Sector developments and company hires

Call for ‘proper discussion' about risk
Securitisation issuance in the EU equaled 0.3% of the bloc’s GDP last year, while UK issuance equaled 0.9% of the country’s GDP, according to AFME data. In contrast, Australian, Chinese and US issuance respectively equaled 2.8%, 1.8% and 1.4% of GDP in 2022.

In newly published research, AFME highlights that Europe languishes far behind its global competitors in terms of the contribution of its securitisation market to the financing of its economy, even when taking into consideration the structural features of different markets. As important EU inter-institutional negotiations are taking place this month on the capital requirements regulation and the UK kicks off its review of the securitisation framework, AFME is urging policymakers to introduce measures that enhance risk-sensitivity in the prudential framework for banks. A review of other frameworks and requirements applying to non-bank investors is also needed to achieve greater proportionality for this asset class, according to the association.

 “Europe’s securitisation market remains depressed while other large global capital markets reap the economic rewards of this financing tool. At a time when inflation continues to rise, monetary policy is tightening and capital becomes increasingly scarce, now is the time to address this gap. The competitiveness of Europe’s financial services sector is at a key disadvantage without a vibrant securitisation market,” comments Adam Farkas, ceo of AFME.

The association also points out that Europe continues to rely disproportionately on bank financing. In June 2022, European (EU+UK) banks reported €16.2trn in total outstanding loans to non-financial corporations and households, representing an increase of 3.5% from 2021. In comparison, outstanding volumes of EU+UK securitisation in 2022 were equal to €1109.4bn, a decrease of 6.7% from 2021.

This reflects a longer-term trend of a decline in outstanding EU+UK securitisation volumes over time, with volumes falling by 12.5% since 2014. Outstanding EU+UK bank loans increased by 22.6% over the same period.

As of June 2022, annual securitisation issuance in the EU+UK represented just 1.2% of total outstanding bank loans, whereas in the US during the same period, annual issuance was equal to 12.6% of outstanding bank loans. AFME notes that this large gap highlights a significant opportunity for the EU and UK to further transform existing outstanding loans on their banks’ balance sheets, via securitisation, enabling additional lending to the real economy. This will not happen without policy action to revive the EU and UK securitisation markets, the association warns.

“Europe needs to have a proper discussion about risk. It is 15 years since the Great Financial Crash, yet it still seems to dominate our thinking. For me, the biggest risk we face today is lack of growth, but we pursue regulatory approaches that make growth more difficult. We need to be honest about the trade-offs involved and ask ourselves whether we have struck the right balance, particularly when our international competitors are striking that balance in a different, more growth-friendly place,” concludes Lord Hill, former EU Commissioner for Financial Services and Capital Markets Union.

In other news…

EMEA
TMF Group has appointed Cliff Pearce as its new global head of capital markets, reporting to Daniel Max, head of global solutions. Pearce joins the firm from Intertrust Group, where he was global head of capital markets services. He brings more than 20 years’ experience in capital markets gained at NatWest, Bear Stearns and Bank of America Merrill Lynch, originating and delivering structured finance transactions to a wide range of clients.

Veld Capital has promoted mds Konstantin Karchinov and Sebastien Wigdo to partner and named Richard Kirkby as cfo. The appointments follow the carve-out of AnaCap Financial Partner’s credit business, including all of its legacy funds, to form Veld Capital at the end of last year (SCI 4 October 2022).
Karchinov joined the firm in 2009 and has senior oversight and responsibility for deal origination and execution of credit investments. Prior to AnaCap Credit, he was a member of JPMorgan’s principal investments team in New York and later London, focusing on whole loans portfolios, asset-backed lending as well as servicing and origination platforms.
Wigdo joined Veld in June 2019 and has senior oversight and responsibility for deal origination and execution of real estate-backed investments. Prior to joining the firm, he was a member of King Street Capital’s investment team in London.
Kirkby joined Veld from CVC Credit Partners, where he had been head of fund accounting, having previously worked in risk management at Davidson Kempner European Partners. He will take responsibility for finance across the firm’s dedicated platform, including all funds and management entities.

Warba Bank, the Kuwait-based group that specialises in banking and investment services in compliance with Sharia principles, has hired Mohammad Alghunaim as a senior analyst. Formerly of public pension fund The Public Institution for Social Security, Alghunaim will focus on structured and syndicated finance. He left his role as a real estate investment analyst after five years at the public pension fund in September to join the Kuwait Foundation for the Advancement of Sciences, where he served as an officer in the finance and investment team for nine months.

North America
Chicago-headquartered law firm Winston & Strawn has appointed Cadwalader, Wickersham & Taft’s Scott Cowie as a structured finance-focused associate in its New York office. Cowie leaves his role as an associate at Cadwalader after two years, during which time he worked on securitisation transactions spanning CLOs, RMBS and middle market lending.