How to revive the European securitisation market

What role can a revived securitisation market have in financing the real economy in Europe? Kevin Ingram, partner and specialist in debt securitisation at Clifford Chance, says increasing the volume and depth of issuance in the market is crucial.

Report: High-quality securitisation for Europe—The market at a crossroads

Europe needs stronger capital markets to serve the real economy and fill the funding gap cause by regulatory constraints which affect banks’ lending capabilities the Association for Financial Markets in Europe (AFME) has said in its new report. The report goes onto describe how to revive the European securitisation market, which could help unlock long-term financing and fuel growth.

Is there already a relaunch of the securitisation deal in the European market or do you think these reports will be the impetus to get things moving again?

There has been political and regulatory recognition for some time in Europe that securitisation can have an important role in financing the real economy. These reports help to both provide greater detail of the case for securitisation but also look to identify impediments to the development of safe and viable securitisation markets. There are securitisation transactions being done in Europe—there are just not enough of them and increasing the volume and depth of issuance in the market is crucial.

Do you think the proposal on risk weighting will encourage the market?

Yes. It would not only make securitisation a more attractive investment for regulated investors but it would also be an important signal that regulators do not regard securitisation instruments unfavourably compared to other similar types of secured investments.

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