Skip to navigationSkip to main contentSkip to right columnADVERTISEMENTJean-Marc PoilpréWed, July 15, 2026 at 4:34 PM GMT+2 11 min readEuropean banks are increasingly deploying synthetic risk transfer (SRT) transactions to manage private credit exposures, using bespoke transactions to free up capital, reduce concentrations and support continued lending.Key findings:Banks in Europe are using SRTs to manage private credit exposures across infrastructure debt, subscription lines and NAV facilities.Exposures to private credit and private equity funds — particularly fund-finance structures — are viewed by investors as high quality, and trade at tight spreads.Capital relief remains the primary driver as private credit loans attract high risk weights, creating strong SRT incentives.Heightened regulatory scrutiny around financing provided to SRT investors and concerns over back leverage have prompted some banks to reduce the availability of repo funding."Banks have been active in the direct lending space in the past few years, sometimes with the intention to write large tickets that can push them above their internal borrower limits," says Alan Shaffran, senior portfolio manager and partner at Magnetar. "This creates an incentive to find partners to share that risk."Monsur Hussain, head of markets research at Fitch Ratings, notes that European banks are facing "increasingly pointed regulatory scrutiny over their private credit exposures," while internal risk teams are looking to actively manage these positions, adding that in this context, SRT transactions "can be likened to a scalpel, allowing banks to target exposures with precision — whether at the level of individual obligors, sectors or geographies."Broad scopePrivate-credit SRTs span a broad range of assets — from infrastructure loans financing renewable energy projects, data centres and project finance, to shipping loans — while subscription lines and NAV lending remain among the market's largest segments."What we are seeing are SRT-like transactions aimed at optimising bank balance sheets, where direct-lending-type loans or club-deal loans increasingly sit alongside broadly-syndicated leveraged loans," Shaffran notes.Investors note that the scope of private-credit-related SRTs goes well beyond direct lending portfolios.The SRT market has been used to distribute both direct private-credit exposures — such as highly leveraged loans backing LBOs — and exposure to private credit and private equity funds or investment structures such as BDCs, says Matthew Moniot, co-head of credit risk sharing at Man Group. In contrast to high leverage LBO loans, fund-level exposures are considered to be of a very high quality, and as a result they trade at extremely tight spreads, Moniot notes.Terms and Privacy PolicyEU DSA contactPrivacy & Cookie SettingsMore Info