TSI Congress 2020 – Berlin onsite & globally online

The ‘old hands‘ will still remember: In 2007, about two months after the SOS reports from Bear Stearns and IKB, the first TSI Congress was held in Berlin. The second congress, in October 2008, followed just a few days after the bankruptcy of Lehman Brothers. The financial crisis had the world firmly in its grip, and with it began a long period of intense regulatory debate. Securitisations were particularly affected.

Twelve years after the Lehman bankruptcy

Today, twelve years later, the memories of those years are still alive as the coronavirus brings to the world an unprecedented crisis that will not leave the financial markets untouched either.

The response of central banks and politicians to the challenges has never been clearer. ‘Unprecedented‘ and unparalleled are words that are repeatedly used to describe what is happening.

But how effective are these measures? What do the real economy and the financial sector expect? A V-shaped, a U-shaped upswing? Deflation, inflation, stagflation - there is no shortage of forecasts.

At the same time, the questions are growing.

Finding answers to the questions

TSI has always made it its business to explore these questions and this year, on 1 and 2 October, we also looked into these issues at the TSI Congress 2020 in order to develop ideas and tasks/activities for the future.

The focus was on the economic implications of the coronavirus crisis not only for the real economy and the financial sector but also for the various asset classes, auto securitisations, RMBS, market place lending platforms, CLOs and credit funds.

Looking ahead and exploring solutions

It was equally important for us to look ahead and find the necessary solutions.

After all, we have to ask ourselves: have the right regulatory conclusions been drawn from the last financial crisis, or are the gaps and weaknesses becoming apparent only now, in the coronavirus crisis? And what follows from this, what needs urgent correction, where must the journey now take us?

A look at the regulations of the past years was a recurrent theme throughout the congress. Several panels pointed out that there was still no level playing field for securitisations with other capital market instruments, be it in terms of capital backing, qualitative requirements, transparency or LCR classification.

What consequences can already be identified in the market?

The consequences of the coronavirus crisis cannot yet be conclusively assessed. Insolvency and supervisory rules have been temporarily suspended, making it difficult to estimate future credit defaults.

However, there was agreement among market participants and discussants that non-performing loans at banks will increase significantly, as will the requirements for risk and equity management.

Practical solutions for synthetic securitisation and the securitisation of NPLs are therefore more urgently needed than ever.

European policy needs to step up

The EU Commission and its High-Level Expert Group see the need for action. There is talk of urgent ‘quick fixes’. First proposals of the Commission are on the table. Now it is up to Parliament and above all the EU Council to respond. And in these decisive months, Germany will take over the Presidency of the Council.

The Federal Government strongly supports the programme of the EU Commission, as Dr Jörg Kukies, State Secretary in the Federal Ministry of Finance, made clear in his contribution to the congress. It will use its Council Presidency to implement the proposals.

However, Kukies sees the future risks for Europe's financial markets in the coming, even closer interconnection between bank and sovereign risk. In his opinion, clear progress in the banking and capital market union is needed to counter these risks.

The future role of securitisation

It is thus becoming clear right now that Europe needs a functioning securitisation market to link bank and capital market financing, transfer credit risks to the capital markets and overcome the coronavirus effects. This time, securitisation will be part of the solution, leading market participants agreed

As was the case at the TSI congresses of previous years, the securitisation of trade and leasing receivables of the real economy via banks' ABCP programmes was given a wide scope. Market participants expressed great regret that neither the High Level Report nor the current EU plans contained anything substantial in this regard.

But it was not only the securitisation issues that moved the participants. The coronavirus crisis is also a wake-up call for digitalisation, and it will also affect the securitisation market in the long term.

How far Europe is lagging behind the USA and Asia in the drive towards digitalisation was the topic of the wine evening. The guest speaker was Prof Klemens Skibicki, a member of the Young Digital Economy Advisory Board at the Federal Ministry of Economics and Technology and management consultant.

Financing conditions of the real economy under coronavirus conditions

Another central topic was the financing conditions of the real economy under coronavirus conditions. The structural change accelerated by the crisis and the many and varied government programmes associated with it will also accelerate the transition of the economy and society to carbon neutrality and make a deep imprint on the real economy. The effects of ESG financial market regulation on the real economy attracted a great deal of interest at the congress.

The looming economic war between the USA and China was also a congress topic. The interview with Prof Markus Taube, a renowned expert on China and the USA, gave a good insight into the challenges facing Europe here.

As in previous years, the TSI Congress 2020 was a meeting of experts from law firms, securities companies, banks, investor circles with political decision-makers, regulators and supervisory authorities. More than 110 speakers participated in the panels, workshops, round tables and business events, almost two thirds of them onsite. Not all of them were able to be physically present because of the pandemic, but still about 160 experts gathered onsite this year, observing all hygiene measures that such an event requires in these times. For all others, TSI provided the congress as a live stream in a TV look and feel with almost 30 events over one and a half days. Almost 500 registered participants took advantage of this option.

Voices of our participants

Feedback from a high-ranking investor who attended as a virtual participant: ‘I have recently attended several hybrid (onsite/offsite) events. Your conference was clearly the one that was best organised. The technical platform was also excellent’. And another visitor summed up: ‘I really have to say that with this event you have managed to lift conferences 2.0 to a new format’.

Combining onsite and online attendance gave the TSI Congress 2020 its special charm. It was also the gateway into a new hybrid future of the TSI Congress - onsite in Berlin and globally online.

As usual, TSI will take up, accompany and promote securitisation-relevant topics in its circle of partners and with its shareholders, politicians and supervisors.