Asset Based Finance in Germany and TSI - the two terms are closely linked. True Sale International GmbH (TSI) emerged in 2004 from a banking initiative in Germany to promote the German securitisation market. Today, the topics of the TSI go far beyond this and cover broad areas of the asset-based finance market.
The original aim of the TSI was to enable banks in Germany to securitise their own loans and create a brand for German quality securitisations in accordance with German law and on the basis of a standardised procedure agreed with all market participants. The now well-established "DEUTSCHE VERBRIEFUNGSSTANDARD" sets standards in terms of transparency, investor information, exclusion of Originate to Distribute structures (OTD) and lending and processing standards. TSI shapes the German market for securitisations and assed-based finance with its events with more than 1.000 participants annually, its internet presence and its public appearance. TSI always looks beyond the end of its nose and covers also current market trends such as blockchain, fintech and digitilisation effects and changes in the financial and real economic framework conditions.
Securitisations have proven their worth in Germany and for the German economy securitisation is an important link to the capital market. The sales financing of the German automotive industry, the financing of asset leasing, the working capital financing of German industry and trade - securitisations are increasingly used in all areas. In recent years, between 30 and 40 billion euros in leasing, trade receivables and loans have been securitised on a regular basis.
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1. Macroeconomic Trends 2023
- Geopolitical and economic reordering of the world – Conflict between the transatlantic allies with Russia and China endangers the globalisation of the last decades. This development affects the global division of labour and financial flows. Europe is still searching for its place and role.
- Re-emergence of traditional industrial policies – The US Inflation Reduction Act has the potential to change international competition. The European response in the form of the Green Deal Industrial Plan and a possible subsidy race with the USA also influence the conditions for financing the climate and energy transition.
- Turnaround in monetary and interest rate policy – Higher and volatile inflation in the longer term with further interest rate steps in the Eurosystem are to be expected. Different causes in global inflation dynamics lead to divergent monetary policy responses. This influences investment and financing decisions.
- Public finances at a crossroads – The new debt incurred to finance the climate and energy turnaround increases the urgency to integrate private investors for financing the transformation.
- Hardly any signs of economic recovery, but recession probably milder than expected – Ukraine war, China’s change in Corona policy, supply chain disruptions, high commodity and energy prices and core inflation rates are having less of an impact on the economy than expected in the short term. However, the associated level of uncertainty restraints economies and financial markets. The momentum of investment in transformation is lagging behind targets.
- Technological change drives digital and sustainable transformation – New digital AI technologies for the mass market point the way for a transformation to succeed: distributed ledger technologies and tokenisation open up new financing channels; openness to technology for more innovations can also be a key to sustainable transformation.
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2. Capital and financial market trends
- Sustainable Finance continues to drive headlines – Sustainability regulation with its multitude of transparency requirements is challenging banks, issuers and investors. The focus of the discussion is shifting from financing already green assets to financing the transition to a decarbonised economy.
- Challenges to Corporate Finance – The mix of high inflation rates, disrupted supply chains and sustainability regulation is of particular importance for German SMEs; in the short term the focus is on liquidity issues, in the long term also on capitalisation issues (equity and subordinated capital).
- Banks with mixed outlook – Continuing regulatory pressure on the financial sector, intensified by the threat of recession and negative rating migration, is making business more difficult; the margin boost from the interest rate turnaround is currently offset by a declining volume of new business.
- Lending business in transition – High inflation with a significant impact on the cost side, especially for SMEs, is affecting the cash flow of companies. Competition and the trend towards substitution by financing from non-bank financial institutions (NBFIs) are increasingly raising the question of who will be financing whom in the economy in the future.
- Renaissance of securitisations in public discussion – The great importance of bank-based corporate financing in Germany and the high need for investment illustrate the relevance of securitisations for financing the transformation. Meanwhile, decision-makers in Germany and Europe see securitisations as a contribution to improving financing conditions for SMEs.
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3. Capital and financial market trends
- Sustainable Finance continues to drive headlines – Sustainability regulation with its multitude of transparency requirements is challenging banks, issuers and investors. The focus of the discussion is shifting from financing already green assets to financing the transition to a decarbonised economy.
- Challenges to Corporate Finance – The mix of high inflation rates, disrupted supply chains and sustainability regulation is of particular importance for German SMEs; in the short term the focus is on liquidity issues, in the long term also on capitalisation issues (equity and subordinated capital).
- Banks with mixed outlook – Continuing regulatory pressure on the financial sector, intensified by the threat of recession and negative rating migration, is making business more difficult; the margin boost from the interest rate turnaround is currently offset by a declining volume of new business.
- Lending business in transition – High inflation with a significant impact on the cost side, especially for SMEs, is affecting the cash flow of companies. Competition and the trend towards substitution by financing from non-bank financial institutions (NBFIs) are increasingly raising the question of who will be financing whom in the economy in the future.
- Renaissance of securitisations in public discussion – The great importance of bank-based corporate financing in Germany and the high need for investment illustrate the relevance of securitisations for financing the transformation. Meanwhile, decision-makers in Germany and Europe see securitisations as a contribution to improving financing conditions for SMEs.
In its endeavours, TSI has the support of many partners – banks and law firms, rating agencies, auditing companies and service providers. It thus reflects the breadth of the German market.
TSI's Advisory Council plays an important role in the company's work. It comprises board members and CEOs of major German banks, the four large rating agencies with ECB recognition, two auditing firms and a representative of the Federal Ministry of Economics and Technology. It identifies and discusses key issues to be taken up by TSI. To the Advisory Council of TSI
TSI has the support of a broad, top quality network formed, at present, by 70 enterprises from the asset based finance industry. TSI Partners come from all sectors of the German securitisation market: banks, consultancy companies and service providers, law firms, rating agencies and professional associations. The unifying factors are competence and experience in the securitisation market and a common interest in further developing that market. TSI Partners derive particular benefit from TSI's lobbying and PR services. If you would like to find out more about the individual TSI Partners, their competence with regard to the securitisation and asset based finance market and their range of services, just click TSI Partners to access more detailed information.
Chair of the TSI shareholders' meeting:
Arndt Beuermann, Head of Execution - Asset Finance (Director), Commerzbank
