TSI Congress "Fundamental change in the credit and securitisation markets", 1 and 2 October 2009 in Berlin

More than 550 people from every kind of institution associated with the credit markets attended the TSI Congress 2009 in Berlin, representing banks, law firms, auditing companies, supervisory authorities, politics and government ministries, promotional institutions, business associations and industrial companies. Thirty-four panels and workshops provided the perfect opportunity to discuss current topics relating to the credit and securitisation markets and to search for solutions.

In his opening speech, Dr Günther Bräunig, Chairman of TSI’s Advisory Council and a member of the Managing Board of KfW Bankengruppe, pointed out that discussions about securitisation are becoming more pragmatic and called for the market to develop uncomplicated, high-quality securitisation structures. This call became something a leitmotif at the Congress. Lars Hille, a member of the Board of Managing Directors at DZ Bank, appealed to the industry to adopt a compulsory certification procedure as a means of signalling the quality of German securitisation transactions. From the world of politics, the retiring SPD politician Ludwig Stiegler and his colleague Hartmut Schauerte from the CDU called for the German securitisation market to use its own quality label to make clear the difference between the robustness and transparency of its securitisations and the bad examples from elsewhere.

The representatives of the business world, Anton Börner, the President of the Federation of German Wholesale and Foreign Trade (BGA), and Dr Josef Trischler, the Managing Director of the German Engineering Federation (VDMA), pointed out the benefits of securitisation for the German economy. They called on the German Government to promote German SME securitisation transactions and encouraged the German securitisation industry to recover investor confidence by developing quality standards. Professor Helmut Kotz, a member of the Executive Board of the Deutsche Bundesbank, saw the recovery of the securitisation market as making an essential contribution to limiting the negative impact of the financial crisis on the real economy. During the closing panel discussion, which dealt with the supervisory consequences of the financial crisis, Prof. Dr. Michael Hüther, Director of the Institut der deutschen Wirtschaft Köln, called for a reform of banking supervision. For instance, financial supervision should be part of a new organisational structure, which would also be able to pay non-civil service salaries. Otherwise, he said, it would be difficult to recruit the required experts, who would be able keep pace with the increasing regulatory demands.

All in all, it was clear that there has been a further shift in the view of the credit and securitisation markets since last year. More than ever, the focus is on the financing needs of the real economy, the investors’ requests for clear, simple structures and the change in the legal framework conditions. The securitisation market is currently undergoing a transformation: in recent years, the "sellers' market" has become a "buyers' market" and, as in every buyers’ market, the strict rules of quality competition now apply.

To summarise the main points of the 34 panel discussions and workshops:

There has been a marked easing of the situation in the credit and securitisation markets since March 2009, but further setbacks, caused especially by an intensification of the crisis in the real economy, are not ruled out.
The capital situation of German banks remains tense.
It has not yet been possible to ward off the threat of a credit crunch for German SMEs.
Future regulation – especially when it comes to imposing more stringent capital requirements on banks – should retain a sense of proportion.
The recovery of the securitisation markets is of particular importance for the stabilisation of the credit markets. This is especially true for Germany.
The securitisation transactions carried out in recent years via the KfW PROMISE and PROVIDE platforms and the TSI platform are sound and their fundamental data are good; the criteria for a prime label “ABS – Made in Germany” are already being met.
The repo-eligibility of notes issued as part of securitisation transactions remains important for banks; the further development of the eligibility criteria therefore has a decisive effect on the quality and structure of securitisation transactions.
Simple, transparent structures and well-regulated corporate governance in transaction documentation, together with incentivation which underpins the avoidance of moral hazard in the credit and securitisation process are key quality features.
Mathematical risk models and common sense need to be part and parcel of risk management.
The closer intermeshing of business promotion and SME securitisation represents an efficient way of easing the equity situation and of providing an incentive for SME financing.
German legislation should make tax provisions to enable the securitisation of insurance risks and of leasing and trade receivables from Germany without the need to resort to offshore solutions.

The workshops and panel discussions were complemented by an extensive social programme. More than 250 Congress participants took up KfW’s invitation to a reception in its Berlin branch on the eve of the Congress. During the Congress, the Business Breakfast with Dr Thilo Sarrazin, the Political Lunch with Dr Gerhard Schick, the Wine Colloquium with Ludwig Stiegler and Hartmut Schauerte and the visit to the Reichstag provided plenty of opportunity to engage in a more informal exchange of views with politicians from the SPD, CDU and the Green Party as well as with members of the Executive Board of the Deutsche Bundesbank.

Over the past three years, the TSI Congress has become firmly established as a key event for the German credit and securitisation market. Its role as a central communication platform with opportunities to exchange information was further enhanced in 2009. With more than 60 sponsors and media partners, including 30 exhibitors, and with the support of, for example, the Federal Ministry of Finance, the Federal Ministry of Economics and Technology and the Federation of German Industries (BDI), the Congress is a prime meeting place for all those who are in any way associated with the German credit markets.