In a keynote speech, Pedro Machado of European Central Bank Banking Supervision said the ECB’s latest data show rapid growth in significant risk transfer securitisations, especially synthetic transactions, but that related risks remain manageable overall for now at both bank and system level. Synthetic securitisation issuance by significant institutions reached EUR 258 billion in 2025, up 47 percent from EUR 175 billion in 2024, while the stock of underlying exposures in securitisations originated by significant institutions rose from EUR 223 billion at the end of 2022 to EUR 570 billion at the end of 2025. Machado said the ECB has not identified a material maturity concentration, acute counterparty exposure concentration or an immediate flowback vulnerability. Unfunded protection from counterparties other than governments and development banks accounts for 11 percent of outstanding protected tranches, and most of those tranches are collateralised. He nevertheless flagged concentrated investor segments, deeper links between banks and non-bank financial institutions, persistent data quality gaps, and cases where banks’ governance and risk management frameworks have not kept pace with issuance growth. He also reiterated a supervisory preference for simple, standardised securitisations over more complex structures and said that, under the fast-track process introduced in January 2026 for own-funds reductions and significant risk transfer applications, the ECB assessed the two transactions submitted in the first four months of 2026 in eight working days rather than several months, without changing prudential requirements. Looking ahead, the ECB intends to continue work on investor concentration, stress-testing capabilities and data quality, while preserving ex ante case-by-case assessment of significant risk transfer transactions as the core of its supervisory approach. Machado added that legislative changes still under discussion could support further market growth later in the year, making it important for supervisory oversight and banks’ risk management to evolve in parallel.
European Central Bank - Banking Supervision 2026-05-14
European Central Bank Banking Supervision says synthetic securitisation risks remain manageable as 2025 issuance reaches EUR 258 billion
The European Central Bank Banking Supervision reported rapid growth in significant risk transfer securitisations, especially synthetic deals, with issuance by significant institutions reaching EUR 258 billion in 2025, up 47 percent year-on-year, while related risks remain manageable. Pedro Machado flagged concerns over investor concentration, bank–non-bank linkages, data quality and governance, reiterated a preference for simple, standardised structures, and noted faster significant risk transfer assessments under the new fast-track process. He said the ECB will prioritise investor concentration, stress-testing and data quality, and that potential legislative changes could further expand the market, requiring supervisory and bank risk management practices to keep pace.