Barclays, Deutsche dodge losses thanks to risk transfer market but investors tighten terms

By Owen Sanderson
01 Mar 2021

The synthetic risk transfer market helped some of Europe’s biggest banks dodge loan losses last year, with Barclays saving more than £300m and Deutsche at least €150m. But the backdrop last year led to investors taking a tougher line on writing new credit protection, steering clear of pools with limited disclosure and hoping to dodge the most damaged sectors.

Synthetic risk transfer is big business for Europe’s largest banks, where it acts as a crucial piece of the corporate lending puzzle, allowing them to recycle capital from low-returning corporate revolvers into higher returning alternatives.

The biggest users are Europe’s biggest investment banks — Barclays, Deutsche Bank, Credit ...

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