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Global Financial Markets

Nov 7, 2019

Capital Relief Trades (CRTs) - often referred to as synthetic securitizations - are used by banks to transfer risk on reference pools of assets to non-bank investors, reduce the risk weight of assets held by these banks and improve capital ratios. Historically, the CRT market has been dominated by issuers in the United Kingdom and other European jurisdictions, and, while the United States has lagged behind Europe in CRT issuance, there are reasons to believe this trend will change in the coming years. Mayer Brown partners Carol Hitselberger, Julie Gillespie and Ed Parker discuss why US banks are interested in CRT, the operational requirements for synthetic securitizations under the US capital rules and structuring considerations important to these transactions.