Latest news with #CRTs
Time of India
06-05-2025
- Business
- Time of India
US banks modest use of risk transfers is credit positive, Moody's says
5 5 Next Stay Playback speed 1x Normal Back 0.25x 0.5x 1x Normal 1.5x 2x 5 5 / Skip Ads by Live Events A very small proportion of U.S. banks have issued a complex product that enabled them to shed risk from loan portfolios and the relatively modest use of the products was a credit positive, Moody's Ratings said in a report after surveying 69 rated U.S. deals known as credit risk transfers , banks effectively buy insurance from hedge funds and other investors against the risk of losses from grew in popularity in 2022 as regulators proposed increases to capital requirements for large banks after the regional banking crisis and under the Basel III regulations that pushed banks to look for ways to improve their regulatory capitalization only 15 out of 69 U.S. banks surveyed by Moody's issued CRTs and their use was relatively modest, reflected in a median capital benefit of a 25 basis point increase in the Common Equity Tier 1 (CET1) ratio - which measures the quality of a bank's assets, the report said."More material increase of more than 1% would likely indicate an overreliance on CRTs and therefore be credit negative," it total outstanding CRT balances for these banks exceeded $15 billion, referencing more than $150 billion in assets, it said noting issuance volume correlated with the size of the bank, which was also a credit the 26 surveyed banks with assets of $100 billion or more, 11 (42%) have issued CRTs and of the 43 rated banks with assets less than $100 billion, only four (9%) have issued CRTs, it completed only a few transactions, reflected in a median of three transactions and backed by high quality performing assets. The most active CRT issuers tend to be the global investment and universal banks, it investors were also quite concentrated, with the largest investor holding around 40% of a bank's total CRT exposure and the top three investors holding around 80%. Most banks' CRTs had no more than 10 investors, the survey new CRT issuance in 2025 is likely to come from banks that have already engaged in such transactions and most of the survey respondents that had not already participated said they were unlikely to do so, said Moody's.
Economic Times
06-05-2025
- Business
- Economic Times
US banks modest use of risk transfers is credit positive, Moody's says
Moody's report (Representative Image) Synopsis Moody's Ratings reports that a small fraction of U.S. banks utilize credit risk transfers (CRTs) to offload loan portfolio risk. While these deals gained traction in 2022 due to regulatory changes, only 15 out of 69 surveyed banks issued CRTs, resulting in a modest median capital benefit. A very small proportion of U.S. banks have issued a complex product that enabled them to shed risk from loan portfolios and the relatively modest use of the products was a credit positive, Moody's Ratings said in a report after surveying 69 rated U.S. banks. ADVERTISEMENT In deals known as credit risk transfers, banks effectively buy insurance from hedge funds and other investors against the risk of losses from loans. They grew in popularity in 2022 as regulators proposed increases to capital requirements for large banks after the regional banking crisis and under the Basel III regulations that pushed banks to look for ways to improve their regulatory capitalization levels. Still only 15 out of 69 U.S. banks surveyed by Moody's issued CRTs and their use was relatively modest, reflected in a median capital benefit of a 25 basis point increase in the Common Equity Tier 1 (CET1) ratio - which measures the quality of a bank's assets, the report said. "More material increase of more than 1% would likely indicate an overreliance on CRTs and therefore be credit negative," it said. The total outstanding CRT balances for these banks exceeded $15 billion, referencing more than $150 billion in assets, it said noting issuance volume correlated with the size of the bank, which was also a credit positive. ADVERTISEMENT Of the 26 surveyed banks with assets of $100 billion or more, 11 (42%) have issued CRTs and of the 43 rated banks with assets less than $100 billion, only four (9%) have issued CRTs, it said. Banks completed only a few transactions, reflected in a median of three transactions and backed by high quality performing assets. The most active CRT issuers tend to be the global investment and universal banks, it said. ADVERTISEMENT CRT investors were also quite concentrated, with the largest investor holding around 40% of a bank's total CRT exposure and the top three investors holding around 80%. Most banks' CRTs had no more than 10 investors, the survey found. Most new CRT issuance in 2025 is likely to come from banks that have already engaged in such transactions and most of the survey respondents that had not already participated said they were unlikely to do so, said Moody's. ADVERTISEMENT (You can now subscribe to our Economic Times WhatsApp channel) (Catch all the US News, UK News, Canada News, International Breaking News Events, and Latest News Updates on The Economic Times.) Download The Economic Times News App to get Daily International News Updates. NEXT STORY
