Post by Office of the Superintendent of Financial Institutions Canada

Banks transferring credit risk to a counterparty isn’t new. What’s new is that activity has been trending in recent years. When it comes to synthetic risk transfer transactions, what really matters is the actual risk, not just how the deal is structured. 1️⃣ Is the risk genuinely transferred? 2️⃣ Can the structure hold up under stress? 3️⃣ Is the bank truly reducing risk, or just lowering capital on paper? These questions matter for the overall stability of the financial system. Learn more and access a summary of the Superintendent’s fireside chat at the National Bank Annual Conference 2026: https://lnkd.in/e_V-ZHDi   For those less familiar with synthetic risk transfers: They're structures banks use to shift some of the credit risk on a pool of loans to a private credit fund or another financial institution — while keeping the loans on their balance sheet. They are often used to manage exposures and free up capital.