UniCredit's Czech and Slovakian unit shifts risk on 1.7 bln euros in loans
MILAN, Nov 28 (Reuters) -UniCredit Bank Czech Republic and Slovakia, the Italian bank's subsidiary for the two central European countries, on Thursday said it had signed a deal with a Dutch pension fund to offload risks on 1.7 billion euros ($1.8 billion) in corporate loans.
Such transactions are known as "significant risk transfer" deals (SRTs) and have been increasingly used by banks to free up capital by selling risks relating to loans to specialised investors, as capital holding requirements tightened.
The assets remain on the banks' balance sheet but the risk is transferred through a "synthetic" securitisation deal. Banks pay fees in return, while investors shoulder the risk of unexpected losses on the loan portfolio.
"The size of the transaction, the innovative structure and the resulting capital relief benefits, achieved both at group and local level, confirm UniCredit's strategy to increasingly use SRT," UniCredit Bank Czech Republic and Slovakia said.
UniCredit said it aimed to expand the use of SRT deals to new asset classes and other subsidiaries in central and eastern Europe.
In the latest deal, dubbed "Project ARTS Morava", the assets securitised are corporate loans to clients in both Czech Republic and Slovakia.
The buyer is Dutch pension investor PGGM, on behalf of its client PFZW, the Dutch pension fund for the healthcare sector, UniCredit said.
Given these deals aim to shield banks from unexpected losses, the buyer bought the so-called second loss tranche, while the lender retained the first loss and senior tranches.
UniCredit Bank GmbH, the group's German unit, acted as sole arranger and placement agent.
($1 = 0.9481 euros)
Reporting by Valentina Za; editing by David Evans
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