ECB Finds Synthetic Securitisation Falls Short on Corporate Lending

The European Central Bank (ECB) has concluded that synthetic securitisation provides only limited support for corporate lending in Europe. The instrument allows banks to keep loans on their balance sheets while transferring the risk of borrowers' default to investors.

In 2018-2025, banks that used securitisation increased corporate lending by an average of about 5%, compared to a 1% increase for those without such transactions.

However, after accounting for bank size, capital levels, and macroeconomic conditions, the effect proved significantly smaller: a 1% increase in synthetic securitisation issuance was associated with only a 0.02% rise in corporate lending.

The ECB considers this result too small to have a noticeable economic impact, given Europe's annual investment gap of €750 billion to €800 billion identified in the Draghi report.