Banks Get Picky on Asset-Based Loans as Tricolor, MFS Hit Market

European banks are being more selective on asset-backed lending, as collapses including Tricolor Holdings and Market Financial Solutions Ltd. have made firms more cautious of the sector.

BNP Paribas SA, Deutsche Bank AG and Banco Santander SA are among banks that are being more particular about which deals they participate in, according to people with knowledge of the matter. It’s become more difficult to get deals accepted through risk committees, especially for loans to smaller borrowers, said the people, who asked not to be identified discussing private information.

Companies that tap asset-backed loans are often specialty lenders or firms ...