News - PCS

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23/10/2013

EBA has a public hearing on the LCRs. No good news for securitisation

Today, the EBA held a public hearing on the LCRs generally. The meeting was somewhat unusual in that the hearing was on two EBA reports where no drafts had been circulated. The EBA did apologise for this, citing brutal time pressures. As a result, the hearing took place over slides that were shown for the first time at the meeting itself. The EBA was also at pains to indicate that these slides represented a draft of the report to be presented and not the final conclusions. The EBA indicated that the slides would appear on their website, although they do […]

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18/10/2013

ECOFIN discusses proposals to use securitisation with some public money as a way to provide European SMEs with access to finance

At its meeting in Luxembourg on 15th of October, the European Ministers of Finance discussed a proposal made by the Commission and the European Investment Bank to help the access to finance of SMEs. The proposal contains three options, two of which involve securitisation. The securitisation options, similar in many respects to the proposal made by PCS in its response to the Commission's Green Paper on Long Term Funding, would involve the use of public money to take out the highest risk tranche. The official press release may be found here.

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14/10/2013

PCS quoted in an article in the Financial Times regarding a possible threat to the survival of the ABS markets

The Financial Times published an article on the risk that the ABS market in Europe could collapse as a result of the low volume of issuance. The concern is that with so little issuance, investors may find it difficult to maintain a costly infrastructure that may not be compensated for by income generated by low volumes of ABS purchases. The article quoted PCS, described as a key industry group, and in particular mentioned that the causes of the low level of issuance was no longer investor diffidence vis-a-vis securitisation but the very cheap lending from central banks. This lending makes […]

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14/10/2013

PCS extends "Interim Period extension (version 4 Rule Book and Checklist for Dutch issuers only)" to 30th November 2013

In the PCS announcement dated 12th September 2013 it was noted that Dutch issuers may additionally benefit from an Interim Period extension (version 4 Rule Book and Checklist) until the earlier of (1) October 11th, 2013, and (2) the date upon which ‘conforming’ Dutch criteria changes have been introduced. Due to the later than expected introduction of Version 5 of the Rule Book and Checklist, which was finally announced on 9th October, 2013, the PCS Board has agreed to additionally extend (for Dutch issuers only) the applicability of the Interim Period extension (version 4 Rule Book and Checklist) to the earlier of (1) November […]

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09/10/2013

PCS amends Checklist, Rule Book, and Eligibility Criteria – 8th October 2013

Following the recent PCS Europe board meeting, a number of amendments have been made to the PCS Rulebook and in line, tracking amendments to the PCS Checklist and PCS Eligibility Criteria. The changes reflect work undertaken by the PCS Market Committee during recent months to ascertain whether the existing criteria could be maintained in a more streamlined and efficient form. Based upon this work, a number of criteria have been merged or seen their language consolidated so as to encapsulate the existing criteria in a more simple format. We expect these changes to make the application process more straightforward for […]

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16/09/2013

ECB discusses the reactivation of the European ABS market in its most recent monthly report

In its September Monthly Report, the ECB published an article entitled "Reactivating the European ABS market: challenges and possible remedies". (It can be found in Box 6 on page 48 of this document). In the article, the ECB raises the question of the impact of the various regulatory proposals and the issues of investor uncertainty. It also speaks positively of "initiatives to improve transparency and standardisation, with the aim of enabling investors to better assess risk, and support the real economy [as] crucial to attract market participants and reactivate the European ABS market."

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12/09/2013

PCS extends the PCS interim period to 11th October, 2013 for PCS Label applications

The PCS Europe Board has agreed to change of the end of the PCS Interim Period from September 11th, 2013 to October 11th, 2013. The Interim Period allows Originators to evidence certain items (such as the audit or certain reps and warranties) in the Originator Certificate rather than the prospectus. The PCS Board will be approving a number of changes to the PCS criteria in the next few days and the extension is designed to provide some certainty for PCS label applicants who have, or are about to apply for a PCS label. This temporary Interim Period extension will only […]

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12/09/2013

The PCS Secretariat is pleased to announce that the first PCS label has been awarded for a securitisation with Italian assets. The transaction has Italian residential mortgage loans as its underlying assets.

