HSBC, Standard Chartered weigh significant risk transfers as Asia-linked deals ramp up

HSBC is laying the groundwork for a significant risk transfer (SRT) linked to a portfolio of Asia-Pacific loans as it ramps up use of the hedging instrument. 

The bank is holding preliminary discussions with investors about a deal potentially tied to loans from markets including Hong Kong, Singapore, India and Australia, said people familiar with the matter.

The transaction may be completed later this year, the people said, asking not to be identified because the talks are private.

Separately, Standard Chartered, another Asia-focused lender, is considering a transaction tied to around US$2 billion of global corporate loans as part of its Chakra SRT programme, said people familiar with the matter.

The terms may change pending discussions with investors, they added. 

SRTs are becoming increasingly popular with banks as a way of managing default risk on their loan books, boosting solvency ratios and freeing up regulatory capital that can then be redeployed.

Investors like them because they currently offer coupons that regularly exceed 10 per cent. HSBC’s rivals, such as Barclays and Banco Santander, are among the most consistent issuers.

European and North American lenders dominate the market, but Asian loans are starting to feature more regularly in deals.

Singapore’s DBS said on Tuesday (Jun 30) that it had carried out its debut SRT, referencing a US$1 billion diversified portfolio of corporate loans.

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In 2025, Sumitomo Mitsui Banking Corporation’s Asia-Pacific arm completed a deal. Standard Chartered carried out an SRT linked to US$1.5 billion of trade finance loans, allowing it to claim capital relief for its Singapore subsidiary.

HSBC chief financial officer Pam Kaur told analysts on a call in March that the bank had started doing some SRTs in the UK and Asia, but was focused on making greater use of them.

“We have a lot of room to do more, compared to some other banks who may have done too much and have to scale back because of some regulatory factors,” she said.

Representatives for HSBC and Standard Chartered declined to comment.

Asia-Pacific loans were among assets hedged by BNP Paribas in a series of deals completed recently. Other European lenders that have finalised deals in recent weeks include Societe Generale, Raiffeisen Bank International and KBC. BLOOMBERG