PGGM and Alecta Sign €8 Billion Credit Risk Sharing Agreement with BNP Paribas | New
PGGM and Alecta have signed a credit risk sharing agreement with BNP Paribas on an 8 billion euro portfolio of European, American and Asia-Pacific corporate loans.
The transaction follows a similar but much smaller agreement with BBVA on project finance concluded last month.
The new transaction is the tenth co-investment in credit risk sharing by the Dutch and Swedish pension asset managers since they began collaborating on this in May 2020.
As part of the agreement, Alecta takes a 30% stake in all new credit risk sharing transactions initiated by PGGM.
The agreement is the first to be based on the EU’s new set of criteria for Simple, Transparent and Standardized Transactions (STS). PGGM hailed this as “an important milestone”.
EU STS standards, which are not yet mandatory, relate to the minimum amount of “skin in the game” that loan originators are required to keep.
The EU sets it at 5%, but for PGGM it is 20%. In addition, banks are required to offer homogeneous loan portfolios in order to avoid situations such as those that preceded the financial crash of 2008 when toxic securitized loan packages caused the collapse of the financial system.
A combination of project finance and corporate lending would, for example, not meet the new standards.
Angélique Pieterse, Senior Director at PGGM, said: “Completing our first STS-eligible risk-sharing transaction with BNP Paribas is very special, given that the two institutions have together entered into the first-ever dialogue on STS for synthetic securitization. with the EBA in 2015. Today, the circle is complete by concluding this transaction, and we hope that there will be many more to follow.