BBVA completes two significant risk transfers totaling €3.5 billion
This week, BBVA completed two significant risk transfers (SRTs) with a combined value of €3.5 billion. BBVA also reached an agreement to sell a €314 million portfolio of restructured mortgages. These transactions allow the Group to unblock regulatory capital, as part of its strategy to optimize capital allocation.
The first of the two transactions was a synthetic securitization, BBVA Vela Consumer 2025-1, involving €2.5 billion of consumer loans.
The second, Galea 1, was a synthetic securitization of project finance loans originated by BBVA Corporate & Investment Banking(CIB), totaling €1 billion.
In addition, BBVA reached an agreement to sell a €314 million portfolio of restructured mortgages or ‘re-performing loans secured’. The portfolio contains real estate backed mortgages that were non-performing in the past and are currently up to date on payments. The U.S.-based private fund manager One William Street Capital Management L.P. purchased the portfolio.
These transactions join the other non-synthetic SRT that took place at the end of May, totaling €2.35 billion, also involving unsecured consumer loans.
As part of its strategic priority to optimize capital and value creation, BBVA is expanding its use of structured tools designed to enhance the efficiency of capital consumption, with a focus on securitization transactions and significant risk transfers in particular. These transitions combine illiquid assets, such as mortgages or consumer loans, to create tradable securities that are sold to investors through vehicles created for this purpose. They allow the bank to actively manage credit risk by transferring exposure to these vehicles. Provided that these structures meet SRT regulatory criteria, they allow for effective reduction of risk-weighted assets, and free up regulatory capital.