UniCredit prices loans using significant risk transfer capital relief, Bloomberg News reports
- Banks use significant risk transfer transactions to free up capital that would otherwise be tied up against their loan books for regulatory purposes
UniCredit is including the capital benefit from significant risk transfer (SRT) into its process for granting and pricing new loans, the head of the bank’s balance sheet management said in an interview with Bloomberg News published on Thursday.
“We have been working to evolve our use of SRTs from being purely a capital efficiency tool into something that directly improves the competitiveness of our bankers when they originate loans,” Stefano Chiarlone said.
Among large European banks, UniCredit is one of the most active in the use of SRTs, which it has turned into an ordinary tool to manage capital, developing a large-scale programme that leads it to complete SRT transactions on a regular basis.
Banks use significant risk transfer transactions to free up capital that would otherwise be tied up against their loan books for regulatory purposes.
The Italian lender plans to issue SRTs tied to between 14 billion euros ($16.25 billion) and 16 billion euros of loans this year, with the possibility of moving closer to 20 billion euros if origination in the second half of the year keeps growing, Chiarlone told Bloomberg.