Dutch pension fund puts on reg cap trade with Rabobank

Wednesday, March 19, 2014

Dutch bank unloads corporate loan risk onto domestic pension fund. 

TAGS: Financials

Comment by: Anonymous. Posted 10 years ago [2014-03-24 18:19:11]

Anon, Reg cap trade is indeed a bit fo a tainted defintion of the trade. A risk Transfer Trade is probably more appropiate. Interestingly, more and more institutions are using these techniques to mitigate risk form their balancesheet. If done correctly (so not like some of the old reg cap trades), this tool could be very effective in managing the portfolio risk

Comment by: Anonymous. Posted 10 years ago [2014-03-19 23:00:45]

Without knowing details, this transaction strikes me as perfectly reasonable. If Rabo is effectively participating a pool of loans, then the bank is laying off risk while maintaining borrower relationships. Question: Have I fallen behind on the jargon? In the past, a term like "reg cap trade" would mean "trade that reduces regulatory capital without significant reduction in true risk ('economic capital')."

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