The refinancing and placing of risk in the market by securitising receivables has come under heavy criticism in the wake of the financial crisis. Securitisation transactions have even been held partly responsible for the emergence of the crisis. Nevertheless, the resurrection of the securitisation markets is at the centre of current discussions in order to avert a possible credit crunch and hence to stop the economic recovery from being strangled.

Against this background, the BearingPoint ‘Future of securitization in Europe’ study throws light on a possible reorganization as well as future opportunities of the European securitisation market. Participants from financial institutions, service providers, industry and associations have given their assessments about the further development of the market, what hurdles exist and how they can be overcome.

The key individual results of the study are:

• A possible credit crunch can only be averted with a functioning securitisation market.
• A resurrection of the securitization market for the important ABS und MBS segments is only likely from 2011. For the ABCP segment, the investors are expected to return in 2010. There is no confidence in a return of the CDO segment.
• The focus of future securitization deals will be on receivables from the real economy, particularly leasing receivables, trade receivables and consumer loans, but no longer on the repackaging of securitization tranches.
• Securitisation will remain economically attractive, yet at much higher risk costs.
• The overriding motive for future securitisation deals will be asset-backed refinancing and not the placement of risks in the market.
• An essential prerequisite for a functioning securitisation market is the supervision of the rating agencies.
• In order to resurrect the securitisation market, transparency, standards and less complex transaction structures are required.
• For securitisation deals, a seal of quality is required that defines minimum requirements for the structure of transactions and their external reporting, in order to create a new segment for high-quality, transparent and easy-to-understand securitisation deals.
• According to the view of the study’s participants, the interest of investors in the important ABS and MBS securitisation segments will not return until 2011, meaning that the 2010 securitisation market cannot yet provide the desired relief for the banks. In order to avert a possible credit crunch, measures such as continued liquidity injections from the state or the central banks will therefore be necessary to support the market.

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For more information please contact
Stefan Schütt, Tel: +49 895 4033 7011, stefan.schuett@bearingpointconsulting.com
Hendrik Kollmann, Tel: +49 691 3022 3516, hendrik.kollmann@bearingpointconsulting.com