Eleven years after the outbreak of the subprime crisis and ten years after the collapse of Lehman, the TSI Congress in Berlin celebrated its twelfth anniversary. With over 650 participants, it was the largest congress in its history.
The following topics dominated the debate:
The congress opened with the topic "The capital markets between fear and hope: Central bank policy, protectionism, geopolitics and the future of the euro and Europe" moderated by Jens Schmidt-Bürgel, head of Moodys Germany, Hans W. Reich, Chairman of the Supervisory Board, Citigroup Global Markets Deutschland AG, Prof Dr Gunther Schnabl, Institute for Economic Policy University Leipzig, Werner Steinmüller, Member of the Board of Deutsche Bank AG, responsible for the Bank's entire Asian business, and Michael Theurer, FDP, Member of the German Bundestag and until the end of 2017 Member of the European Parliament, discussed with him.
The panel started with a review: How did the panel members experience the collapse of Lehman Brothers exactly ten years ago? Hans Reich, who at that time was chairman of the supervisory board of a large mortgage bank, and Werner Steinmülller, who at that time was responsible for Deutsche Bank's transaction banking, vividly described how the money and financial markets were threatening to dry up overnight and how the financial system could only be saved by courageous measures taken by governments and central banks.
In summary, one can conclude that although the regulations drastically restrict the banks' scope for activity, in combination with central bank policy they have contributed to the high liquidity flowing past the banking system into the markets.
They all assessed central bank policy very ambivalently. The central banks, as Gunther Schnabl explained, stopped the crisis at short notice, but at the price of laying the foundation for a later crisis, as they did in 2000 after the dotcom crisis. According to Schnabl, new bubbles are emerging, this time not in the banking sector, but in the corporate sector due to the "zombie-fication" of large parts of the corporate landscape, especially in Southern Europe. Market exits would be avoided at the cost of falling productivity and stagnating structural change.
All of them agreed that the asset inflation in the equity and real estate markets associated with central bank policy was a threat to economic and political stability. According to Hans W. Reich, the structural change in the financial system, which goes hand in hand with the new regulations and monetary policy, has not yet been properly understood and grasped by politicians and the public with regard to its effects on economic financing. The emerging protectionism was viewed critically throughout; what China lacks in exports to the USA, Reich said, was to the detriment of imports from the emerging countries, because China's current account balance was balanced overall. The danger of currency wars could also be a consequence of US protectionist policies.
The further course of the congress was now dominated by the topics that are currently affecting asset based finance: The new securitisation regulation will come into effect on 1 January 2019. Four years of intensive work have gone into it, during which time the EU Commission, Council and Parliament have dealt with the topic in detail. And although the new regulation addresses a problem that has never existed before in Europe on the originator side - European securitisations have always been high quality - the Commission's aim is to ensure that investors do not repeat the mistakes they made before 2007 in the future.
To ensure this, detailed requirements have been formulated for high-quality standardised, simple and transparent securitisations. The new regulation brings opportunities, but initially also a great deal of uncertainty, for the securitisation market, because the many criteria - which are necessarily indeterminate because they cover the whole of Europe - must be interpreted and implemented in a legally compliant and application-proof manner.
There is no question that this is the dominant topic in the market for three months until its validity, which was also reflected in the high level of interest shown by the participants in the corresponding panel for STS implementation in the area of conduit and term transactions.
In term transactions in Germany, the Auto-ABS topics are naturally in the foreground. With this asset class one looks more calmly at the new regulation, because most requirements were already in the past part of Auto-ABS transactions. During the congress, VW presented its new Driver fifteen transaction in a press background discussion, which has already been structured according to STS specifications. On the other hand, there is still a high degree of uncertainty with regard to ABCP issues. The panels dealing with the securitisation of trade and leasing receivables were therefore of particular interest. Especially in those securitisations of the German industry and trade as well as the leasing industry which are close to the economy, that was the tenor of the discussions, many questions are still open and the uncertainty among all participants is still large, since the regulation regards the securitisation market exclusively through the "bank glasses".
However, in addition to these issues closely related to securitisation, new technologies such as Blockchain, Asset Based Crypto Currency Financing and new competitors such as Fintechs increasingly attracted the attention of participants.
In addition, several other events looked at topics that focused on economic financing. The implications of Basel IV for SME financing, the importance of interest rate changes for corporate financing, the question of access to capital markets for SMEs, Fintech strategies for corporate financing and new forms of asset-based finance for companies were examined.
Beyond the classic securitisation topic, the TSI Congress 2018 also featured other asset-backed finance topics that are attracting increasing interest in the market. These include credit funds, managed CLOs, aircraft finance, securitisation of government bonds (SBBS) and securitisation of NPLs. But the tried and tested asset-backed instruments such as leasing, factoring and covered bonds also met with great approval among the audience. Despite the sometimes difficult regulatory discussion, the mood among the participants was very good and there was a lot of lively discussion, exchange of ideas and making contacts inside and outside the panels. Both the German and the international supervisory authorities were on site with numerous representatives.
After one and a half days and 35 workshops and panels, the congress closed with the topic "Structural change as an opportunity: But who finances e-mobility, digital change and green renewal?" Under the moderation of Matthias Renner, Head of Division Investment Banking, Raiffeisen Bank International, Dr Levin Holle, Head of Financial Market Policy, BMF, Helmut Meier-Tanski, Head of Group Treasury, Deutsche Leasing, Arne Mühlholm, Member of the Board of Management, SEB AB Frankfurt Branch and Dr Volker Treier, Deputy Managing Director & Head of International I AHK, DIHK, discussed. With structural change, financing requirements are growing. Although e-mobility, digital change and green renewal are not new issues at their core, there are many questions about its financing. After all, Germany's capital market is not very pronounced and bank financing is not optimally geared to the coming structural change through the bank structure, nor is the regulatory framework.
Once again, the TSI Congress proved to be a central platform for exchange, discussion and expansion of the network and, as one congress participant put it: "For me, the best event on the subject of asset-based finance. I'm sure I'll be back next year!" And for everyone else to note down: TSI Congress 2018 on 26 and 27 September 2019 in Berlin.
TSI ... where the Community meets!
To the two special editions of "RISIKO MANAGER" and „die bank“ with the central topics of the TSI Congress 2018: