European banks are increasingly deploying synthetic risk transfer transactions to manage private credit exposures, using bespoke deals to free up capital, reduce concentrations and support continued lending. The International Association of Credit Portfolio Managers reports that in 2025 participating banks securitized €378 billion of loans and protected €30 billion of junior tranches, increases of 35% and 21% respectively over 2024. BNP Paribas completed its first synthetic securitisation referencing $1.25 billion of RCF exposures to US Business Development Companies in December last year, while BBVA was expected to close an SRT transaction reducing risk on AI infrastructure loans in late June. Regulators have raised concerns about interconnectedness, with an ECB working paper estimating that 26% of SRT funding may ultimately be sourced from bank credit, though practitioners argue repo financing remains a small fraction of the market and same-bank round-tripping is not occurring. Investor appetite for fund-finance exposures remains strong, with assets referencing fund vehicles trading at extremely thin spreads despite limited transparency into underlying exposures.
BNP Paribas SABNP Paribas completed its first synthetic securitisation referencing $1.25 billion of RCF exposures, freeing up capital.
Banco Bilbao Vizcaya Argentaria S.ABBVA expected to close an SRT transaction reducing risk on AI infrastructure loans, freeing up capital.