b'Flywheel EffectAddressing SyntheticRisk TransfersAround the GlobeMayer Brown has helped clients design andWe also represent bank issuers in risk execute synthetic risk transfers for over 20transfertrades.WerepresentedTruist years. We were the first law firm to obtainBank in the issuance and offering of $580 regulatoryapprovalforadirectcred- million of fixed-rate subordinated notes and it-linked note structure that used a hypo- certificates, backed by a pool of fixed rate thetical financial guarantee. Today, we areretail installment sale contracts used to the sole firm in the U.S. market that activelyfinance the purchase of new and used cars represents both banks and investors in equaland light trucks. This included represent-measure.ing Truist Financial Inc. and Truists state We invest time with clients, both newnon-member bank subsidiary, Truist Bank, and longstanding, collaborating on deals,in connection with obtaining relief under the some of which never move past the termFederal Reserves Regulation Q, which sets sheet or bidding stage. Our commitment isminimum capital requirements and capi-partially attributable to structured financetal adequacy standards for banking orga-andcapitalmarketspractices,butalsonization in the United States. Specifically, reflects our dedicated regulatory experts,Truist received authorization to treat its who are encouraged to identify and developcredit-linked notes transaction as a syn-unique opportunities. By investing in ourthetic securitization for purposes of calcu-clients in this way, we have earned a repu- lating Truists risk-weighted assets under tation for being the first call for new ideas.the capital rule. For example, we represented a largeThe transaction involved the transfer U.S. private equity firm in what is believedof a portion of the credit risk of the under-to be the first synthetic risk transfer bylying exposures to the noteholders under a Japanese bank, and the first syntheticwhich those holders absorb credit losses. risk transfer referencing loans extendedThe amount of cash that Truist Bank owes to business development companies. Weto the noteholders depends on the credit per-represented the firm from the preliminaryformance of the pool of reference assets. In bid stage through the execution of the deal.addition, Truist Bank received the value of In another transaction, we representedthe purchased credit protection at issuance a U.S. private equity firm in what is believedin the form of cash proceeds. Thus, the credit to be the first synthetic risk transfer by aprotection is pre-funded and, as a result, German bank on U.S. real estate loans. ThisTruist Bank does not take the credit risk of deal was even more notable for being the pri- the protection providers.vate equity firms inaugural effort with this structure and this asset class. Our ability to act in every time zone and every asset class for every type of client is unmatched.17'