The Fight for harmonisation of securitisation law throughout the EU received a massive boost this month when the general counsel of the European Central Bank (ECB) Antonio Sainz de Vicuna lent his support to lawyers arguing the case.
At a symposium held by the European Securitisation Forum (ESF) in Brussels on 6 June, Sainz de Vicuna said that the ECB “fully supports harmonisation of rules relating to securitisation”.
This was one of the most important points to come of the symposium, said Mayer Brown Rowe & Maw partner Mark Nicolaides, who attended the conference. The sway of the bank could lend valuable support to the ESF's mission to harmonise legislation throughout the EU.
When it comes to securitisation, the European market falls well behind that of the US. A lack of harmonisation between member states has meant that potential deals are just not being done.
It is expected that the European securitisation market will grow by e162bn (£103.35bn) in 2002, but that is just half the projected growth of the US.
When markets are amenable to securitisation, benefits include lower funding costs for end users, such as reduced mortgage costs, lower lending rates from banks and better rates for corporates.
It was agreed at the symposium that there were two general approaches to harmonisation throughout member states.
First, there is the 'top down' approach. “One gets the [European] Commission riled up; they then tell each of the local member states, 'We must harmonise',” said Nicolaides.
Alternatively, there is the 'bottom up' approach, whereby each member state seizes the benefits of securitisation and harmonises itself. The government of each member state consults with industry and comes up with rules that are more informed. It is then up to individual states to lobby their governments.
“People concluded that we have to work from both directions,” said Nicolaides.
Clifford Chance partner Kevin Ingram, who helped draft the white paper for the ESF, said that complete harmonisation throughout Europe will never be possible. “It isn't going to happen,” he stated. He admits, though, that a move towards it would be of benefit.
For lawyers, it would mean less work on each transaction, because harmonisation would make securitisation deals less complex. But as a result, the number of deals would be likely to increase.
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