UK’s PRA loosens tight conditions on risk transfer

By Owen Sanderson
15 Jan 2020

The UK’s bank regulator, once one of the world’s toughest, has eased some of its conditions around the synthetic risk transfer market, allowing the UK’s biggest lenders to sell balance sheet CLOs on similar terms to their European Central Bank-regulated peers.

The UK regulator no longer requires ratings for UK risk transfer deals, easing conditions for issuers, though driving the market underground. The specialist regulatory capital hedge funds which buy the deals typically have no rating requirement, and so there is now no required disclosure for the secretive ...

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