ECB Tells Banks to Identify Leverage Providers on SRT Deals (2)

The European Central Bank is probing the use of leverage underpinning banks’ fast-growing significant risk transfer market, according to people familiar with the matter.

The ECB is seeking details of banks that lend to buyers of SRTs, said the people, who asked not to be identified because the discussions are private. The request is part of efforts by the ECB to understand who is ultimately holding the risk of the instruments.

An ECB spokesman declined to comment.

Banks have expanded their use of SRTs fivefold since 2016 to gain better regulatory treatment by offloading loan risks. Leverage, a form ...