Unicredit has successfully applied for and been awarded the PCS label for Cordusio RMBS Securitisation s.r.l. series 2007. Further details can be found here

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10/09/2013

ECB confirms that it will no longer accept as repo collateral RMBS and SME ABS that do not comply with the loan by loan disclosure requirements.

Yesterday the ECB announced that, as of October 16th 2013, RMBS and ABS of SME loans that do not comply with the loan by loan disclosure requirements as managed by the European Data Warehouse will no longer be eligible as repo collateral. The ECB did indicate, however, that it would be prepared to make exceptions on a case by case basis if an adequate explanation of non-compliance was provided. Other types of securitisations are not excluded as they do not, as of yet, have loan by loan disclosure requirements. Those are expected in due course and it is anticipated that […]

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04/09/2013

European Commission releases draft new rules for money market funds

Today, the European Commission released its new draft regulation for money market funds (MMFs). The relevant texts can be found here. The regulation will be important for securitisation as it lists, inter alia, the assets that European MMFs are allowed to purchase. In the draft, these assets are limited to securitisations with less than 398 days to run and exclusively backed by corporate debt which, itself, has less than 398 days to run. This is a matter of some concern as this appears to define safe and high quality securitisation by reference to the underlying asset class (corporates). It is […]

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22/08/2013

PCS extends the PCS interim period to 11th September, 2013 for PCS Label applications

The PCS Europe Board has agreed to change of the end of the PCS Interim Period from August 15, 2013 to September 11, 2013. The Interim Period allows Originators to evidence certain items (such as the audit or certain reps and warranties) in the Originator Certificate rather than the prospectus. The market committee will be proposing a number of changes to the PCS criteria at the next PCS market committee and PCS Board Meetings. This has lead to a real practical issue for a number of issuers who intend to apply for a PCS Label before the next PCS Board […]

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22/08/2013

PCS extends the PCS interim period to 11th September, 2013 for PCS Label applications

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30/07/2013

APG and Robeco join PCS Europe as members

Today, APG and Robeco joined the PCS Europe association as full members. APG, as administrator of over 30% of all collective pension schemes in the Netherlands, and Robeco, as one of the most prominent asset managers there, are key additions to the PCS association, helping to strengthen the investor voice in the PCS initiative. We welcome them and look forward to their fruitful contributions.

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19/07/2013

Ian Bell, Head of the PCS Secretariat, has an article published in Financial World on the state of the European securitisation market

Ian Bell, Head of the PCS Secretariat, has an article published in the July/August edition of Financial World, a UK financial magazine, writing about the changes in the perception of securitisation in the public sector and arguing for a definition of high quality securitisation. The article can be found here.

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18/07/2013

ECB announces a reduction of the haircuts for certain ABS in its collateral rules

Today, July 18th, the ECB has announced some changes to the haircuts imposed on various instruments used as repo collateral. In particular, it has reduced the rating requirements for six classes of asset-backed securities and reduced haircuts generally applicable to eligible ABS under the Eurosystem collateral framework. This move appears to reflect the views expressed at the highest levels of the ECB that many securitisations performed extremely well and that one should treat high quality securitisations differently from the flawed products that caused damage during the crisis. The ECB press release may be found here.

