Unlocking Capital – Growth of Srts’ €20 Bn Bank Benefit: BI Replay

Significant risk transfers (SRTs) are booming, with double-digit growth momentum likely to sustain for the next two years, based on a BI Survey. The capital benefit to banks via these transactions could be as much as €20 billion a year in Europe, while the US volumes are small but fast increasing. The opaqueness of these transactions are compensated by 10%-plus returns on average, keeping demand high. Default risk of the underlying assets, complicated by the interconnectedness between SRT buyers and sellers, may attract increasing scrutiny, though regulation is seen friendly overall so far.