ECB Official Warns Banks Against Overuse of SRTs Amid 85% Surge

A top regulator warned against over-reliance on complex debt transactions as European banks boost their use of synthetic risk transfers to free up capital.

The European Central Bank is “mindful that banks should not rely excessively on securitizations for their capital planning,” said Pedro Machado, an official at the ECB’s oversight arm. He spoke at a conference organized by S&P Global Ratings in Frankfurt.

Machado, who is a member of the ECB’s Supervisory Board, also addressed proposals for changes to the regulatory framework to promote securitization, emphasizing that structures should be simple.

The ECB judges whether the transactions actually transfer ...