October 2020 – “Asset Based Finance 4.0 – Financing in Transition” is the motto of this year's True Sale International GmbH (TSI) securitization initiative conference. The Hamburg Commercial Bank has been one of its active supporters since 2004. Tilo Kraus, Area Manager of Global Sales & Syndicate, will also be placing great hopes on the subject of securitizations in future.
The Hamburg Commercial Bank has been part of the TSI initiative spanning across banks from the start. What are your common goals on the subject of securitization?
Tilo Kraus: The TSI was formed in 2004 via a bank initiative in Germany. Our common goal was, and continues to be: we want to promote the German securitization market. But today, the TSI themes extend far beyond the promotion of the German securitization market and cover wide areas of the asset-based finance market. The HCOB is a founder member and equal partner at TSI GmbH. Our marketing director Dr. Nicolas Blanchard actively represents the interests of the HCOB on the TSI advisory board. And Alexander Podolsky represents us from the Treasury. The shareholders or partners of TSI come from all areas of the German securitization and asset-based finance markets: including banks, consulting firms, service providers, law firms, rating agencies and associations. What they all have in common is competence and experience on the market with securitizations and asset-based finance as well as a mutual desire to develop these businesses further.
What exactly does TSI do?
Tilo Kraus: TSI represents the interests of the German securitization market and segments of the asset-based finance market linked to securitization vis-à-vis national and international decision-making bodies and other experts in their field. In so doing, TSI maintains close contact with national and European professional associations, supervisory bodies and central banks as well as legislative bodies and authorities. In particular we are following the current development in structural variants which are similar to securitization, the topic of sustainability, the STS securitization regulation and synthetic risk hedging. For us as HCOB, the close integration with the relevant participants on the market in the context of the current TSI conference in Berlin is important for exchanging ideas. However, it also allows us to provide information on our product approaches, such as our SmartFact platform.
What is the significance of securitizations on the capital market today?
Tilo Kraus: Securitizations have shown themselves to be reliable in Germany, and securitization has become an important link to the capital market for the German economy. Securitizations are increasingly being used in all areas – for example sales financing in the German car industry, financing of capital goods via leasing or working capital financing of German industry and trade. In the past, between 30 and 40 billion euros were securitized to leasing and trade receivables and credits.
Looking at the regulatory framework for securitizations – what has changed in the last ten years?
Tilo Kraus: When the securitization regulation came into force in 2018, to be applied to all new securities issued since January 2019, for the first time, a standardized framework, applicable across the EU and also across all sectors, had been created for the regulatory handling of securitizations. With this amendment to all of the securitization rules, the EU Commission, the EU Parliament and the European Council are taking account of the fact that securitizations are an important component of well-functioning financial markets. A robustly structured securitization is an important instrument for diversifying the financial sources and promotes a broader allocation of risks in the European financial system. Securitization thus contributes towards improving the efficiency of the financial system and making the conditions of the real economy more stable in the currently challenging financing environment. Incidentally, the new securitization rules do not just apply to banks, but to all relevant financial market segments such as funds or insurance, where references to the securitization regulation are found in the relevant rules. Ultimately, in terms of standardized European financial markets, it is important to have a harmonized scope of regulations.