Foreign banks capitalise on CLOs

The sale of balance-sheet collateralised loan obligations for regulatory and economic capital relief is back on the agenda in Asia, with international houses keen to hedge regional loan exposures. But local banks seem unwilling to follow suit, finds Alice Hales

The use of securitisation by banks, whether conventionally or synthetically, to transfer risk and gain capital relief on loan portfolios is not a new phenomenon in Asia. But while such deals form a key part of the risk management strategies of Japanese banks, their counterparts in the rest of the region have been slow to follow suit. That is not to say there have been no such deals in Asia ex-Japan, but they remain a rarity. And activity has been driven by international banks rather than