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Category: ABS Capital Relief Trades Regulation


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Steve Gandy, md at Santander, reflects on a 30-year career in securitisation ahead of his retirement

Asked about the day after his forthcoming retirement, Steve Gandy, md at Santander, mildly remarks that a ‘’friend will take us out for curry, including my grandson. I’m then off to Germany to see my daughter and then back to the UK, where we will sell the house and head for the US.’’

Gandy’s unremarkable statements draw a curtain on a long and indeed remarkable career, spanning over three decades as one of the leading practitioners in the securitisation market. He was born in El Paso, Texas, the son of two Texans but with Mexican ancestry, as he enjoys pointing out.

‘’It explains why I get along with Spaniards and Latin Americans, along with all those years at Santander,’’ he says.

El Paso consists of a nearly 700,000 population, according to US Census Bureau data, so it remains a relatively small city for US standards. The latter may explain an early desire for an international career.

‘’I don’t know where I got the desire to travel the world. But I grew up in a town, so I wanted to have an international career, to learn about other cultures and study their languages,’’ reflects Gandy.

Perhaps unsurprisingly, the road led first to a linguistics degree at the University of Texas, where he graduated cum laude. This was then followed by an MBA at the Thunderbird School of Global Management, where he won the school’s highest honour, the Barton Kyle Yount Award.

Gandy’s first post was for PNC in Philadelphia, then Mexico City, Pittsburgh, Hong Kong, New York and Chicago, before settling in London for the last 23 years. However, unlike the international career, securitisation was something that just occurred along the way. 

‘’It was 1989 and I was being transferred from Paris to the US while working for PNC. They just told me that I was going to work for some project. The first question I asked was, ‘what is securitisation?’” he remarks humorously.

He continues: ‘’I went through it with an accountant. The project was for an auto loan securitisation. I asked them a tonne of questions and it clicked with me. I loved the creativity, the complexity and the ability to solve puzzles. It was a toolbox that I could use to help my clients solve problems.’’

As with virtually all securitisation practitioners, the 2008 financial crisis is a period that he remembers with dismay. ‘’I was helping people get cars and recycle capital to lend. It was a product that enhanced my employer’s relationship with our clients. If done in the proper way, it’s a great product. But during the subprime crisis, the incentives were greatly distorted, and it became a race to the bottom.’’

The experience of the financial crisis is what laid the groundwork for Gandy’s career highlight, namely the STS framework for synthetic securitisations. ‘’I’ve been trying to restore the credibility of the market since then. The PCS templates benchmark best in practice, so any deal can be assessed, and the same is even truer of STS synthetic securitisations.’’

He adds: ‘’Santander was one of the founders of the European DataWarehouse and PCS. I worked hard to establish the PCS templates. Furthermore, the discussions that we carried out at the European Parliament were crucial, while the support of AFME, the Commission and the EBA proved decisive.’’

Under Gandy’s reign as head of private debt mobilisation, notes and structuring at Santander Corporate and Investment Banking (CIB), the Spanish lender became one of the most important securitisation issuers. On synthetic securitisations, the bank set the bar high for large and programmatic issuance volumes, innovative structuring on a variety of asset classes and best practices.

Santander’s Project Boquerón transaction – which closed in December 2020 – is a case in point, as regulators look to markets for best practices on ESG and impact trades. It also illustrates Gandy’s point as to what securitisation can offer in a world moving towards net zero.

The significant risk transfer trade was carried out with Newmarket and references a €1.6bn portfolio. The deal champions ESG lending through three unique features, both at inception and during reinvestment.

First, the portfolio is focused on ESG assets at issuance, including projects across 21 countries and more than 50% in renewable energy projects. Additionally, coupon incentives exist to replenish the portfolio with further ESG assets during the revolving period.

Finally, the trade includes coupon incentives for utilising the capital released to further grow Santander’s lending to new ESG assets globally outside the transaction, using a novel approach of linking growth to megawatts funded through green projects, as opposed to simply focusing on RWA metrics.

In terms of the advice he would like to offer his successor Matt Cooke, who joined Santander CIB in September last year as European head of securitised products group, Gandy says: ‘’Always have the client’s interest in mind, be the best in the business and everything else will follow from there.’’

A simple and straightforward piece of advice, but one that has worked very well for Gandy, for Santander and for the return of a more robust and more legitimised securitisation market.

Stelios Papadopoulos

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