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.


  • Risk transfer reboot

    Large corporate SRTs prepped

    Capital relief trade issuance is set for a comeback in 2Q20 as a handful of banks are readying large...

    News Analysis    14 April 2020
  • Modelling delinquency deluge

    Mortgage market advisers and consultants are struggling to find any models that work for the current...

    “Our clients are modelling a range of scenarios but are preparing themselves for the worst...

    News    8 April 2020
  • EIF calls for guarantee applications

    Sector developments and company hires

    EIF calls for guarantee applications The European Commission has unlocked €1bn from the Eu...

    Market moves    8 April 2020
  • Stochastic modelling

    IFRS 9 challenges persist amid pandemic

    Supervisors have advised banks to embed the effects of government programmes, such as payment morato...

    News Analysis    8 April 2020
  • SCI Start the Week - 6 April

    A review of securitisation activity over the past seven days

    Last week's stories Breathing space? EU banks benefit from Basel 3 delay Capacity con...

    News    6 April 2020
  • ESG catalyst?

    Positive impact SRTs gaining traction

    Significant risk transfer is primarily associated with achieving favourable capital treatment. Howev...

    News Analysis    3 April 2020
  • Breathing space?

    EU banks benefit from Basel 3 delay

    The Basel Committee's decision last week to delay implementation of the final Basel 3 rules...

    News    2 April 2020
  • CECL delayed

    EU banks await IFRS 9 relief

    The US Fed, the FDIC and the OCC last week approved an extension of the new credit loss accounting s...

    News    31 March 2020
  • Capacity constraints

    Covid-19 not yet posing solvency issues

    Government and central bank actions have kept both the financial system and the real economy afloat...

    News Analysis    30 March 2020
  • SCI Start the Week - 30 March

    A review of securitisation activity over the past seven days

    Transaction of the week Northern Arc Capital and fintech platform CredAble have closed a trade fina...

    News    30 March 2020
  • Closing the gap

    Audentia Global investor relations head Sophia Vanco and chief of staff Nick Makin answer SCI's ques...

    Q: How and when did Audentia Global become involved in the capital relief trades market? NM: Aude...

    The Structured Credit Interview    26 March 2020
  • Call for TALF expansion

    Sector developments and company hires

    BlackRock hired The New York Fed has retained BlackRock Financial Markets Advisory as a third-party...

    Market moves    25 March 2020
  • CRT deals disclosed

    Intesa publishes capital management strategy

    Intesa Sanpaolo has released details of its capital management strategy, following the release of it...

    News    23 March 2020
  • SCI Start the Week - 23 March

    A review of securitisation activity over the past seven days

    SCI NPL Securitisation Awards 2020 - new deadline SCI NPL Securitisation Awards 2020 - new de...

    News    23 March 2020
  • Economically efficient

    Study supports reduction of PD estimates

    A new study undertaken by Open Source Investor Services (OSIS) suggests that capital relief trades a...

    News Analysis    20 March 2020
  • Credit event definitions

    UTP category brings less uniformity

    The EBA’s guidelines on default definitions have brought less uniformity to credit event d...

    News Analysis    20 March 2020
  • Close relationship

    CRT documentation should evidence intentions

    When structuring a capital relief trade, the documentation should evidence the intentions of the par...

    News    20 March 2020
  • Short-term volatility

    SRTs on hold, although 2H20 rebound expected

    Capital relief trade issuance has been postponed until the second half of the year due to the corona...

    News Analysis    19 March 2020
  • EIB mulls SME ABS purchase plan

    Sector developments and company hires

    Dealer credit facility launched The US Fed has established a Primary Dealer Credit Facility (PDCF)...

    Market moves    18 March 2020
  • Pandemic response

    DNB lowers bank buffers amid outbreak

    Dutch central bank DNB has lowered the capital buffers for Dutch banks and postponed the introductio...

    News    18 March 2020
  • SCI Start the Week - 16 March

    A review of securitisation activity over the past seven days

    SCI NPL Securitisation Awards 2020 As a result of COVID-19, the SCI NPL Securitisation semina...

    News    16 March 2020