Yahoo
06-05-2025
- Business
- Yahoo
US banks modest use of risk transfers is credit positive, Moody's says
By Shankar Ramakrishnan (Reuters) -A very small proportion of U.S. banks have issued a complex product that enabled them to shed risk from loan portfolios and the relatively modest use of the products was a credit positive, Moody's Ratings said in a report after surveying 69 rated U.S. banks. In deals known as credit risk transfers, banks effectively buy insurance from hedge funds and other investors against the risk of losses from loans. They grew in popularity in 2022 as regulators proposed increases to capital requirements for large banks after the regional banking crisis and under the Basel III regulations that pushed banks to look for ways to improve their regulatory capitalization levels. Still only 15 out of 69 U.S. banks surveyed by Moody's issued CRTs and their use was relatively modest, reflected in a median capital benefit of a 25 basis point increase in the Common Equity Tier 1 (CET1) ratio - which measures the quality of a bank's assets, the report said. "More material increase of more than 1% would likely indicate an overreliance on CRTs and therefore be credit negative," it said. The total outstanding CRT balances for these banks exceeded $15 billion, referencing more than $150 billion in assets, it said noting issuance volume correlated with the size of the bank, which was also a credit positive. Of the 26 surveyed banks with assets of $100 billion or more, 11 (42%) have issued CRTs and of the 43 rated banks with assets less than $100 billion, only four (9%) have issued CRTs, it said. Banks completed only a few transactions, reflected in a median of three transactions and backed by high quality performing assets. The most active CRT issuers tend to be the global investment and universal banks, it said. CRT investors were also quite concentrated, with the largest investor holding around 40% of a bank's total CRT exposure and the top three investors holding around 80%. Most banks' CRTs had no more than 10 investors, the survey found. Most new CRT issuance in 2025 is likely to come from banks that have already engaged in such transactions and most of the survey respondents that had not already participated said they were unlikely to do so, said Moody's. (Reporting by Shankar Ramakrishnan; Editing by Lincoln Feast.)
Business Recorder
06-05-2025
- Business
- Business Recorder
US banks modest use of risk transfers is credit positive, Moody's says
A very small proportion of U.S. banks have issued a complex product that enabled them to shed risk from loan portfolios and the relatively modest use of the products was a credit positive, Moody's Ratings said in a report after surveying 69 rated U.S. banks. In deals known as credit risk transfers, banks effectively buy insurance from hedge funds and other investors against the risk of losses from loans. They grew in popularity in 2022 as regulators proposed increases to capital requirements for large banks after the regional banking crisis and under the Basel III regulations that pushed banks to look for ways to improve their regulatory capitalization levels. Still only 15 out of 69 U.S. banks surveyed by Moody's issued CRTs and their use was relatively modest, reflected in a median capital benefit of a 25 basis point increase in the Common Equity Tier 1 (CET1) ratio - which measures the quality of a bank's assets, the report said. 'More material increase of more than 1% would likely indicate an overreliance on CRTs and therefore be credit negative,' it said. The total outstanding CRT balances for these banks exceeded $15 billion, referencing more than $150 billion in assets, it said noting issuance volume correlated with the size of the bank, which was also a credit positive. Moody's upgrades Pakistan's banking outlook to positive Of the 26 surveyed banks with assets of $100 billion or more, 11 (42%) have issued CRTs and of the 43 rated banks with assets less than $100 billion, only four (9%) have issued CRTs, it said. Banks completed only a few transactions, reflected in a median of three transactions and backed by high quality performing assets. The most active CRT issuers tend to be the global investment and universal banks, it said. CRT investors were also quite concentrated, with the largest investor holding around 40% of a bank's total CRT exposure and the top three investors holding around 80%. Most banks' CRTs had no more than 10 investors, the survey found. Most new CRT issuance in 2025 is likely to come from banks that have already engaged in such transactions and most of the survey respondents that had not already participated said they were unlikely to do so, said Moody's.
