Key insights
- BNP Paribas increased its synthetic risk transfer deals by 43% in 2025 to €66.7 billion. The ECB is scrutinizing the growth of SRTs, urging banks to remove whole loans from balance sheets instead of only shifting credit risk. This regulatory pressure could lead to increased capital requirements for banks using synthetic SRTs, potentially reducing lending capacity and impacting future earnings, but the impact on US equities is limited.
Investing.com -- BNP Paribas SA increased its reliance on significant risk transfers last year, with securitization exposure to originated synthetic SRTs in the non-trading book rising to €66.7 billion ($77.2 billion) from €46.5 billion at the end of 2024, according to its latest annual report. The increase represents a 43% jump.
SRT deals have grown rapidly in volume over recent years as new issuers and more buyers enter the market. Banks use SRTs to insure loans against default, allowing them to free up capital for lending and return money to shareholders through dividends and share buybacks.
Banco Santander SA’s securitization exposure reached €74 billion last year, according to corporate filings, a marginal increase from €73 billion the previous year.
The growth of SRTs across the banking industry has drawn regulatory scrutiny. The European Central Bank has urged lenders to rely more on deals that remove the whole loan from their balance sheets due to concerns around circular transfer of risks. Synthetic SRTs only shift the credit risk.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.