Critics warn against softening risk transfer rules for insurers
EU proposal to cut capital for unfunded protection of bank loan books would create systemic risk, investors say
Early last month, the European Commission opened a consultation on the EU’s securitisation rules. Amid the proposals, one controversial idea being mooted is the extension of the so-called STS label to the unfunded protection of bank loan portfolios by insurers – a type of synthetic risk transfer (SRT).
STS designation – which applies to securitisation deals that are deemed simple transparent and
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