The bank HSBC Holdings $HSBA (-0.07%) is reviewing the implementation of a Significant Risk Transfer (SRT) in relation to a portfolio of investment grade corporate loans worth €2 billion, according to an agency report.
The size of the SRT would correspond to around 10 percent of the reference portfolio, the Bloomberg news agency reported, citing people familiar with the matter. The final terms of the potential deal are still the subject of discussions with investors.
HSBC did not wish to comment on this when asked by Bloomberg.
SRTs are a structured finance transaction (securitization) that enables banks and lenders to transfer part of the credit risk of a loan or asset portfolio to third-party investors, for example by issuing debt instruments or through synthetic structures such as guarantees.
One of the most attractive aspects of SRT transactions is capital relief.
By outsourcing risks, banks reduce the capital they need to hold for certain assets and thus create space on their balance sheet for new business.