Two weeks before the next Euro Summit, the credit industry and the Federal Chancellery are urgently calling for a reform of securitisation rules: The time is right to simplify the packaging of loans for the capital market, as State Secretary Jörg Kukies, Commerzbank Deputy CEO Bettina Orlopp and Barclays Germany CEO Ingrid Hengster said on Wednesday at the 17th Financial Market Day (Finanzplatztag) of Börsen-Zeitung in Frankfurt.

At the conference at the Frankfurt Stock Exchange, Orlopp lamented the lack of a deep, European capital market. According to the Commerzbank CFO, it is important to push ahead with a major reform and promoting securitisation is an obvious step in this direction. Securitisation hardly plays a role in Europe, but is widespread in the USA. „We need to see something, otherwise we will lose touch.“ The credit industry must create a „bridge between the capital market and the credit market“, said Barclays manager Hengster, who is also familiar with the political view of financing as a former board member of the development bank KfW.

Politicians now have a duty, emphasized Kukies, who joined the conference via video conference from Berlin. The State Secretary in the Chancellery argued that the call for a transition to a climate-neutral economy also raises the question of financing. This would require not only state capital, but also a lot of private capital. „The banks will not be able to do this on their own,“ said the former Co-Head of Germany at Goldman Sachs. That is why the capital market is needed. In addition to reforming the securitisation rules, he believes that politicians should also review other requirements such as the green asset ratio and further harmonize supervision in Europe.

The heads of state and government will meet at the Euro Summit on March 22. It is not yet clear how concrete any plans for the next steps in the political project of a capital markets union will be. Orlopp, Hengster and Kukies mentioned two key points for securitizations: firstly, a review of regulation. Hengster cited reporting obligations and due diligence requirements. National states could also simplify rules. Secondly, capital requirements, because to date securitisations have had to be backed by more capital than instruments with a comparable risk profile, criticized Orlopp. On Monday, Miye Kohlhase, Managing Director of the German Bankers Association, had already called for a reform of securitisation rules in the Börsen-Zeitung.

The bank managers and the State Secretary were confident that politicians would take action. „The Euro Group will decide something on this,“ said Kukies. Orlopp said that it was uncertain whether a solution would be found before the European elections in June. However, she was confident that a result would be visible in the next two years. Hengster also outlined a similar timeframe.

Orlopp complained that securitisation still has a bad reputation after the financial crisis – largely unjustified, she emphasized. Meanwhile, Kukies, representing the German government, was a little more cautious: politicians must keep an eye on the incentives they set with regulation. A reform of the securitisation guidelines must also take place within this framework. At the same time, he called on the industry to stand ready to finance a transformation. „Finance as much as possible!“