To support growth, competitiveness and the EU's strategic priorities in an increasingly contested geopolitical environment, Europe needs a banking sector that is globally competitive, resilient and able to finance the real economy. This, in turn, depends on banks having the capacity to provide businesses with the funding they need to invest, innovate and grow.
At a time when Europe faces substantial investment needs in areas such as defence, energy transition, digital infrastructure and industrial competitiveness, ensuring that banks can efficiently deploy capital and continue extending credit to the real economy has become increasingly important.
Against this backdrop, Significant Risk Transfer (SRT) transactions have become an increasingly important feature of the European banking landscape. Demand has grown steadily as banks seek efficient ways to manage credit risk, optimise capital and support their businesses in an increasingly competitive and capital-intensive global market.
This growth reflects a broader recognition that SRT is more than a mechanism for generating regulatory capital relief. Rigorously regulated and supervised, it is a valuable risk management tool that can strengthen banks’ resilience, improve capital efficiency and give them greater flexibility to respond to changing economic and market conditions.
A proven and resilient framework
The strength of SRT rests on the resilience of the European securitisation market. European securitisations have demonstrated strong performance through multiple periods of economic stress, including the COVID-19 pandemic, the energy crisis and the recent period of elevated interest rates.
Today's market operates within a robust regulatory framework characterised by strict underwriting standards, risk retention requirements, extensive transparency and close supervisory oversight. Banks must demonstrate that meaningful risk transfer has occurred before capital relief is recognised.
This matters because competitiveness depends on confidence. SRT can only support efficient capital allocation if risk is transferred prudently, transparently and within a well-supervised framework.
Looking beyond lending versus dividends
Recent discussion has focused on whether capital released through SRT supports additional lending or increased shareholder distributions.
Reviewing SRT solely through a "lending versus dividends" lens overlooks its broader contribution to the competitiveness and resilience of Europe's banking sector.
This is particularly relevant in Europe, where businesses continue to rely heavily on bank financing and banks remain central to funding investment, growth and innovation. Preserving the capacity of banks to support the economy is therefore not simply a banking issue, but a competitiveness issue.
Banks' ability to support the economy depends not only on balance sheet capacity, but also on profitability, resilience and access to capital. By helping banks manage risk and optimise capital, SRT strengthens all three.
A stronger capital position allows banks to support customers through economic cycles, expand their capacity to lend and provide financing at more competitive rates, while continuing to invest in technology and innovation and maintaining the confidence of investor. These outcomes are not alternatives to supporting the real economy. They are often prerequisites for doing so effectively.
For businesses, this can mean greater access to financing and better pricing, helping them invest, innovate and grow.
Supporting a stronger European banking sector
Healthy and competitive banks create value across the wider economy. Customers benefit from resilient institutions that can lend, invest and innovate. Investors benefit from sustainable returns. Regulators benefit from a banking sector that is better able to absorb shocks and maintain financial stability.
SRT contributes to these outcomes by enabling banks to manage risk more efficiently while maintaining strong capital positions.
In a globally competitive market, efficient risk and capital management tools are an important component of maintaining banks’ competitiveness. Well-functioning SRT markets help ensure that European banks can continue supporting clients while remaining resilient and attractive to investors.
