December 2, 2024 (NO COMMENTS)

Early last month, the European Commission opened a consultation on the EU’s securitisation rules. Amid the proposals, one controversial idea being mooted is the extension of the so-called STS label to the unfunded protection of bank loan portfolios by insurers – a type of synthetic risk transfer (SRT).

STS designation – which applies to securitisation deals that are deemed simple transparent and standardised – allows banks to gain greater capital relief when moving risk off their balance sheet.