Santander’s Consumer Unit Has Big Plans for Synthetic Risk ABS

Santander Consumer Finance has ambitious plans in the market for synthetic risk transfers, which are capturing the attention of Wall Street as a way to shore up banks against stiffer capital rules.

The unit of Banco Santander SA expects to go ahead with 15 such relief-seeking deals this year, up from 11 in 2023, a spokesperson for the Spanish lender said by email. The firm also plans to issue four cash securitizations in 2024, down from five last year.

By using synthetic risk transfers, banks are able to shift the risk of loan losses through a derivative or credit-linked note, ...