WSJ: Interest payments stopped as homeowners defaulted on loans

WSJ: Interest payments stopped as homeowners defaulted on loans

Commerzbank AG is planning to sell a substantial risk transfer (SRT) tied to a €2 billion ($2.4 billion) portfolio of corporate loans, according to sources familiar with the matter. This move is part of the German lender's strategy to bolster its capitalization and fend off potential takeover bids, notably from UniCredit SpA. The SRT, valued at around 6.9% of the reference portfolio or approximately €140 million, is expected to help Commerzbank reduce risk-weighted assets [1].

Commerzbank's Chief Executive Officer, Bettina Orlopp, is spearheading this initiative to maintain the bank's independence. The bank has been using SRTs for some time, but these transactions are now part of a broader plan to unlock more capital. Commerzbank's corporate clients unit anticipates that SRTs will help reduce risk-weighted assets by €10 billion by 2028 [1].

UniCredit, under the leadership of CEO Andrea Orcel, has been pushing for a deal that would create a European banking champion. In September, UniCredit increased its holding in Commerzbank, following a purchase from the German government. Orcel has renewed his push for a merger by sending a letter to top German officials, including Chancellor Friedrich Merz [1].

The global sales of SRTs are projected to grow by 11% on average over the next two years, according to a recent Bloomberg Intelligence survey. Other banks, such as Aareal Bank AG, Erste Group Bank AG, Standard Chartered Plc, and ING Groep NV, are also discussing or finalizing such deals [1].

References:
[1] https://www.bloomberg.com/news/articles/2025-07-04/commerzbank-plans-to-sell-srt-tied-to-2-billion-of-loans