Something for Everyone in a Divided America China Learned to Embrace What the US Forgot: The Virtues of Creative Destruction Meet Seven of America's Top Personal Finance Influencers ©2025 Bloomberg L.P.
Bloomberg
07-02-2025
- Business
- Bloomberg
Deutsche Bank Raises Bar for SRT Leverage Amid ECB Inquiry
By and Arno Schuetze Deutsche Bank AG is tightening terms under which it provides loans for investors such as hedge funds to buy significant risk transfers. The Frankfurt-based lender is letting investors in SRTs know that the bank will be less proactive in offering clients financing via repurchase agreements, according to people familiar with the matter.
