Dutch pension fund manager PGGM has entered into a €2.3 billion risk sharing transaction in Spain with Banco Santander, according to a statement.
The deal is akin to a synthetic securitisation, Mascha Canio, head of credit and insurance linked investments at PGGM, said in a statement.
The transaction relates to a portfolio of small- to medium-sized enterprise (SME) loans originated by the Spanish bank. The book consists of more than 6,000 loans to Santander’s clients in Spain.
PGGM has entered the agreement on behalf of its client, PFZW, and expects to achieve a stable and robust long-term return. The risk sharing transaction offers access to a portfolio of credit risk that helps the pension fund diversify its asset mix, PGGM said.
Pablo Roig, chief financial officer at Santander Spain, said: “This cooperation with PFZW assists us to manage our exposures in the SME sector and to recycle the freed-up capital in new lending to this strategically important client base in Spain.”
PGGM has invested in similar risk sharing transactions since 2006. To date, it has invested €5 billion in roughly €80 billion of loan portfolios worldwide.
Canio commented: “We really appreciate working together with banks that have established a good track record in SME lending. This collaboration shows how a Dutch pension fund can work together with banks to stimulate small and medium business investments in the European economy. We are very pleased to have closed our first Spanish SME risk sharing transaction with our long-term risk sharing partner Banco Santander.
“In light of the European Commission’s legislative proposal on securitisations – in which it proposes preferential regulatory treatment for simple, transparent and standardised securitisations – this is a transaction that supports the relevance of synthetic securitisations next to true sale securitisations,” said Canio.
PGGM is a cooperative Dutch pension fund service provider offering asset management, pension fund management and policy advice to its institutional clients. On 31 December 2015, PGGM had €182.6 billion in assets under management.