Extracting Investor Value From Banks’ Core Loan Portfolios
Overview
In his most recently published article, Olivier Renault provides an informative introduction to risk sharing transactions (SRT’s), in which the motivations behind these transactions and their structures are revealed, and a clear outline of their growing market created.
Olivier Renault describes how capital and risk pressures have left banks with no other option other than to reduce their exposure to middle market leveraged lending and other highly capital-intensive business. For some asset classes these institutions still wish to maintain their practise of lending, despite being constrained by capital and ever increasing troublesome regulatory requirements.
Despite existing for over two decades, SRT’s have experienced considerable growth, particularly over the past five years due to their adoption by banks and coinciding regulatory developments resulting in them becoming an important instrument in the lending process.
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