Vittorio Emanuele monument, Rome

Moral hazard addressed

Category: Capital Relief Trades ABS

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EIF completes SRT with BP Bari

The EIF has completed a guarantee agreement with Banca Popolare di Bari under the SME Initiative for Italy. The transaction consists of a number of structural features designed to reduce moral hazard.

According to Sebastian Dietzsch, associate director at Scope: “The loss claims under the guarantee are based on an expected loss calculation, which minimises cashflows between BP Bari and the EIF, significantly reducing counterparty risk exposure to the bank.

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