The Association of German Banks, Bundesverband deutscher Banken (BdB), which represents the interests of private credit institutions, is campaigning for a reform of the regulations for securitisation in view of the vast financing requirements for the sustainable transformation of the economy. The aim is to "organise an ecosystem that is attractive for investors and issuers", explains Miye Kohlhase, a member of the association's management board, talking to Börsen-Zeitung. "In any case, this also includes holistically revised securitisation rules." There are currently requirements in various EU legal acts. "We need simultaneous adjustments here."

One focus should be on the capital requirements. According to Kohlhase, investors currently treat securitisations less favourably than capital market products with the same risk profile. "The risk weighting slows things down," criticises the BdB representative. Although risks have been reduced – for example, through deductibles and a ban on re-securitisations – the flat risk premium for securitisations, the so-called p-factor and securitisation floor, have not been sufficiently readjusted. "We need a recalibration" is the demand of the private banks.

According to her, reporting requirements should also be reformed. "The transparency obligations are unpragmatic." Suppose an investor in a private transaction carries out its own due diligence, for example, when securitising short-term trade receivables. In that case, she believes it is incomprehensible why extensive data that is intended for public securitisation must also be prepared. The investor would not use it anyway. This means additional time and effort that is not offset by any benefit. It is not just about standardising processes and contracts in civil law but also about further standardisation in order to bundle receivables from different countries with securitisations.

Kohlhase makes it clear that securitisation is not a side issue, but an essential lever for covering the current high financing requirements of companies. "In order to finance the sustainable transformation of the economy, we need a broader approach beyond traditional bank financing," she emphasises, adding: "Securitisation is an important element of this." Unfortunately, this instrument still has a bad reputation. With a view to the European market, however, this is not justified, "nor was it during the years of the financial crisis".

Of course, not every SME has to be active on the capital market. Many small and medium-sized enterprises do not want to do so. "It's more about using capital market investors to finance SMEs and involving them in the process." Securitisation would then create new scope for lending.

With a view to the bigger picture, namely financial market regulation in Europe and efforts to utilise the capital market more effectively as a source of financing, Kohlhase advocates a stronger focus on the competitiveness of local financial service providers. "The Banking Association is in favour of the EU framework for the capital market being geared not only towards the goals of financial stability and consumer protection but also towards the goal of global competitiveness." The European Union should develop a "pull effect for liquidity", she emphasises and advocates "for adjustments relevant to the capital market, for example in insolvency law".

The business is constantly evolving: The banking expert cites the clearing of forward transactions via central counterparties as an example. Many rules, on the other hand, have not been adapted for more than 20 years.

Here, too, she has examples in mind: "The harmonised civil law framework in the form of the Financial Collateral Directive and the Settlement Finality Directive urgently needs to be modernised." One directive dates back to 2002, the other to 1998, and there is also a need for modernisation in tax law, for example, in the EU-wide uniform taxation of sales of financial services.

When asked about the retail investor strategy currently in the EU legislative process, Kohlhase explains that the banking association supports the objectives of the proposal. "However, we do not consider the EU Commission's specific proposal – keyword: partial commission ban – to be helpful in attracting more investors to the capital markets." However, this is important. "We need to make the conditions for saving in securities more attractive in general."