Core Insights - UBS is exploring a significant risk transfer strategy through structured tools linked to its loan portfolio to alleviate stringent capital regulatory pressures [1] - The bank is considering a structured risk transfer (SRT) linked to a $1 billion loan portfolio, with the SRT size potentially reaching approximately 12.5% of the reference portfolio [1] - UBS is also advancing another SRT transaction linked to a CHF 20 billion (approximately $25 billion) loan portfolio, intending to issue related notes via the J-Elvetia platform [1] - The SRT mechanism allows banks to transfer loan default risks to pension funds, sovereign wealth funds, and hedge funds, thereby freeing up capital to meet regulatory requirements [1] - The backdrop for the SRT plans is a banking reform pushed by the Swiss government, which may increase UBS's existing capital requirements by up to $26 billion to prevent crises similar to that of Credit Suisse [1] Industry Trends - The global SRT market is expected to grow at an average annual rate of 11% over the next two years, with European banks being the main driving force [2] - Institutions such as Santander, Banco BPM, and Deutsche Pfandbriefbank are discussing or advancing related transactions [2]