In partnership with DealCatalyst, and hosted by 9fin’s Celeste Tamers, our latest panel discussion explored why significant risk transfers (SRTs) are becoming a strategic balance sheet tool for North American regional banks.

We’ve highlighted the key takeaways below, or you can watch the full session here instead.

SRTs: from defensive to offensive play

The US SRT market has undergone a fundamental shift. As Bank of America's David Sklar noted: “The primary motivation for banks to do these trades has changed: 2023 capital relief. 2024 proof of concept. 2025 capital efficiency.”

Banks now see SRTs not as pre-emptive measures but as offensive tools to maximize return on capital and equity. Darren King from Merchants Capital explained that SRTs are “very much an offensive arrow in the quiver of banks, as opposed to a defensive one where you're short on capital."

For regional banks, that means using SRTs to manage concentrations, preserve balance sheet control, and sustain client relationships while continuing to innovate and optimize capital usage.

Click here to explore how US banks are using SRTs as risk tools amid Basel Endgame uncertainty.

Executing deals despite regulatory uncertainty

Though the US regulatory environment has been plagued with uncertainty, it has not been impossible to navigate. Clifford Chance’s Gareth Old noted: “We know what the current rules are and you can execute transactions under them…at least for a shorter duration transaction.” The hope is that regulatory changes will make it easier to issue SRTs, but even in the current state, “deals are getting done.”

The US regulatory matrix means that regional banks look for solutions beyond just capital relief and to target CRE concentration. EJF Capital's Liz Mazer noted this is “where conversations have managed to take hold with a number of banking institutions.” The multifamily space, in particular, has drawn attention as a “CRE-bucketed asset” where banks can both manage regulatory limits and achieve capital efficiency through different types of securitization.

Investor requirements: specialization and relationships

Regional banks’ specialized lending models demand equally specialized investors. As Darren King explained: “What we want to see from investors is expertise in our asset classes.”

“You kind of have to pick your poison, as an investors, in terms of what asset class you like,” added Cheyne Capital’s Frank Benhamou.

That expertise goes hand in hand with relationship-building and taking a holistic approach to the regional bank’s needs. Liz Mazer noted: “To succeed, you need to be agile and really understand what a bank is looking to do with their balance sheet.”

Infrastructure and execution challenges

SRTs are complex transactions that require significant internal build-out. As Darren King noted: “It does touch a lot of different points in your bank,” spanning corporate finance, accounting, servicing, and relationship management.

Scale is also a gating factor. With typical portfolios needing $500–700m to make a trade viable, SRT activity naturally concentrates among larger regional banks rather than smaller community lenders.

A market still evolving

Despite more programmatic issuance, the market retains a bespoke, sometimes improvized character. As David Sklar joked: “Every SRT trade is either a science project or a fire drill, there’s nothing in between.”

Still, panelists expect further evolution toward standardization and potential rating agency involvement — echoing the path taken by the GSE CRT market and pointing toward broader accessibility.

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