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Capital Relief Trades

Capital relief trades are deals put together by banks to sell on to investors to reduce the bank's regulatory capital requirements. Such deals can take many forms, but SCI focuses on those where synthetic or securitisation structures are utilised. Those deals can be broken down into the following broad categories (deals can be combinations of these categories): CDS - credit default swaps: in the capital relief trade context, this denotes deals that utilise such instruments to transfer credit risk. CLN - credit-linked note: in the capital relief trade context, this denotes the deal is structured as a note with an embedded credit derivative. Fin gtee - Financial guarantee: a means of structuring a capital relief trade, whereby the investors benefit from a guarantee that all the issuer's obligations will be met. Funded: where a capital relief trade is understood to have been structured using a credit derivative (CDS, CLN, synthetic CDO etc) with the protection seller making an initial payment. Unfunded: where a capital relief trade is understood to have been structured without an initial payment being made under the credit derivative (CDS, CLN, synthetic CDO etc). True sale: a capital relief trade based on a cash securitisation structure rather than a synthetic securitisation structure.


  • Swedish regulations to limit risk transfer

    Finansinspektionen, Sweden's financial supervisory authority, recently released new securitisation g...

    News Analysis    20 July 2017
  • Synthetic expected loss approach outlined

    Scope has published research that offers a technical illustration of how the expected loss framework...

    News    18 July 2017
  • Final STS document welcomed

    The European Parliament's economic and monetary affairs committee yesterday approved, as expected, t...

    News Analysis    12 July 2017
  • Risk transfer round-up - 7 July

    The second quarter appears to have been a quiet period in the risk transfer market, with only two ca...

    News    7 July 2017
  • Risk transfer round-up - 30 June

    The EIF has recently signed guarantees with five banks in Romania under its SME initiative (SCI 12 M...

    News    30 June 2017
  • SCI Start the Week - 26 June

    A look at the major activity in structured finance over the past seven days

    PipelineA mix of new deals - both in terms of collateral type and jurisdiction -...

    News    26 June 2017
  • IFRS 9 to spur risk transfer trades

    Higher expected provisioning under IFRS 9 is expected to spur a slew of risk transfer issuance befor...

    News Analysis    23 June 2017
  • Risk transfer round-up - 23 June

    Sources refer to heightened activity in the capital relief trades market, with many deals awaiting f...

    News    23 June 2017
  • Regulatory boost for risk transfer trades

    Balance sheet synthetic securitisation volume is predicted to rise in the coming years, with greater...

    News Analysis    20 June 2017
  • Risk transfer round-up - 16 June

    One talking point this week was the EBA's announcement at IMN's Global ABS conference of its intenti...

    News    16 June 2017
  • STS could take a year, but optimism prevails

    The implementation of the STS securitisation framework is unlikely to be completed within a year, ac...

    News Analysis    16 June 2017
  • Spanish EFSI deal debuts

    The EIF has closed its second European Fund for Strategic Investments (EFSI) deal, providing BBVA wi...

    News    12 June 2017
  • STS strikes investor and issuer balance

    Further details have emerged over the STS securitisation agreement that was finalised this week (SCI...

    News Analysis    2 June 2017
  • Risk transfer round-up - 2 June

    Dynamic Credit is prepping another Dutch RMBS originated under the ELAN Woninghypotheken brand. Dubb...

    News    2 June 2017
  • MARF listing breaks new ground

    The Mercado Alternativo de Renta Fija (MARF) has admitted a new synthetic securitisation dubbed FT P...

    News    1 June 2017
  • Job swaps round-up - 19 May

    CDO manager transfers Dock Street Capital Management has replaced Vertical Capital as portfolio ad...

    Job Swaps    19 May 2017
  • Risk transfer round-up - 19 May

    Sources expect three true sale significant risk transfer trades to be issued by Italian banks this y...

    News    19 May 2017
  • STS discussions stumble on hierarchy

    The Strasbourg Trilogue discussions on simple, transparent and standardised (STS) securitisation hav...

    News Analysis    19 May 2017
  • Risk transfer round-up - 12 May

    Risk transfer activity has rebounded this week, with the EIF's landmark Spanish portfolio guarantee....

    News    12 May 2017
  • Landmark portfolio guarantee inked

    The EIF has agreed to guarantee 50% of a €5.52bn Spanish SME credit portfolio originated b...

    News Analysis    12 May 2017
  • Risk transfer round-up - 5 May

    Capital relief trade activity has been relatively subdued this week. However, sources report that th...

    News    5 May 2017