It has been almost two months since Standard Chartered formed its new securitization franchise. FinanceAsia catches up with Warren Lee, head of the bank's Asian asset securitization team, to find out where the bank sees opportunities for the region.
Lee, along with Lesi Zuo and Kenneth Kwan, joined Standard Chartered in July from Bank of America's ABS group. Zuo takes up the role of director while Kwan joins as an associate.
What are the main objectives for the new team?
The team at Standard Chartered will have a slightly different focus from many US and European banks. A large part of Standard Chartered's business has always been geared to the local currency business, and we feel that securitization in Asia has developed to a point where we can start to focus on domestic securitization markets.
In the past year or so, there have been regulatory and legal changes in countries such as Taiwan and Malaysia and these are bringing about some exciting opportunities. There's huge potential for the business in these countries.
Securitization is an important product to complement the bank's existing global markets franchise. We plan to pursue US dollar-denominated securitized deals as well as local currency transactions, and offer clients conduit as well as capital markets execution. In addition, there are opportunities for securitization to be used by Standard Chartered as a financial tool for funding and balance sheet management.
You mention Taiwan and Malaysia. Where else in the region can you currently see there being decent levels of activity?
Since I started at the bank, I've traveled to Taipei, Kuala Lumpur and Singapore and there is definitely business to be found in those places. If you look at Singapore, there have been regulatory changes recently that allow private lenders the first claim on mortgaged properties, rather than the Central Provident Fund. That is definitely going to help further the development of the securitization market and I think we will see a good flow of property deals in future.
Standard Chartered already has a strong local bond market presence in Asia, so when opportunities do arise, we will be looking to capitalize on them. As an example, in Hong Kong this year, we were the first to bring retail bonds to the market for issuers such as the MTRC and Wharf, and we hold the lead in this new product market.
Synthetic securitization in Asia hasn't quite taken off in the way some people were hoping. What is your view on this part of the market?
Basically, the activity so far has been limited to Hong Kong and Singapore, where we have seen a few deals. The reason that synthetic markets have yet to take off elsewhere is because these types of deals are not covered by the regulations in other countries. I think regulators just want to see securitization of cash assets working properly first over a period of time, but I do expect to see them embrace synthetic securitization in future. It is not a case of regulators being against this asset class: you can see in the way that the credit derivatives market is growing, that there is room for synthetic products across the region.
You mention that Standard Chartered will focus a lot on the domestic markets. What else do you see the team offering to clients that other banks might not do?
We have established strengths in debt capital markets and risk management solutions, as well as in-depth understanding of legal and regulatory requirements. Utilizing the bank?s diverse range of global financial products, we are able to offer customized solutions to enhance value to clients. The expertise we have in asset securitization and debt capital markets will enable us to be more innovative in the areas of new product offerings, balance sheet management and risk mitigation.
Standard Chartered has commercial banking franchises throughout Asia. Because of that, what are the chances that we may see the bank being a regular issuer as well as arranger of deals?
The bank does have a strong consumer banking business in Asia, and securitization can be used as a tool to manage our balance sheet and capital. There are opportunities for us to leverage on this. Each local market's customs, regulations and customer demographics will determine the appropriate strategy. With our highly experienced asset securitization team, Standard Chartered now has the expertise to deliver these capabilities to our customers.