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17/07/2013

Another positive intervention on securitisation, coming this time from the Italian Finance Minister Fabrizio Saccomanni

On July 16th, opening a seminar in Rome on “Credit crunch. Credit funds” organised at the Ministry of Finance, Fabrizio Saccomani, Italian Finance Minister said that “to support access to finance, especially for SMEs, it is necessary to revitalise securitisation, even with an initial regulatory support as well as support from the Government”. This is another addition to the strong policy maker support we have been seeing from a number of quarters, including the ECB and the EU Commission at the highest level for the use of securitisation in the context of SME finance. The speech (in Italian) is available […]

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15/07/2013

Mario Draghi, in his presentation to the European Parliament, explicitly supports the return of the securitisation market through making a distinction between high quality securitisation and others

Mario Draghi, in his role as president of the European Systemic Risk Board, made a presentation to the European Parliament's Economic and Monetary Affairs Committee. During the question and answer session, President Draghi responded to a question from Zalba Bidegain, a Spanish MEP from the EPP, on the ECB's role in financing SMEs. He responded that the EIB, the European Commission and ECB were working to “resurrect what it used to be called securitisation” – and said that “we think there are good securitisations and bad securitisations, i.e. good and bad products” – asking for the EP support for such […]

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15/07/2013

The European Investment Bank has invited PCS to chair a technical working group on the issue of how better data collection and distribution could assist the revival of a strong SME securitisation in Europe

Following a workshop organised under the auspices of the European Investment Bank and chaired by Wilhelm Molterer, Vice President in charge of Cohesion, PCS has agreed to chair a new technical working group. The aim of the group is to see how the financing of SMEs in Europe through securitisation could be assisted by better data collection and distribution. The group will look at, amongst other topics, cross-European standardisation of SME data as well as the possibility of some form of scoring system. The technical working group's report is expected in autumn.

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05/07/2013

PCS files its response to the European Commission's Green Paper on Long-Term Finance. The paper very much seeks to focus on clear and actionable plans to help securitisation and particularly to harness the public sector to revive the SME securitisation market

PCS files its response to the European Commission's Green Paper on Long-Term Finance. The paper very much seeks to focus on clear and actionable plans. It re-iterates the importance of creating a robust yet reasonable prudential regulatory framework around securitisation in Europe and how this can be done by inserting a definition of "high quality securitisation" in all the European legislation and then calibrating this asset class against its actual excellent performance. In the context of SME finance, PCS also puts forward a substantial proposal that would harness the public sector to revive the SME securitisation market and channel much […]

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21/06/2013

Emil Paulis, from the European Commission, gives a keynote speech supporting quality securitisation and explicitly refers to PCS as a positive development

Emil Paulis, from the European Commission gave a keynote speech at the Global ABS conference in Brussels this week. He indicated strong support from the Commission for the return of high quality securitisation. He also acknowledged that the regulatory community had not yet developed the same level of support but that this should happen if continued efforts are made to set out its strength and importance to the economy . Emil Paulis also explicitly referred to PCS as a positive and important development in this regard. A report of his speech can be found here.

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03/06/2013

First UK Master Trust PCS labelled transactions

PCS is pleased to announce that the first PCS label has been awarded for a UK Master Trust transaction. The UK Master Trust is Santander's Holmes Master Issuer Plc. Seven Holmes transactions have been labelled including the recently closed Holmes 2013-1 and a further six existing transactions. For further details please go to https://pcsmarket.org/draft//pcs-transactions

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30/05/2013

PCS responds to EIOPA's consultative document on a possible re-assessment of the proposed capital requirements for the securitisation holdings of insurers

PCS has submitted a response to EIOPA's consultative document on a possible re-assessment of the proposed capital requirements for, inter alia, the SME loan securitisation holdings of insurers. In its response, PCS expresses some concerns about EIOPA's apparent suggestion that such re-assessment could only be warranted if it were possible to distinguish SME loan securitisations from all other types of securitisations. PCS strongly argues that a re-assessment is warranted not because SME loan securitisations are different from all others but because SME loan securitisations are part of high quality securitisations whose performance and robustness makes them different from other types of […]

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24/05/2013

PCS amends checklist, Rule Book and Eligibility Criteria

Following the recent PCS Europe Board meeting, a number of amendments have been made to the PCS Rule Book and in line, tracking amendments to the PCS Checklist and the PCS Eligibility Criteria. The key highlights of the changes are amendments to certain criteria relating to UK Master Trusts. The changes can be found at pcsmarket.org/checklist together with the previous versions. The updated Rule Book and Eligibility Criteria can be found at pcsmarket.org/downloads.

