News - PCS

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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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22/04/2013

Yves Mersch, of the ECB, gives an interview to Il Sole. He specifically focuses on the issue of upcoming regulations of ABS as a reason for the failure of the market to return

In an interview given last week to the Italian newspaper Il Sole 24 Ore, Yves Mersch, a member of the Executive Board of the European Central Bank and the person in charge at the ECB of the Banking Union dossier, not only reflects of the need for a securitisation market to assist SME's in Europe but specifically refers to the proposed regulatory changes to the capital treatment as a possible cause of the securitisation market's failure to revive. The relevant extract of his interview can be found here

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16/04/2013

Reuters article on the debates taking place around securitisation in policy and regulatory circles - PCS mentioned

In a recent article (which can be found here), Reuters addresses some of the debates that are taking place in the European policy an regulatory community over the impact of proposed regulation such as Basel 3 and Solvency II on the real European economy. The endorsement by Benoit Coeure of PCS is specifically mentioned.

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12/04/2013

Benoît Coeuré , Member of the Executive Board of the ECB makes a positive reference to securitisation and to PCS

Benoît Coeuré, Member of the Executive Board of the ECB, gave a speech in Dublin on April 11th on "Challenges and feasibility of diversifying the financing of EU corporates and SMEs". Securitisation is touched upon as a possible source of funding for SMEs in Europe, indicating further support from policy makers for a return of a strong and high quality securitisation market. In particular, Mr Coeuré, cites PCS, commending its efforts in this field. The speech can be found here

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12/04/2013

Irish Department of Finance publishes a report on the non-bank funding of growth and jobs in Europe. PCS is explicitly described as "as step in the right direction"

In the context of the Irish Presidency of the Council of the European Union, the Irish Department of Finance has published a summary report entitled "High-level Workshop on Non-Banking Funding of Growth and Jobs in Europe". The report, which complements and supports the EU Commission's ongoing work on the issue of long-term funding (and, in particular, its Green Paper) examines possible source of non-bank funding necessary to bridge the funding gap which results from the deleveraging of banks. This report looks into securitisation funding for SME's. It also specifically refers to the PCS initiative, which it describes as "a step in […]

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02/04/2013

Fitch publishes a report on Basel III proposals for securitisation - "Capital Requirement Proposals Diverge from Structured Finance Performance"

Fitch Ratings has published a report on the Basel III proposals for securitisation. The full report can be found here. A particularly striking chart, displayed below, shows the proposed Basel III capital charges against realised and expected losses:

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25/03/2013

European Commission publishes a Green Paper on long-term financing of the European economy – securitisation is mentioned as one of the financial channels that could unlock additional long-term funding

Today, 25th March 2013, the European Commission publishes its Green Paper on the long-term financing of the European economy. The Green Paper contains very positive comments on securitisation, including the following paragraph: "Reshaping securitisation markets could also help unlock additional sources of long-term finance. Subject to appropriate oversight and data transparency, they can help financial institutions free capital, which can then be mobilised for additional lending, and manage risk. Market-based initiatives to stimulate securitisation markets include emerging labels for high quality, transparent and standardised securitisations. There is scope to develop simple securitisation products based clear and unleveraged structures, using well-selected, diversified and […]

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25/03/2013

PCS White Paper quoted in the Financial Times

In an article published on 18th March, the Financial Times quoted from the PCS White Paper regarding the potential impact of bank deleveraging in Europe if the resulting funding gap cannot be bridged. Click here for article

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22/03/2013

PCS amends checklist, Rule Book and Eligibility Criteria

Following the recent PCS market committee and PCS Europe Board meetings, 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 consumer loans and existing transactions as well as a change in the "End of the Interim Period" date to August 15, 2013. The updated Checklist can be located 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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