A resurgence of synthetic collateralized loan obligations appears to be taking shape in Europe, as banks in the region seek regulatory capital relief.

Working on behalf of clients, big underwriters including Deutsche Bank, RBS and Societe Generale have contacted investors about a number of such deals in the past few weeks. In doing so, they've stirred to life a sector of the securitization industry that has seen little movement since the credit market crashed in mid-2007.

Take a current pitch from SocGen. The bank, in what one source characterized as more of a sample transaction than an actual offering, has been passing around marketing documents for a ?6.4 billion ($9.7 billion) securitization tied to a client's corporate loans.

Here's what's known about how the deal works: The issuer would designate ?6 billion of loans to companies in France and elsewhere in Western Europe to act as a reference portfolio, and would take out a guarantee from the securitization trust allowing it to shed the risk associated with those receivables. The resulting bond issue would consist of ?210 million of triple-B-rated mezzanine notes offered to investors, along with a ?6 billion super-senior class and a ?180 million equity slice that both would be retained.

The deal essentially places the securitization trust ahead of the issuer in absorbing losses on the reference portfolio, even though the issuer would get to keep pocketing payments on the underlying loans. In exchange, mezzanine buyers would receive an annual coupon of 800 bp over Euribor over the lives of their amortizing five-year investments.

SocGen's marketing documents are aimed at a range of investors in the U.S., Europe and elsewhere, including asset managers and pension funds.

Sources said SocGen has actually completed a few such transactions over the past year, mainly tied to clients' export-finance and infrastructure loans. Some deals with more traditional CLO structures have also been completed. But those now making the rounds represent the first significant flow of synthetic "balance-sheet" CLOs to hit the market in some time, and a number of industry participants said they expect to see the arrangements with increasing regularity in the months ahead.

The goal in each case is for the issuer to gain regulatory capital relief under the Bank for International Settlements' New Basel Capital Accord, or Basel 2. One source estimated that a risk-transfer mechanism like the one SocGen is proposing would permit an issuer to reduce its withholding requirements on the referenced assets by 90%.

Banks in Europe have been implementing the Basel 2 framework since the guidelines took effect last year, and have to officially adopt the system in 2010. U.S. banks have until 2012 to get on board with a separate version of the guidelines, with J.P. Morgan set to lead the pack by complying next year.

Basel 2 adds a layer to banks' withholding requirements by basing them on varying levels of risk. For example, an institution might reserve the equivalent of zero to 1.6% of the balance of a triple-A-rated asset, versus 8-12% for lower-rated holdings. Synthetic securitizations allow them to move some of the less-friendly receivables off their books. The loans underpinning SocGen's deal, for example, have an average grade of triple-B-minus.

The latest offerings come after European banks tried to shed risk by placing a new round of synthetic CLOs late last year. But few of the issues got done, in large part because regulators weren't keen on the concept. Now, some key changes appear to have won over government officials. For example, the issuers are no longer trying to sell their deals' equity. That means the institutions still carry some risk, demonstrating that they maintain an interest in the performance of the underlying assets.

Investors have also shown a willingness to buy into the new deals. "I truly believe these trades will be getting done," one banker said.