City Of London
UK's Revamp to Make It Cheaper for Banks to Use Popular Tool to Offload Risk
- PRA resetting securitization rules in the aftermath of Brexit
- Imminent consultation paper will pave way for unfunded SRTs
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UK financial regulators are set to bolster banks’ use of significant risk transfers by making it easier to do “unfunded” deals, where banks use insurance to cover potential loan losses.
The Bank of England will soon bring forward a consultation paper outlining the circumstances under which lenders can create those transfers, according to people with knowledge of the matter. The guidance is part of its wider post-Brexit revamp of the country’s rules on securitization.