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20/05/2013

EBA launches a consultation on large exposures and proposes to change the treatment of securitisation

EBA last Friday launched an consultation paper entitled "EBA consultation on draft Technical Standards to determine the overall exposure to a client or a group of connected clients in respect of transactions with underlying assets". In the paper the EBA proposes to treat all tranches of securitisations as "first loss" tranches, giving no credit to subordination. Although this sentence is infelicitous, closer reading of the proposal indicates that this approach is only relevant to the calculation of exposure limits. The EBA explains why it is proposing this treatment for exposure calculation and does not call into question the efficacy of subordination […]

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17/05/2013

Will Howard Davies of PIMCO joins PCS Market Committee

PCS is delighted to announce that Will Howard Davies of PIMCO has agreed to serve on the PCS Market Committee. Will has been working on the investment side of securitisation for 14 years and is presently portfolio manager at PIMCO, responsible for RMBS and residential mortgages. We are very grateful to Will for bringing his expertise and the perspective of a pan-European, and indeed global, investor such as PIMCO to the PCS initiative.

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15/05/2013

PCS updates securitisation default table

PCS would like to thank Standard & Poor's for providing it with an update to its securitisation default table. Six months on, the data shows that, in the sixth year of the worse economic crisis since the war, overall defaults in the PCS eligible asset classes are creeping up but are still only 10 basis points (up from 7 basis points). This is also across the whole capital structure. Today, losses on the senior notes of such transactions – the only ones that are eligible for the PCS label – remains zero. The new table can be found here

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09/05/2013

The Irish Debt Securities Association becomes a PCS Permanent Observer

At the General Meeting of the PCS Association, the Irish Debt Securities Association ("IDSA") was elected as a Permanent Observer. IDSA is a recently established industry organisation with the aim to promote and develop Ireland as the premier European location for activities to support the global structured finance, debt securities and the specialist securities industries. IDSA promotes a responsible, sustainable and effective environment within which debt securities and other specialist securities can be used to facilitate transactions, to create investment products and to raise capital funding. IDSA aims to achieve its mission by representing all industry participants, promoting high standards of […]

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03/05/2013

WSJ Article on Draghi announcement, quoting PCS

Following Mario Draghi's announcement of a consultation on assisting in the revival of the ABS market, the WSJ publishes an article on the subject in its Moneybeat blog. Francesco Papadia, PCS Chairman and Ian Bell, Head of the PCS Secretariat are quoted. The article can be found here

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03/05/2013

Mario Draghi announces the start of a consultation on "initiatives to promote a functioning market for asset-backed securities collateralised by loans to non-financial corporations"

In a press conference held on May 2nd in Bratislava, Mario Draghi, President of the ECB, announced a consultation with other European institutions on "initiatives to promote a functioning market for asset-backed securities collateralised by loans to non-financial corporations". (The text of the press conference can be found here. In his more detailed response to questions, Mr Draghi also distinguished clearly between "very different kinds of ABS" making positive references to what he described as "plain vanilla" ABS and indicating that this form of ABS was very safe. He also identified regulation as one of the reasons for the very subdued […]

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29/04/2013

Financial Times article on the problems of increasing lending to European borrowers – it mentions PCS as part of the efforts to revitalise the securitisation market

In an article by John Authers, the Financial Times examines the problems of channeling lending to European borrowers and especially SMEs. The article identifies bank capital issues but also the lack of demand from creditworthy borrowers in the middle of an economic crisis. It also mentions the role of securitisation but reminds the readers of its bad reputation, mentioning PCS as one of the ways in which the industry is seeking to re-habilitate this financing channel. The article can be found here: (although please note, it rests behind a paywall)

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