The Asia-Pacific division of Sumitomo Mitsui Banking Corporation ( SMBC ) has closed its first synthetic risk transfer ( SRT ) transaction, referencing a US$3.2 billion portfolio of Australian and Asian project finance loans.

The transaction, which closed in September and October 2025, was executed with three strategic sponsor partners – Blackstone, Stonepeak, and Clifford Capital.

Essentially, an SRT allows a bank to transfer credit risk from loan portfolios to investors without selling the loans. It uses derivatives ( e.g., credit default swaps ) or credit-linked notes to mimic securitization, thereby freeing up regulatory capital, optimizing balance sheets, and supporting new lending. On the other hand, investors earn premiums for taking on potential losses on specific tranches of risk.

In line with SMBC’s objective to drive higher return on equity and recycle capital for redeployment, the SRT enables the bank to optimize regulatory capital while continuing to support needs across the region.

The transaction was structured as a tailored solution that aligns SMBC’s capital and relationship objectives with investors’ portfolio and return requirements, further deepening the bank’s relationships with leading global and regional sponsors active in project finance.

“This inaugural SRT is a strategic step to further enable our client-centric growth in the region while optimizing our capital returns,” says Katsufumi Uchida, head SMBC’s Asia-Pacific division.

“Through this investment, we have the opportunity to provide our investors with exposure to quality, diversified infrastructure and project finance loans in the Asia-Pacific region,” says Stonepeak partner Andrew Robertson. “APAC infrastructure credit is a key strategic focus area for our firm, and we see partnerships with banks through innovative structures as an attractive avenue for growth.”

The latest transaction follows SMBC’s inaugural SRT trade completed by its Americas division in April 2025, which, the bank says, underscores its commitment to developing capital-efficient solutions across its global franchise.