Personal Contribution to the Industry: Steve Gandy, md and head of private debt mobilisation, notes and structuring at Santander

At the helm of arguably the most active and diverse capital relief trades arranging team, Steve Gandy has demonstrated strong leadership in innovation and the introduction of new asset classes and jurisdictions to the market. However, this award also recognises his significant contribution to the industry in terms of thought leadership and advocacy with policymakers and regulators on significant risk transfer matters.

Santander first began exploring SRT issuance in 2008-2009, but began a programmatic organised issuance programme in 2014, after Basel 3 was fully adopted in Europe. “Since 2015, we have issued them in a strategic and disciplined way as part of the bank’s capital planning process. We have a pipeline of deals approved at the beginning of the year, which we execute over the following 12 months on a regular basis,” Gandy explains.

Santander has multiple points of entry to the SRT market, given that its principal subsidiaries are autonomous in terms of managing their own capital and liquidity. As part of the group budgeting process, they are all challenged to be more efficient in the use of capital.

“The bank’s subsidiaries may choose to manage their capital in a variety of ways, one of which is to employ securitisation to recycle capital. SRT deals have proven to be an efficient way of recycling capital and reducing RWAs at below our cost of capital, so it makes sense to execute them,” Gandy observes.

Securitisation has historically been a key product for Santander and securitisation is a cost-effective financing tool. Consequently, because securitisation is strategically important to the group, it is natural that the bank should be an advocate for the industry.

This advocacy includes the PCS initiative, which Santander and other market stakeholders established in 2012 to develop a labelling entity that encourages best-in-class features to be incorporated in securitisations, with the stated purpose of restoring the badly damaged reputation of ABS. PCS, in turn, was one inspiration behind the European Commission proposing the STS criteria - many of which were patterned after the criteria developed by PCS.

At around the same time, the ECB approached Santander - along with other banks - to drive increased transparency in the securitisation market and create a privately-owned data repository. The European DataWarehouse (EDW) was established in 2013 and is committed to developing ABS data templates to be included in the ECB collateral framework.

With the emergence of the STS debate, the European Banking Federation asked Gandy to chair its securitisation working group. He also joined the AFME’s Securitisation Board EXCO through which he participates in EBA roundtables and provides testimony. Notable contributions made in this role include the EBA’s SRT discussion paper and STS synthetics proposals.

“It’s strategically important to Santander to maintain an open and constructive dialogue with regulators to ensure that the resulting legislation responds to the needs of market participants, so that securitisation can be an effective source of funding, for banks, and hence, for the economy,” Gandy remarks.

Together with his involvement in the EBF and AFME, Gandy is a member of the EDW board and the PCS Association Board and chair of the PCS market committee. “Following the Covid crisis, policymakers have begun asking what they can do to help banks lend more in the real economy. The industry has responded that one key point is to make the SRT process more predictable and streamlined, and the EBA has responded through its helpful recommendations for streamlining the process in the SRT Discussion Paper,” he notes.

Gandy looks forward to participating in the consultations related to the upcoming review of the securitisation legislation that the European Commission will commence in 2021 in the context of Capital Markets Union. This includes the securitisation risk weights, the LCR treatment of securitisations and clearer rules around the controversial topic of excess spread. Additionally, there are many issues related to the new ESMA templates that the industry is struggling with, which is important for facilitating increased transparency across the SRT market.

Santander defends increased transparency in the SRT market. All of Santander’s Magdalena and most of its consumer SRT deals are listed on stock exchanges, with publicly available performance data.

“More transparency would provide increased confidence to regulators, which would in turn facilitate increased volumes and attract more investors to the sector,” Gandy concludes.

For complete coverage of SCI’s 2020 CRT Awards, click here.