Such moves allow banks to manage default risk on loan books, boost solvency ratios, free up regulatory capital<\/p>\n
Published Fri, Jul 3, 2026 \u00b7 07:11 PM<\/p>\n
HSBC is laying the groundwork for a significant risk transfer (SRT) linked to a portfolio of Asia-Pacific loans as it ramps up use of the hedging instrument.\u00a0<\/p>\n
The bank is holding preliminary discussions with investors about a deal potentially tied to loans from markets including Hong Kong, Singapore, India and Australia, said people familiar with the matter.<\/p>\n
The transaction may be completed later this year, the people said, asking not to be identified because the talks are private.<\/p>\n
Separately, Standard Chartered, another Asia-focused lender, is considering a transaction tied to around US$2 billion of global corporate loans as part of its Chakra SRT programme, said people familiar with the matter.<\/p>\n
The terms may change pending discussions with investors, they added.\u00a0<\/p>\n
SRTs are becoming increasingly popular<\/a> with banks as a way of managing default risk on their loan books, boosting solvency ratios and freeing up regulatory capital that can then be redeployed.<\/p>\n Investors like them because they currently offer coupons that regularly exceed 10 per cent. HSBC\u2019s rivals, such as Barclays and Banco Santander, are among the most consistent issuers.<\/p>\n European and North American lenders dominate the market, but Asian loans are starting to feature more regularly in deals.<\/p>\n Singapore\u2019s DBS said on Tuesday (Jun 30) that it had carried out its debut SRT<\/a>, referencing a US$1 billion diversified portfolio of corporate loans.<\/p>\n In 2025, Sumitomo Mitsui Banking Corporation\u2019s Asia-Pacific arm completed a deal. Standard Chartered carried out an SRT linked to US$1.5 billion of trade finance loans, allowing it to claim capital relief for its Singapore subsidiary.<\/p>\n