How will securitization shape up?
Questions abound over the future of the securitization business and the entire originate-to-distribute model.
Cees Maas, IIF: self regulation can work for securitization
Frédéric Oudea, chief executive at Société Générale, says: "A lot of firms will be refocusing finite human and capital resources on select business areas and groups of clients, and this may offer us opportunities to gain market share. We do not believe that securitization will come to an end and that the financing of companies and economies will go back entirely onto banks’ balance sheets. "We will carry on with securitization more as a client-driven financing offering rather than a transactional, arbitrage product. Partly for considerations of market perception, banks may run fewer vehicles only in select geographies. Structures will be simpler, with greater clarity on the underlyings. But these are merely adjustments to that business, rather than fundamental changes."
In its report, the IIF recommends that banks conduct the same level of due diligence and credit assessment on assets that they originate for future parcelling into securities and distribution as they would conduct on assets they intend to hold for a long period.