Diversify bank refinancing!
A contribution from
Prof. Dr Andreas Pfingsten
Director at Finance Center Münster
Scientific contact and cooperation partner at Fin.Connect.NRW
At a bankers‘ meeting at the Deutsche Bundesbank’s head office in NRW on 7 March 2023, Dr Thomas Gstädtner, Head of Division DG Systemic & International Banks at the ECB, presented the ECB’s supervisory priorities for the years 2023 to 2025. Among other things, it will again become more important for banks to diversify their funding, not least because of the ECB’s ongoing reduction in liquidity provision.
My assessment on this: An important contribution can be made by reviving securitisations in order to address additional investor groups. Based on real estate loans, Pfandbriefe could partly be used as a similar instrument in Germany. But firstly, this is only applicable for a few asset classes and secondly, it does not allow for a reduction of default risks. For details, see our study.
The supervisory priorities mentioned are initially only directly aimed at large internationally active and systemically relevant banks. In Germany, the savings banks and cooperative banks typically have a very broadly diversified group of depositors and also their liquidity networks. However, in view of the high financial requirements of transformation financing as well as the presumably increasing risks and the associated capital requirements, it seems to me that securitisation with its possible risk sharing also has some potential in these pillars of the German banking system.