Goldman Sachs Group Inc. is pursuing a significant risk transfer tied to about $5 billion of corporate loans, according to a Bloomberg report citing people familiar with the matter. The move marks another step by the Wall Street firm to manage balance sheet exposure and free up regulatory capital for future growth.
The size of the transaction, known as a significant risk transfer or SRT, represents roughly 10% of the reference portfolio, the sources said, asking not to be identified as the details remain private. The deal will be issued under Goldman’s Absolute program, Bloomberg reported. A company spokesperson declined to comment on the matter.
SRTs are complex financial instruments that allow banks to insure loans against default by selling credit-linked notes to investors such as pension funds, sovereign wealth funds, and hedge funds. These transactions enable lenders to transfer portions of their credit exposure while maintaining client relationships, boosting solvency ratios, and freeing up capital that would otherwise be locked under regulatory requirements. The additional flexibility can be used for new lending, acquisitions, or returning capital to shareholders.
Earlier this year, Goldman Sachs’ board approved a multi-year share repurchase program of up to $40 billion and announced a 33% increase in its quarterly dividend, underscoring its confidence in future earnings capacity. The bank’s latest risk transfer deal may further support its capital management goals and enhance its ability to deploy funds in higher-yielding opportunities.
The broader SRT market continues to expand as global lenders turn to synthetic structures to manage risk. Bloomberg Intelligence projects the global SRT market to grow by an average of 11% annually over the next two years. Other major financial institutions, including UBS Group AG, Banco Santander SA, and ING Groep NV, are reportedly exploring similar transactions as regulatory pressure and capital efficiency considerations drive the evolution of credit risk management across the banking sector.
